E. J. Korvette

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E.J. Korvette was a New York City-based retailer, founded in 1948. It is notable as one of the first department stores to challenge the suggested retail price provisions of anti-discounting statutes^[1]. It is also notable for its failure to manage its business success which led to decline and its 1980 bankruptcy and closure.^[2] Founded by World War II veteran Eugene Ferkauf and his friend Joe Zwillenberg, E.J. Korvette did much to define the idea of a discount department store. It displaced earlier five and dime retailers and preceded later discount stores, like Wal-Mart, and warehouse clubs such as Costco Wholesale^[1].

Contents 1 Notable Retailing Innovations 1.1 Discounting and Membership Program 1.2 Strip Malls and the Suburbs 2 Decline and Closure 3 The Origin of the E.J. Korvette Name 4 Former locations 4.1 Connecticut 4.2 Illinois 4.3 Maryland 4.4 Michigan 4.5 Missouri 4.6 New Jersey 4.7 New York 4.8 Pennsylvania 4.9 Virginia 5 References 6 External links

[edit] Notable Retailing Innovations

E. J. Korvette's founder, Eugene Ferkauf, began his discounting career in a 400-square-foot loft in mid-Manhattan, New York City. Inventory consisted of well known brands of luggage, household appliances and some jewelry. Discounts were one-third off regular price. Sales were over $2,500 per square foot. Ferkauf retired in 1968. (Discount Merchandiser July 1988)

E.J. Korvette's used several retailing innovations to propel its rapid growth. It used discounting even though most discounting was outlawed (or thought outlawed) at the time^[1]. Korvette's instituted a membership program, a technique from consumers' cooperatives that never been applied to a department store before. It also expanded into suburban locations at a time when most department stores were in a central business district.

[edit] Discounting and Membership Program

Korvette's low-price, low-service model was in some ways similar to that of earlier five and dime retailers such as Woolworth's, McCrory's, and S.S. Kresge. But Korvette's was innovative in avoiding the anti-discounting provisions of the Robinson-Patman Act, and undercutting the suggested retail price on such expensive items as appliances and luxury pens.

Korvette used "membership cards" (which it distributed in front of its stores) to style itself a retail cooperative. In so doing, Korvette's was able to accept deep discounts from suppliers— something that competing department stores, such as Macy's and Gimbel's, could not do. In fact, Macy's and others filed numerous "fair trade" lawsuits against Korvette's to stop it from undercutting their prices^[1]. None succeeded. Arguably the lawsuits helped Korvette's by calling attention to prices so low that competitors thought them illegal.

Founder Eugene Ferkauf attributed his idea for membership cards and deep discounts to luggage wholesaler Charles Wolf^[1]. But where Charles Wolf made limited or even surreptitious use of it, Korvette's popularized it by instructing employees to distribute membership cards to any person entering any Korvette's.

[edit] Strip Malls and the Suburbs

While the first E.J. Korvette store was located on 46th street in Manhattan, its rapid growth in the 1950s was helped by its many stores in strip malls along arterial roads leading out of urban centers. This made E.J. Korvette ideally situated to meet the demands of the suburbs which grew in the United States during the that era.

First of modern type store was opened in 1954, a 90,000 square foot store, which for the first time carried apparel. (Discount Merchandiser July 1988) In 1956 Korvette's had 6 stores. By 1958 it had 12 stores. At its peak, it had 58 stores^[1].

Korvette's expanded into the Chicago area in the 1960s. It successfully challenged the local and state Sunday closing ordinances and laws. Once those barriers were broken, many other retailers opened on Sunday.

[edit] Decline and Closure

By the late 1970's, Korvette's started experincing financial problems and in 1979, started closing down their unprofitable stores. In 1980, they declared bankruptcy and on December 24, 1980 they closed all of their remaining 15 stores.

Korvette's decline and closure are variously attributed to inconsistent management[1], failure to focus on merchandise it knew (such as appliances), and ultimately attempting to compete directly with the department stores in areas such as fashion (when it had neither the expertise nor the right store atmosphere)^[2].

[edit] The Origin of the E.J. Korvette Name

According to Korvette's founder, Eugene Ferkauf, the name E.J. Korvette was coined as a combination of the initials of its founders (Eugene and Joe) and a re-spelling of the naval term, "Corvette." ^[3]. This claim, and the fact that the name pre-dates the Korean War by three years, directly contradict an urban legend that the name stood for Eight (or Eleven) Jewish Korean War Veterans.

[edit] Former locations

[edit] Connecticut

• Hartford
• Trumbull - Trumbull Shopping Park (now Westfield Trumbull) - (later G. Fox, then Filene's, now Macy's)

[edit] Illinois

• Elmhurst - Hwy. 83 @ St. Charles
• Matteson - Crawford Ave. @ Lincoln Hwy.
• Morton Grove - Waukegan Rd. @ Dempster
• North Riverside - Harlem @ Cermak
• Oak Lawn - 87th @ Cicero

[edit] Maryland

• Baltimore
  • Ritchie Hwy. (Glen Burnie?)
  • Northern Pkwy. @ Loch Raven Blvd.
• Bel Air - Harford Mall - (later Hochschild-Kohn's, then Hecht's, now Macy's)
• Catonsville - Catonsville Shopping Center, Baltimore National Pike (US 40) (later Caldor, now Kmart)
• Glen Burnie - Governor Plaza, MD Route 3 (Gov. Ritchie Highway) (later Ames, later became Syms, CompUSA, and Bally Total Fitness)
• Langley Park (originally Lansburgh's, then Korvette's, then Kmart, now other stores, including a Toys "R" Us which closed in 2007)
• Parkville - Perring Plaza Shopping Center, Perring Parkway and Joppa Road (became Ames, later became Burlington Coat Factory, Metro Food Market/Shoppers Food Warehouse, and Office Depot)
• Rockville - Mid-Pike Plaza, Rockville Pike at Montrose Rd. (now G Street Fabrics)

[edit] Michigan

• Madison Heights - 29101 John R. Rd. (now Kmart)
• Redford - Telegraph Road - (now Burlington Coat Factory and smaller stores)
• Roseville - Gratiot @ 12 Mile (now Roseville Towne Center -- Office Depot and Marshalls)
• Southgate - Fort Street near Pennsylvania Rd. - (building eventually torn down; Super K-Mart at same location since late 1990s)

[edit] Missouri

• St. Louis
  • S. Florissant Road in Cool Valley (now Schnucks)
  • Watson Rd. @ Lindbergh (now a strip mall)

[edit] New Jersey

• Ewing Twp. - North Olden Ave. at Princeton Ave. (later Laneco, now SuperG supermarket and office space ^[4])
• Moorestown (now Kmart)
• North Brunswick - Brunswick Shopping Center (later Caldor, then Ames; current status unknown)
• Paramus - Route 4, across from Bergen Mall (now Kohl's & Daffy's)
• Watchung - Blue Star Shopping Center
• Wayne - Wayne Towne Center ( originally S. Klein, now Fortunoff)
• West Orange - Korvette Shopping Plaza, Prospect and Eagle Rock Avenues (Later Bradlees, now Kmart)
• Woodbridge - US-1&9 at Route 35

[edit] New York

• Albany - Northway Mall (later Montgomery Ward; mall torn down)
• Bay Shore
• The Bronx - White Plains Rd. @ Story Ave.
• Brooklyn
  • Bay Parkway near Belt Parkway (became Caesar's Bay Bazaar in 1982, later Kmart, now Kohl's and Toys "R" Us)
  • Fulton St.
• Carle Place - Westbury Ave.
• Cedarhurst - Five Towns Shopping Center (now Bay Harbour Mall) (entire store gutted for Bay Harbour Mall, a small enclosed shopping mall anchored by Burlington Coat Factory, Service Merchandise, and Marshalls. The mall was "de-malled" in the early 2000's; the former enclosed portion has been replaced with Best Buy and an expansion of Burlington Coat Factory's space. Former Service Merchandise portion is now Bed Bath & Beyond)
• Commack - Veterans Memorial Hwy. (originally S. Klein, then E. J. Korvette. Later Gertz, then Stern's, now Macy's)
• Douglaston
• Flushing (now New York Health Insurance Plan - HIP Center)
• Hartsdale
• Hicksville Mid-Island Plaza (now Broadway Mall) (originally S. Klein, later E. J. Korvette. Ikea in general area)
• Lake Grove (later Gertz, then Stern's; current status unknown)
• Lawrence - (on site of former Bargain Town)
• Manhattan - Herald Square (flagship store) (became Herald Center in 1985)
• Massapequa - Westfield Sunrise (former Sunrise Mall) (later Abraham & Straus, then Stern's, then Macy's Clearance Center, now Wal-Mart)
• Nanuet - NY Route 59
• Port Chester - Boston Post Rd. (later Caldor, now Kohl's)
• Smithtown
• Staten Island
• Valley Stream - Green Acres Mall (former S. Klein, later Gertz, then Stern's, now Macy's Furniture Store)
• West Hempstead (later an indoor flea market called Shopper's Village, now National Wholesale Liquidators)
• West Islip - Sunrise Highway (now Bob's Store)

[edit] Pennsylvania

• Audubon
• Camp Hill - Camp Hill Mall (now Boscov's)
• King of Prussia - Plaza at King of Prussia (store space redeveloped in 1993 for mall expansion)
• Philadelphia - Roosevelt Boulevard and Welsh Road (now Marshalls and a closed Tower Records)
• Wyncote - Cedarbrook Mall (now Cedarbrook Plaza)
• Springfield - Marple Crossroads Shopping Center, (now Filene's)

[edit] Virginia

• Bailey's Crossroads - (now TJ Maxx and Burlington Coat Factory)
• Hampton - Coliseum Mall (later Montgomery Ward, now partially Burlington Coat Factory)
• Springfield - Springfield Mall (now mall space. Originally Lansburgh's)

[edit] References

[edit] External links

• Discount Retailers
• When Giants Stumble
• American National Business Hall of Fame: Retailers