The Department Store, Its Origins, And Economics - Research Paper Example

The Department Store, Its Origins, And Economics The dawn of departmental stores was one of the early society’s most influential and innovative institutions, which helped in transforming the world of business, notably from mid-1800s to early 1900s- around 1930s (Pasdermadjian, 1954). Their inception thereby gave rise to a culture of consumption, as well as the birth of shopping centers which later developed into the modern shopping centers holding everything under one roof (Rich& Stuart, 1963). Considering the social impacts of the departmental stores, one may be inclined to attach the utmost importance to the contributions they made towards transforming the way of human life at different population levels; a transformation that will remain as one of the greatest social advancements over the century (Sparks, 1996). For instance, the contemporary department stores signify much more than just the advancement of the range of goods and consumable products provided for sale by the modern retailers. The evolution of department stores was an urbanization phenomenon, symbolized by the growth of cities and augmentation of the number of customers who dictated or demanded the range of items for sale. A department store is a system of retail established within a single building, opened to the consumers/public, offering a broad range of consumer items. Typically, it allows shoppers or customers to have a wide base of choosing between multiple products at varied prices, and in diverse product categories referred to as “departments.” This paper thereby looks at the revolution of the department stores, as well as the emerging trends in consumer cultures during the era of their rise (Rich& Stuart, 1963). The origin of department stores can be traced back and linked to the growth of the noticeable consumer society during the mid-18th century towards the commencement of the 19th century. However, history can still trace back to 1734 when one of the first shopping structures that seemed like a department store was established by Bennett in Derby- it was an ironmonger shop and it still stands to date. A number of business historical sources argue that the first department store ever established was the “Harding, Howell & Co.”, opened by 1796 in Pall Mall, London. Nonetheless, some other sources reveal that the first and reliably dated department store was opened around 1840 by Aristide Bouncicaut. It was a small retail shop designed for selling clothing and dry goods in Paris (Weiss& Edward, 1948). The stores later name was “Bon Marche”, which served as the world’s first department store in history. Shortly soon, the idea of department stores got spread and later emulated by other prominent commercial entrepreneurs throughout the entire globe. Department stores first emerged in North America and Europe between mid-18th century and mid-19th century, evolving from dry-goods establishments, such as business selling patterns, fabrics, as well as sewing and design materials including threads, laces, and ribbons among others (Woodham& Jonathan, 1997).As the Industrial Revolution hastened a quick economic expansion, there was emergent of the affluent middle-class, which grew both in wealth and size. The urbanized social groups, changing fashion and sharing the culture of consumption thereby became the catalyst and center of the retail revolution (Sparks, 1996). In 1846, Stewart Alexander established a department store “Marble Palace,” eastern Broadway in New York City.He offered a number of European retail merchandizes at fixed and affordable prices over a range of dry goods. As well, he advertised the policy of providing free entrance to all his potential and target customers. Even though his store clad by white marble in order to appear as a Renaissance palazzo, its structure (the building) was in cast iron, a construction that permitted the use of large glass-plate windows, which allowed for major seasonal displays, normally during the Christmas shopping seasons. Later in 1862, Stewart built yet another department store on a whole city block, with eight floors and 19 departments of furnishing materials and dress goods, toys, carpets, sports equipment, and glass, arranged in a central court covered with glass. His new business innovations involved bulk buying from the manufacturers, keeping markup small and prices low, cash refund and simple merchandise returns policy, one-price policy, truthful merchandise presentation, cash selling (no credits), departmentalization, horizontal and vertical integration, large volumes, and free customer services (Weiss & Edward, 1948). By 1880s, most of the U.S. retail centers were shifting towards urban areas or city centers, thereby forming a chain of retail shops (Tony, 1955). In the New York, the major stores were already competing by 1895 for Christmas seasons, doing elaborate Christmas window-displays. The 1895 Macy’s presented thirteen tableaux, involving scenes from Beanstalk and Jack, Gulliver’s Travels, as well as other children’s preferences. Similarly, such department stores were underway in other nations’ cities and capitals, including Paris and London.It worth noting that from mid to the late-20th century, especially during the 1970s, 1980s and beyond, the advancements in social sciences produced a remarkable amount of historical business cultures relevant to marketing (Rosenbloom, 1980). Such included historical advertising, retailing, and the rise of consumer culture (Rich& Stuart, 1963), which revealed a cordial relation between people and goods over time. According to Sparks (1996), with the increase in social mobility and rise of property exchange, there was an increasing number of people, especially the women who realized they could shop without any company at the department stores, and without compromising their reputation. The emergent of disposable income during the late Georgian period transformed window shopping into a leisure activity, and entrepreneurs such as the potter- Jasiah Wedgwood lead the way towards using marketing techniques in order to influence the prevailing preferences and tastes of the target customers or the society (Rosenbloom, 1980). The emergent of department stores aided the creation a “new religion” as Sparks (1996) describes, for the passion for nurtured consumption by the retailing revolution of the department stores. As the actual churcheswere being deserted by people, crowds of women filled the stores, seeking to fulfill their desires during their empty hours in order to find the meaning for their empty lives. The culture of “soul” got replaced by the culture of the “body of beauty and fashion.” The department stores pre-eminently served as the “world of women,” within which women finally got the remedy and encouragement for finding a meaning to their lives through the conspicuous consumption. As well, they introduced a platform upon which women progressively found their roles in selling (Weiss& Edward, 1948). Evidently, the department stores played a significant role in the evolution of the contemporary society, as well as in the evolution of women’s roles within the society. Department stores thereby grew to dominate the retail trade through the introduction of novel merchandising principles. By 20th century, there were significant improvements in the standard of living within the society. Consequently, this lead to the emergence of the middle-class groups amongst which there was a widespread application of the term “conspicuous consumption.” These groups included households, men, and women who had discretionary incomes that enabled them to participate in the modification of the patterns of economic consumption of both goods and services. They got motivations from their personal desires for prestige and public display of their social status, rather than from the inherent practical utility of quality goods and proper services (Pasdermadjian, 1954). By early 1920s, economists (such as Nystrom Paul) had proposed that changes in living standards or the style of life, made viable by the industrial-age economics, induced into the society a philosophy of “futility” which would later increase the volumes of consumption of goods, as well as services in form of social fashion (Sparks, 1996). When World War II ended, the immediate unfolding years were general symbols of prosperity and stability for America. According to Rich and Stuart(1963), the nation transfigured its remaining war machines into a consumer culture, creating jobs for about 12 million returning war veterans. A vast number of American citizens thereafter, enjoyed larger houses, high wages, more cars, better schools, as well as home-comfort machines such as washing machines, and vacuum cleaners among others which were basically designed and made for labor-savings and for making household chores easier (Woodham & Jonathan, 1997). In this 21st century, there are familiar business and economic inventions which made their first advent during that era. The U.S. economy drastically grew during the post-WWII period, augmenting at the rate of about 3.6% annually between the late 1940s and early 1970s. During this prosperity period, the generation of income doubled up significantly, thereby significantly increasing the average family income generations, resulting in the lifting of millions of factory and office workers into growing middle-classes. This enabled them sustain a living standard that was once regarded to be reserved for the rich. By the late 1950s, almost 88% of the American population or families were capable of owning at least one TV, about 74% could own cars, and approximately 61% were owning their homes. This scenario encouraged further development in department stores within the U.S. By early 1960s, blue-collar workers were already the biggest and the most valued buyers of large volumes of luxury goods, alongside services. Additionally, the post-WWII American consumers were already enjoying higher levels of disposable incomes as opposed to any other post-WWII country. The end of WWII saw American soldiers returning home, back into a country that was quite different from the one that they quit four years during the commencement of the war. The production of wartime helped pull out the American economy from the depression. From the late 1940s, the American young adults experienced an impressive rise in their power of expending. Job opportunities became plentiful, wages shot higher, and owing to the shortage of consumer goods during the war, the U.S. populaces were so eager to spend more. During those same years, younger couples were getting married, giving rise to young children at exceptional rates. The expanded and new federal programs, such as the G.I Bill of Rights endorsed several young families to purchase valuable goods and own homes, commonly located within the swiftly expanding suburbs. From 1946 to 1961, the U.S. witnessed a notable expansion in the consumption of both goods and services. The GNP grew by over 35% and individual consumption expenditure rose by over 41%. These cumulative gains were reflected within the incomes of different families, as well as of unrelated individuals. Between this duration, over 21 million housing units were in place, and during the later years, 53% of consumer units within the cosmopolitan areas owned their homes. Statistical records reveal that by 1957, out of the total number of wired households across the nation, 95% had at least a refrigerator, 80% a television, 86% an electric washer, 66% a vacuum cleaner, 11% a gas or electric drier, 9% air conditioner, and 17% a freezer. Car ownership also ascended, with about 71% of consumer units possessing at least an automobile by 1961. All these factors acted as stimulants to the establishment and growth of more and more department stores within the entire country as several entrepreneurs were able to afford the capitals and platforms upon which one could start and run a department store. The rise of department stores was a metropolitan phenomenon. As the urban centers or cities grew, vast number of consumers gained the power to dictate the most demanding items for sale. The construction of roads and rapid developments in transits such as streetcars, subways, and railway lines converged at downtown areas, resulting to the concentration of human populations within such areas. Such developmental changes thereby encouraged retailers to establish or locate their stores strategically within such areas of dense populations. For the success of the business, location was very paramount since being in the wrong place could mean a possible movement or shift of the retailer to a better strategic place. Department stores finally became archetype of the newfangled trends. These hefty urban showcases paved ways for engineering and architectural innovations as elevators, electric lightings, air conditioning, fire-proofing, steel-frame construction, and escalators were invented and improved in order to aim the storage or retail activities. These technologies later leaked out to the public and we are able to witness their presence to date. To the present day’s standards, many large and classic downtown stores of the time included the flagship Bay stores in Toronto, Vancouver, Montreal, and Calgary (Whitaker, 2011). These stores are still large even to the modern scales used today. Their economic essentiality was worth mentioning- larger than several modern industrial complexes. During their zenith, department stores were the largest importers, greatest employers, and held records for the highest volumes of sales of any sector. Kudos to the establishment and development of department stores- its scales of operations lead to business innovations such as the introduction of credits and modern credit cards, catalogue sale, mail orders, inventory controls, chains of distribution, media promotions, and visual presentation, all of which grew rapidly.In order to distinguish themselves (Rosenbloom, 1980), retailers commonly competed for the same target customers by concentrating on new services like in-store groceries, home deliveries, restaurants and pharmacies, telephone and postal services, recreational and fur storage facilities. After 1920, chain department stores rapidly grew, providing stiff competition for the downtown large scale department stores, and the local stores located in small towns (Rosenbloom, 1980). For instance, Penny J. C. had only four stores by 1908, which drastically multiplied to 312 by 1920, and later to 1452 by 1930. Roebuck, Sears & Company- a colossal mail-order house opened its 8-retail stores in 1925, operating department stores which catered for both men and women, especially in the lines of building materials and hardware materials. They deemphasized the edge-cutting fashions, favoring the durability and practicality of items, thereby rendering customers the freedom of selection of goods minus the aid of clerks. The stores were motorist oriented- set apart from the prevailing business districts amidst the residential areas inhabited by their target group. They had ample, off-street, free, and clear communication of their corporate identity. Woodham and Jonathan (1997) reveal that by 1930s, both the chain stores and department stores were underway deeply involved in company structure designs, designing copiously air-conditioned (windowless) stores whose layouts were entirely driven by concerns of merchandising. Much popular in levels, were the Variety stores, such as the dime stores, pioneered by Kress, Woolworth, and Kresge. They operated or controlled more than 4,200 stores by 1930. However, on the 21st century, the dime stores vanished, and dollar stores took over the niche of high turnover and low-cost merchandises. Unfortunately, with the rise of e-commerce, the 2000s saw a decline in the operations of department stores. The number of organizations operating department stores plummeted from 95- operating about 9, 950 stores by 2006, to only 68- operating about 9, 450 stores by 2013. As a social institution, department stores were also instruments of massive production and selling (retailing) of ready goods, such as ready-wear-clothes, as well as several other household items (Weiss& Edward, 1948). Actually, the department store was one of the primary large businesses in North America to make a complete implementation of the principles of vertical integration of business or retail operation (such as the backward integration from retailing, wholesaling, and finally to manufacturing). Department stores evolved as the predecessors of the contemporary shopping centers, with “everything under one roof,” such as the current supermarkets and shopping malls. Not only did they give an eventual rise to the shopping centers, butthey also gave birth to the modern skyscrapers. The need to manage, supply, and control water, light, heat, wastes, as well as the movement of people and goods in large numbers and in bulks through such enormous buildings, imposed sufficient pressure on architects and engineers to design building which were “flexible” and could create room for the use of new equipment and materials (Woodham& Jonathan, 1997). Therefore, the department stores of the 19th and 20th centuries were indeed the contributing factor to the contemporary skyscrapers. Cities, for example, Chicago and New York became among the world’s eminent cities (and still they are), and it is in much coincidence that the department stores build in these cities, such as Marshall Field, Macy, and AT Stewart among others are by far the most luxurious, biggest, and the most modern stores the world had ever witnessed. The absolute size of the department store buildings necessitated the use of new construction materials and technologies, such as lighting system devices, new cooling and heating devices, as well as the technology for monitoring the in-store customers’ movements, which resulted into new store designs, alongside other architectural and engineering innovations (Woodham& Jonathan, 1997). The layout of the stores enhanced an easy shopping for customers, irrespective of their economic or social backgrounds (Sparks, 1996). The stores also offered novel customer services that the world’s business had never witnessed before, such as the provision of rest-rooms, restaurants, reading rooms, wrapping services, home delivery, new forms of merchandise displays, and storage hours amongst other several customer services. The consistent need for delivery of customer services by skilled staff naturally aided thedepartment stores to become the leaders in every area of human resource management. On-the-job training in compliance with focused recruiting created highly qualified staff. The vast number of people, accompanied by the desire by the stores to maintain them, resulted to the improvement of employee benefits, such as life insurance, pension, health insurance, stock purchase and paid vacation plans. It is incredible to underestimate the influence or impacts of the department stores on the society. The development of department stores helped spur a massive production of goods, giving the rise to a culture of fashion and consumption (Rich& Stuart 1963). As well, it turned out to impose extra pressure for the social change. Just to mention a few, the introduction of credit lead to the democratization of consumption, thereby empowering and providingthose with limited purchase abilities, an alternative means and extra ability to pay for their acquisitions over specific time. Thereafter, anyone could manage or afford to acquire goods initially available only to the wealthy group.The rise of department stores democratized the consumption culture, and has to date had the central influence on the urban value and lifestyle (Rich& Stuart, 1963). The introduction of credit was one of the core reasons for the rise of department store to such a higher level of importance within the society. It remains evident, the roles that American stores, Canadian, French department stores, and other department stores have played in the democratization of consumer credit via issuing or using credit cards, thereby establishing a strong and firm consumer credit culture. The advent of department stores had impact on every facet of economic and social life via being a highly innovative and entrepreneurial institution. Directly or indirectly, department store (as the major agent of change) contributed to the adoption of a wide range of technological innovations. Just to mention a few, department stores lay the foundation for the distribution chain, shopping experience, revolutionized retail store, credit policies, assortment and availability of goods, media and other promotional methods, price awareness, and it was also a major contributor to a number of managerial techniques from inventory control procedures to hiring practices.Indeed, department stores were the first U.S. businesses to implement or employ the mechanical data processing paraphernalia for sales, as well as other managerial prerequisites (Tony, 1955). Perhaps, the most lasting legacy of the department stores is the development of rights for women- a democratization of another kind. Whereas shopping has been traditionally viewed as the women’s domain in the 19th century, it was also the women’s desire to engage by their own. While various forms of social interactions were forbidden for women unless accompanied by servants or chaperones, the emergent of department stores lead to the social acceptance for women consumers to shop alone without any guidance (Whitaker, 2011). As well, as the department stores grew or expanded, the number of staff required to operate them also expanded, hence the creation of employment for both men and women. The war time pressures and war aftermaths of early 20th century enhanced and hastened the creation of employment opportunities for women within the retail sectors. By 1930s, women were capable of pursuing professional careers within the department stores, thereby boosting their financial capabilities in supporting themselves as well as their families. Pasdermadjian(1954) proves that the arrival of department stores was one of the society’s most fundamental and democratic institutions, and served as a major force directed towards a more democratic and unrestricted society, especially for the women. Several historical sources and social historians thereby strongly believe that the emergence of department stores lead to the liberation of women, and offered them their fair place and roles within the society (Pasdermadjian, 1954). It made jobs available for women and opened up the doors for new career opportunities for women, including professional fields as well as various positions in politics.Initially, just a few places were morally and socially acceptable for women to go, visit or be seen publicly on their own, including museums, parks, and various leisure activities (Sparks, 1996). Nonetheless, department stores introduced a new change in the society’s values for tolerating that women were capable of going to shop by their own. Labor issues such as holidays, working hours, fines, health issues, as well as employees’ working conditions (notably of women) pushed for re-address. Indeed, it would be fair enough to complement that the department stores were quite innovative in the ways that they treated their employees- both males and females. Since the ancient times, women performed agricultural tasks, and continue in a number of cultures around the world today. In other cultures, while men went to work and performed heavy industrial and agricultural tasks, women remained at home, taking care of family, and performing home-based chores (Hanson, 1983). However, the late 18th and early 19th centuries’ Industrial Revolution gradually changed the nature and scope of workforce in the entire Western world. Eventually, working for a wage or salary became the mode of urban life. Initially, both men and women could be involved in heavy physical labor, such as hauling hefty coal carts through mining shafts in the Great Britain. During the 19th century, there was an increasing number of women securing job opportunities in factories such as textile mills, as well as on assembling cores for machinery (Hanson, 1983). Additionally, women worked as hawkers of flowers, factory produce and other goods. Towards the late 19th century, an increasing number of women were finding jobs in office works, as well as clerical professions. In the U.S., earlier on before the Civil War, the clerical professions and office work were predominantly filled by males. The post-war era saw a rapid rise in large corporations as businesses grew and became bureaucratic. The ever increasing factory works resulted into high demand for employees to handle more tasks. Women thereby got hired in large numbers, as they were less expensive as compared to the male employees. Additionally, typewriting works facilitated women’s entrance into offices since it was initially gender-neutral. However, the typewriting jobs later got more associated with feminine attributes or feminism, which further boosted the number of women getting employed into the profession (Hanson, 1983). At the beginning of 20th century, women were considered as guardians of the society’s morality. They neither had defined roles as workers nor money makers. Women were thereby expected to uphold their innocence till the right man could come along for marriage in order to start a new family and inculcate the morality they preserved. It was not until the WWI that created space for women within the workforce, and other economic and social influences. There was rise in production, especially in Europe where many women found themselves securing jobs outside their homes. Within the century’s first quarter, women commonly occupied jobs in factories or as domestic servants, but by the end of both WWI and WWII, they were able to secure jobs such as salespersons in department stores, as clericals and secretarial. By early 20th century, the increasing number and advancements in department stores significantly increased the number of females working retail centers and department stores. Females thereby worked as seamstresses, clerks, housekeepers, as well as other sales and marketing roles. Similarly, the work or retail sales advanced and extended to office work, resulting to stereotype female occupations with low pay and slim chances for advancement. According to Whitaker (2011), the payroll records for James Mullin, Kennard & Sons- a department store in Delaware, Wilmington, on employee salaries, occupations, bonuses, and commissions reveal sex-segregated occupations with women in sales and clerical positions, and males in department heads and managerial roles (Whitaker, 2011). Department stores regularly sponsored programs of employee welfare, which offered medical care facilities and dining rooms; sponsored extra-curricular activities such as social outings and athletic teams; produced employees’ magazines, and encouraged employees to form and participate in associations. As Weiss and Edward (1948) record, department stores’ welfare programs encouraged a gender-balanced work environment, created a positive image to the retail industry, secured more effective business performance systems, and significantly reduced the common class conflicts between salespersons and customers. This culture generated from the department stores made numerous improvements to the retail industry, and over the past five decades, the culture of gender balance and integration of women into the workforce have been the core factors for the increased social mobility. References Hanson, J. (1983). Employment and entrepreneurship series descriptions: Women’s employment history. London: Routledge. Pasdermadjian, H. (1954). The department store, its origins, evolution, and economics. London: Newman Books. Rich, B. & Stuart, F. (1963). Shopping behavior of department store customers: A study of store Policies, customer demands, and consumer culture. Boston: Harvard University Press. Rosenbloom, B. (1980). The department store and mass merchandiser: Marketing challenges and strategic responses, competitive structure in retail markets. American Marketing Association, 5(1), 168-177. Sparks, L. (1996). Review of bill Lancaster the department stores: A social history. Journal of Macro- Marketing, 16(2), 115-116. Tony, W. A. (1955). Department stores in the U.S., 1889-1943. Business History Review, 29(4), 335- 343. Weiss, G. & Edward, B. (1948). Selling to and through the new department store. New York, NY: Printers' Ink Publishing. Whitaker, J. (2011). The world of department stores. New York, NY: Vendome Press. Woodham, S. B. & Jonathan, F. (1997). Twentieth-century department stores and design. New York, NY, and London: Oxford University Press. Read More