By John F. Di Leo -
For over a century, Chicagoans grew up with a signature memory: special days downtown, shopping at Marshall Field’s and Carson’s, the great rival retail giants down the block from each other on State Street. (shown here: Carson's longtime downtown landmark by Louis Sullivan, sold off years ago).
Smaller stores came and went, but Field’s and Carson’s were the giants, the dominant figures in Midwestern retail for generations.
Macy’s bought out the struggling Field’s chain over a decade ago and cremated the brand name while keeping the stores. Carson, Pirie, Scott & Co. wasn’t so lucky; its current holding company, Bon-Ton, is giving up the ghost for good this spring.
Unable to find a buyer or investor to keep the chain alive, Bon-Ton is shuttering its 200 stores and terminating its many brands. Along with Carson’s, we’re likely saying goodbye to Bergner’s, Boston Store, Younkers, Elder-Beerman, and Herberger’s (though there’s still a chance that the liquidation might leave one or two of these names standing, God willing).
Many Americans grew up with these same memories… Milwaukee kids shopped at Younkers or Boston Store; Rice Lake and Eau Claire kids headed to Herberger’s… there was a time when the department store – the anchor of the local mall – was the big draw. You bought your parents’ anniversary presents there, and your siblings’ Christmas presents, and your girlfriend’s birthday present too. Ever since the days of Montgomery Ward and Marshall Field, a century and a half ago, the department store has towered above the rest of the retail world in our communal memory.
And today, it is all but gone.
Retail: The Easy Answer
Read the business pages, searching for the reason for the long slow death of traditional retail, and they will have answers that are difficult to challenge:
It’s the full-on assault by Amazon and other online retailers; why pay more for the same thing at an expensive building, when you can get it by mail-order without leaving your house? Seems a logical enough position, until we recall that catalog sales provided just as easy an option for 150 years without killing the brick-and-mortar alternatives. So it can’t really be that.
Or… It’s the lack of a genuine brand nowadays. When Field’s, Carson’s, and the rest stopped really making their own products, and just started slapping their private label on products made in the same Chinese factory as everybody else’s, that took a toll. Why spend $40 for this Chinese shirt when I can buy a Chinese shirt at Walmart or Meijer for $20? That argument may be stronger.
Or… It’s the bad individual decisions made by some of these retailers. Penney’s famously switched out their entire menswear lines in favor of all-extra-slim sizes a few years ago; the error lasted less than a year, but the damage was done. Similarly, some retailers target the wrong demographic, or hire the wrong decorator, or hitch their wagons to the wrong fad, and lose a season or two that they otherwise wouldn’t have lost. But are such errors enough to kill a century-old name?
Industry experts have plenty of reasons for these failures. They see a bankruptcy, identify the company’s last three mistakes, or the company’s biggest competitors, and lay the blame there. It’s how analysts think… they have to… in order to figure out which stocks to recommend and which stocks to flee.
But if every retailer is struggling, even in an economic recovery, mightn’t there be some other reason for these doldrums? Some over-arching problem with our economy that we need to tackle before it gets too late? With the way that the analysts talk, one would think that the weak stores’ problems are their own fault, but strong stores will survive. And yet, only the low-priced stores are really thriving – the Walmarts, the Meijers. Is that really because they’re so well-run, or might it perchance just be because they are low-priced?
Other industries don’t have this problem. There’s room for both well-run fast food chains and poorly-run fast food chains, well-run homebuilders and poorly-run homebuilders, well-run landscape companies and poorly-run landscape companies, well-run radio stations and poorly-run radio stations. The economy is big enough to support all of these. You do better if you invest in the well-run ones, of course, but there are still jobs and profits to be made in the imperfect ones.
Why is it that only in retail have we begun to unquestioningly accept the premise that any business that’s less than perfect is now expected to go bankrupt?
The retail sector – especially every big department store that anchors a mall – has an outsize role in the economic climate of our cities and towns. Retail draws tourists and suburbanites to our downtowns and to our malls. Retail provides the part-time jobs that high school and college students depend upon. Retail provides tax revenue for the community. And big retail makes small retail possible – because without the anchors, people don’t walk into the mall to get attracted to the smaller stores either.
Retail: The Real Answer
Retail’s plight has followed a demographic and economic change in America.
The retail world built up in the 20th century to respond to population growth, the same way it did in the 19th. As cities grew up, department stores came to the downtowns. As suburbs grew, the stores built branches in the suburbs too. Even small towns became hubs for the surrounding rural areas, and gained their own department stores as well. As American population grew, the feeling went, it would need – and be able to support – more stores.
But that’s not how it turned out. The growth of the internet since the early 1990s has served as a handy scapegoat for our real problem, but the enemy is demographic, not digital. The long, slow death of department stores is caused by a transformation in who makes up the American population.
When America was on its great period of growth – in the 1800s – Americans prided themselves in being able to shop, to be able to own more than the single Sunday suit of clothes, the single wedding ring, the single pot or pan to which poor people had been limited since time immemorial. All of a sudden, a middle class was growing, a class of people who could enjoy plenty. Even those who were far from rich could afford to "go shopping," for the first time in history.
Henry Ford famously focused on producing a mass-produced vehicle that was affordable enough for his own employees to buy. Instead of the makers of luxury goods doing their manufacturing for members of an upper class, the American economy of a century ago enabled workmen to do their manufacturing for themselves. This was earth-shattering in economic history; it was a wonderful snapshot of the American promise that Washington, Hamilton and Morris had envisioned for us at our nation’s dawn.
But then came three big changes as the twentieth century progressed.
- The American government turned on its manufacturing sector. With high taxes, crippling employment regulations, union supremacy, corrupt government and a litigation culture, our manufacturers were driven away. The great American clothing and footwear and sporting goods and home appliance industries, one by one, were pushed overseas to foreign shores. Today, you can’t buy an American iron, radio, or TV. You can’t afford an American pair of shoes. You can’t even find an American shirt or sport coat. The jobs aren’t there, so the people who would have worked those jobs can’t afford to shop in the stores that would have sold them.
- The American public stopped marrying and having children. The average age of first marriages has skyrocketed; the average number of kids per family has plummeted. So the people who grew up in that department store culture we remember haven’t passed on that culture to many, or even any. (This writer’s grandmother worked at Field’s in her 60s; both the writer and his father worked at Field’s while in college. It was a part of our lives then; it is no longer). If you didn’t grow up with both a special respect for the shelves of the department store, and an ability to afford what they sold, you won’t shop there “if you can buy the same thing for less somewhere else.”
- Seeing the plummeting birthrates, the powers that be decided – half a century ago – to import their replacements. As we allowed late marriage, nihilism, selfishness and abortion to reduce our natural American population, we opened up our borders to a flood of immigrants, both legal and illegal – as if numbers were numbers, and everyone was identical. But where has this left us? Our nation has nearly doubled its population since the last year of the Baby Boom, but with so much of that growth coming from poor foreign immigrants, this new demographic mix obviously cannot and will not support the same economy that the old demographic mix could (nothing against immigrants, by the way; this writer is a grandchild of immigrants… but we are talking about undeniable statistics here, and cultural differences, in the big picture).
Just imagine. What if America had been allowed to continue, over the past century, the same way it grew in its first century? With limited government and minimal obstructions to manufacturing, our economy would have been able to continue to produce both domestic goods to fill the store shelves and an affluent enough populace to buy them. With an America that grew its population organically, with a gentle, controlled assist from abroad, rather than an America that stopped having children and had to import tens of millions wholesale, we would have a people who were raised from birth to participate in this domestic consumer economy.
The challenges of retail are real… and this writer is not trying to overlay a political spin where none belongs. But as one peels this onion and studies these challenges, the real answer is undeniable. The causes of retail’s problems – like the causes of most of our societal problems, from crime to wage stagnation to the unaffordable welfare state burden to urban flight – lie in the errant liberal policies that have been practiced at the local, state, and federal level for a century now, and were then turbo-charged in the 1960s.
We have much to correct if we are to save this country. It can be done, but the first step is to acknowledge reality. It’s the departure from the Founding vision of limited government that put us in this mess, and only a return to the Founders’ vision can help to bring us back.
Copyright 2018 John F. Di Leo
John F. Di Leo is a Chicagoland-based trade compliance trainer, writer and actor. A former board member of the Illinois Small Business Men’s Association, the Illinois Right To Work Committee, and other such groups in the 1980s, he served as Milwaukee County Republican Chairman in the 1990s, and his columns are found regularly in Illinois Review.
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