Montgomery Ward

Montgomery Ward
Private –
Original incarnation, mail order and department store
Current incarnation, online retailer
and catalog merchant
Industry Retail
Fate Bankruptcy in 2000; namesake retailer launched in 2004 after purchase of trademarks
Founded 1872 (1872) (as mail order company and later department store, defunct 2000)
2004 (as current online retailer)
Defunct June 2001 (original company)
Headquarters Original company in Chicago, Illinois, United States
2004 to 2008: namesake company Monroe, Wisconsin, United States
Key people
 Original company: 1872 founder, Aaron Montgomery Ward
namesake company: John Baumann, president of parent company Swiss Colony
Products Clothing, footwear, bedding, furniture, jewelry, beauty products, appliances, housewares, tools, and electronics.
Divisions Riverside
Electric Avenue
Wards Kids
Montgomery Ward Catalog
Slogan You Can't Shop Smarter Than Wards
Website www.wards.com

Montgomery Ward was the name of two historically distinct American retail enterprises. It can refer either to the defunct mail order and department store retailer, which operated between 1872 and 2000, or to the current catalog and online retailer also known as Wards.

Original Montgomery Ward (1872–2000)

Company origins

"Progress Lighting the Way for Commerce", designed for Montgomery Ward by sculptor J. Massey Rhind, appeared as a medallion on many of their stores

Montgomery Ward was founded by Aaron Montgomery Ward in 1872. Ward had conceived of the idea of a dry goods mail-order business in Chicago, Illinois, after several years of working as a traveling salesman among rural customers. He observed that rural customers often wanted "city" goods but their only access to them was through rural retailers who had little competition and did not offer any guarantee of quality. Ward also believed that by eliminating intermediaries, he could cut costs and make a wide variety of goods available to rural customers, who could purchase goods by mail and pick them up at the nearest train station.

After several false starts, including the destruction of his first inventory by the Great Chicago Fire, Ward started his business at his first office, either in a single room at 825 North Clark Street,[1] or in a loft above a livery stable on Kinzie Street between Rush and State Streets.[2] He and two partners used $1,600 they had raised in capital and issued their first catalog in August 1872 which consisted of an 8 in × 12 in (20 cm × 30 cm) single-sheet price list, listing 163 items for sale with ordering instructions for which Ward had written the copy. His two partners left the following year, but he continued the struggling business and was joined by his future brother-in-law George Robinson Thorne.

In the first few years, the business was not well received by rural retailers. Considering Ward a threat, they sometimes publicly burned his catalog. Despite the opposition, however, the business grew at a fast pace over the next several decades, fueled by demand primarily from rural customers who were inspired by the wide selection of items that were unavailable to them locally. Customers were also inspired by the innovative and unprecedented company policy of "satisfaction guaranteed or your money back", which Ward began in 1875. Ward turned the copy writing over to department heads, but he continued poring over every detail in the catalog for accuracy.

In 1883, the company's catalog, which became popularly known as the "Wish Book", had grown to 240 pages and 10,000 items. In 1896, Wards acquired its first serious competition in the mail order business, when Richard Warren Sears introduced his first general catalog. In 1900, Wards had total sales of $8.7 million, compared to $10 million for Sears, and both companies would struggle for dominance during much of the 20th century. By 1904, the company had expanded as such that it mailed three million catalogs, weighing 4 lb (1.8 kg) each, to customers.[3]

In 1908, the company opened a 1.25 million ft² (116,000 m²) building stretching along nearly one-quarter mile of the Chicago River, north of downtown Chicago. The building, known as the Montgomery Ward & Co. Catalog House, served as the company headquarters until 1974, when the offices moved across the street to a new tower designed by Minoru Yamasaki. The catalog house was declared a National Historic Landmark in 1978 and a Chicago historic landmark in May 2000.[4] In the decades before 1930, Montgomery Ward built a network of large distributions centers across the country in Baltimore, Fort Worth, Kansas City, St. Paul, Portland, and Oakland. In most cases, these reinforced concrete structures were the largest industrial structures in their respective locations. The Baltimore Montgomery Ward Warehouse and Retail Store was added to the National Register of Historic Places in 2000.[5][6]

1968–1982 Montgomery Ward logo
1995–1997 Montgomery Ward logo

Expansion into retail outlets

Ward died in 1913, after 41 years running the catalog business. The company president, William C. Thorne (eldest son of the co-founder) died in 1917, and was succeeded by Robert J. Thorne. Robert Thorne retired in 1920 due to ill health.

In 1926, the company broke with its mail-order-only tradition when it opened its first retail outlet store in Plymouth, Indiana. It continued to operate its catalog business while pursuing an aggressive campaign to build retail outlets in the late-1920s. In 1928, two years after opening its first outlet, it had opened 244 stores. By 1929, it had more than doubled its number of outlets to 531. Its flagship retail store in Chicago was located on Michigan Avenue between Madison and Washington streets.

In 1930, the company declined a merger offer from its rival chain Sears. Losing money during the Great Depression, the company alarmed its major investors, including J. P. Morgan. In 1931, Morgan hired Sewell Avery as president who cut staff levels and stores, changed lines, hired store rather than catalog managers and refurbished stores. These actions caused the company to turn profitable before the end of the 1930s.

Wards was very successful in its retail business. "Green awning" stores dotted hundreds of small towns across the country. Larger stores were built in the major cities. By the end of the 1930s Montgomery Ward had become the country's largest retailer. It was this period of growth and prosperity that earned its president, Sewell Avery, an unchallenged position as Chief Executive Officer.

In 1939, as part of a Christmas promotional campaign, staff copywriter Robert L. May created the character and illustrated poem of "Rudolph, the Red-Nosed Reindeer." The store distributed six-million copies of the storybook in 1946 and actor and singer Gene Autry popularized the song nationally.

Vacant Montgomery Ward store, Regency Mall, Augusta, GA
Vacant Montgomery Ward store, Huntington Center, Huntington Beach, CA, demolished
"Electric Avenue" logo on closed store in Panorama City, California (2010)

After World War II, Sewell Avery believed the country would fall back into a recession or even a depression. He decided to not open any new stores. In fact he would not even permit the expenditure of paint to freshen the stores. He wanted to bank the profits Wards was making so that he could have the liquidity when the recession or depression hit. Then he would buy up his retail competition. Without new stores or any investment back into the business, Montgomery Ward declined in sales volume compared to Sears, and many people have blamed the conservative decisions of its president, Sewell Avery. Avery seemed to not understand the changing economy of the postwar years. As new shopping centers were built after the war, it was Sears that got the best locations and Wards was shut out of any opportunity to expand. Nonetheless, for many years Wards was still the nation's third-largest department store chain.

In 1946, the Grolier Club, a society of bibliophiles in New York City, exhibited the Wards catalog alongside Webster's Dictionary as one of 100 American books chosen for their influence on life and culture of the people. The brand name of the store became embedded in the popular American consciousness and was often called by the nickname Monkey Ward, both affectionately and derisively.

Government seizure

In April 1944, four months into a nationwide strike by the company’s 12,000 workers, U.S. Army troops seized the Chicago offices of Montgomery Ward & Company because Avery refused to settle the strike, as requested by the Roosevelt administration because of its adverse effect on the delivery of needed goods in wartime.[7] Avery had refused to comply with a War Labor Board order to recognize the unions and institute the terms of a collective bargaining agreement. Eight months later, with Montgomery Ward continuing to refuse to recognize the unions, President Roosevelt issued an Executive Order seizing all of Montgomery Ward’s property nationwide, citing the War Labor Disputes Act as well as his power under the Constitution as Commander in Chief. In 1945, Truman ended the seizure and the Supreme Court ended the pending appeal as moot.[8]

Decline

In 1955, investor Louis Wolfson waged a high-profile proxy fight to obtain control of the board of Montgomery Ward. The new board forced the resignation of Avery. This fight led to a state court decision that Illinois corporations are not entitled to stagger election of their board members under that state's laws, as well as to tax litigation over whether the costs of a proxy fight are an "ordinary and necessary business expense."[9] In time, it helped inspire new Securities and Exchange Commission rules concerning proxies.

Meanwhile, throughout the 1950s, the company was slow to respond to the general movement of the American middle class to suburbia. While its former rivals Sears, JCPenney, Macy's, Gimbels, and Dillard's established new anchor outlets in the growing number of suburban shopping malls, Avery and succeeding top executives had been reluctant to pursue such expansion. They stuck to their downtown and main street stores until the company had lost too much market share to compete with its rivals. After Avery's departure in 1955 it took two years before the first new store since the 1930s was opened in 1957. Wards tried to become more aggressive with store opening but it was too late. Competition had already taken the best locations. As the existing stores looked worn and disheveled, often malls would not entertain allowing Wards to build there. Its catalog business had begun to slip by the 1960s. In 1968, it merged with Container Corporation of America to become Marcor Inc.

During the 1970s, the company continued to flounder. In 1973, its 101st year in business, it purchased a small discount store chain, the Miami-based Jefferson Stores, Inc. It renamed the stores Jefferson Ward.[10] In 1976 Mobil, flush with cash from the recent rise in oil prices, acquired Montgomery Ward. By 1980, Mobil realized that the Montgomery Ward stores were doing poorly in comparison to the Jefferson stores, and decided that high quality discount units, along the lines of Dayton Hudson Company's Target stores, would be the retailer's future. Within 18 months, management quintupled the size of the operation, now called Jefferson Ward, to more than 40 units and planned to convert one-third of Montgomery Ward's existing stores to the Jefferson Ward model. The burden of servicing the new stores fell to the tiny Jefferson staff, who were overwhelmed by the increased store count, had no experience in dealing with some of the product lines they now carried, and were unfamiliar with buying for northern markets. Almost immediately, Jefferson had turned from a small moneymaker into a large drain on profits.[11] The company sold the chain's 18-store Northern Division to Bradlees, a division of Stop & Shop, in 1985. The remaining stores closed.[12]

In 1985, the company closed its catalog business after 113 years and began an aggressive policy of renovating its remaining stores. It restructured many of the store layouts in the downtown areas of larger cities and affluent neighborhoods into boutique-like specialty stores, as these were drawing business from traditional department stores. In 1988, the company management undertook a successful $3.8 billion leveraged buyout, making Montgomery Ward a privately held company.

In 1987, the company began a push into consumer electronics, using the "Electric Avenue" name. Montgomery Ward greatly expanded its electronics presence by shifting from a predominantly private label mix to an assortment dominated by major brands such as Sony, Toshiba, Hitachi, Panasonic, JVC and others. Vice President Vic Sholis, later President of the Tandy Name Brand Retail Group (McDuff, VideoConcepts, and Incredible Universe), led this strategy. In 1994, revenues increased 94% largely due to Montgomery Ward's tremendously successful direct-marketing arms. For a short period, the company reentered the mail-order business, through "Montgomery Ward Direct", a mail order business licensed to the catalog giant Fingerhut. But by the mid-1990s, sales margins eroded in the competitive electronics and appliance hardlines, which traditionally were Montgomery Ward's strongest lines.

In 1994, Wards acquired the now-defunct New England retail chain Lechmere.

Bankruptcy, restructuring, and liquidation

In 1997, the logo was changed to simply "Wards" which was used until the chain liquidated in 2000.

By the 1990s, however, even its rivals began to lose ground to low-price competition from Kmart, Wal-Mart, and especially Target, which eroded even more of Montgomery Ward's traditional customer base. In 1997, it filed for Chapter 11 bankruptcy, emerging from protection by the United States Bankruptcy Court for the Northern District of Illinois in August 1999 as a wholly owned subsidiary of GE Capital, which was by then its largest shareholder. As part of a last-ditch effort to remain competitive, the company closed 250 retail locations in 30 U.S. states (including all the Lechmere stores),[13] abandoned the specialty store strategy, renamed and rebranded the chain as simply Wards (although unrelated, Wards was the original name for the now-defunct Circuit City), and spent millions of dollars to renovate its remaining outlets to be flashier and more consumer-friendly. But GE reneged on promises of further financial support of Montgomery Ward's restructuring plans.[14]

On December 28, 2000, the company, after lower-than-expected sales during the Christmas season, announced it would cease operating, close its remaining 250 retail outlets, and lay-off its 37,000 employees. All the stores closed within weeks of the announcement. The subsequent liquidation was at the time the largest retail Chapter 7 bankruptcy liquidation in American history (this was surpassed by Circuit City's liquidation eight years later). Roger Goddu, Montgomery Ward's CEO, received an offer from JCPenney to become CEO, but he declined under pressure from GE. One of the last stores to close was the Salem, Oregon location in which the human resources division was located. All of Montgomery Ward was liquidated by the end of May 2001, ending a 130-year enterprise.

Termination of pension plan

In 1999, Montgomery Ward completed a standard termination of its $1.1 billion employee pension plan (Wards Retirement Plan WRP and Retired/Terminated Associate Plan RTAP), which at that time had an alleged estimated surplus of $270 million. The termination of the pension plan included 30,000 Wards retirees and 22,000 active employees who were employed by Wards in 1999. According to tax rules at that time (to avoid paying a 50% federal excise tax on the plan's termination), Wards then placed 25% of the plan's surplus into a new replacement pension plan, and paid federal tax of just 20% on the balance of the surplus. The final result: the estimated remaining $25 to $50 million of the employee pension plan surplus went to Wards free of income taxes, because the company, which was in Chapter 11 bankruptcy proceedings, had huge operating losses. In reality, Wards received an alleged estimated $25 to $50 million for ending the employee pension plan and avoided paying hundreds of thousands in yearly pension premiums to the Pension Benefit Guarantee Corporation. Employees and retirees vested in the pension plan were given a choice of receiving an annuity from an insurance company or a lump sum payment.

Distribution centers

Four of the six massive catalog distribution centers Montgomery Ward built between 1921 and 1929 remain. Three have been subject to renovations for adaptive reuse and the buildings are perhaps the most tangible legacy of Montgomery Ward. Two others have been demolished for various types of redevelopment.

As online retailer

At its height, the original Montgomery Ward was one of the largest retailers in the United States. After its demise, the familiarity of its brand meant its name, corporate logo, and advertising were still considered valuable intangible assets. In 2004, catalog marketer Direct Marketing Services Inc. (DMSI), an Iowa-based direct marketing company, purchased much of the intellectual property assets of the former Wards, including the "Montgomery Ward" and "Wards" trademarks, for an undisclosed amount of money.[30]

DMSI applied the brand to a new online and catalog-based retailing operation, with no physical stores, headquartered in Cedar Rapids, Iowa. DMSI then began operating under the Montgomery Ward branding and managed to get it up and running in three months. The new firm began operations in June 2004, selling essentially the same categories of products as the former brand, but as a new, smaller catalog.[30]

The DMSI version of Montgomery Ward was not the same company as the original. The company did not honor obligations of the previous company, such as gift-cards and items sold with a lifetime guarantee. David Milgrom, then president of the firm, said in an interview with the Associated Press: "We're rebuilding the brand, and we want to do it right."

In July 2008, DMSI announced it was on the auction block, with sale scheduled for the following month. Catalog retailer Swiss Colony purchased DMSI August 5, 2008. Swiss Colony – which changed its name to Colony Brands Inc. on June 1, 2010 – announced it would keep the Montgomery Ward catalog division open. The Website launched September 10, 2008, with new catalogs mailing in February 2009.[31] A month before the catalogs' launch, Swiss Colony President John Baumann told United Press International the retailer might also resurrect Montgomery Ward's Signature and Powr-Kraft store brands.[32] To augment its vast selection, Montgomery Ward started promoting several exclusive new brands in July 2012 in its Early Fall 2012 catalog and on its website– Devonshire Collection, Apothecarie Collection and Elysian Forest Collection furniture, Chef Tested kitchen products, Comfort Creek towels and sheets, Freshica shoes, Sleep Connection bedding and Color Connection window treatments.[33]

See also

References

Notes

  1. ↑ Robertson, Patrick (8 November 2011). Robertson's Book of Firsts: Who Did What For the First Time. New York City: Bloomsbury Publishing. ISBN 978-1596915794.
  2. ↑ "A. Montgomery Ward Park". Chicago Park District. Retrieved 2014-05-20.
  3. ↑ "About Us". Montgomery Ward. Retrieved 2014-05-20.
  4. ↑ "Montgomery Ward & Co. Catalog House". City of Chicago. Retrieved 2014-05-20.
  5. ↑ Staff (2008-04-15). "National Register Information System". National Register of Historic Places. National Park Service.
  6. ↑ "Montgomery Ward Warehouse and Retail Store". Maryland Historical Trust. Retrieved 2014-05-20.
  7. ↑ Horne, Louther (30 April 1944). "Montgomery Ward Seizure Stirs Wide Criticism". The New York Times. Retrieved 2014-05-20. (subscription required (help)). The seizure by troops on Wednesday of the Chicago units of Montgomery Ward Co., second largest of the country's merchandising corporations, has raised a Central West storm of criticism of President Franklin D. Roosevelt's action among business and industrial leaders and the usual Republican denouncers of the national Administration.
  8. ↑ "This Day in History - December 27, 1944: FDR seizes control of Montgomery Ward". History Channel. Retrieved 2014-05-20.
  9. ↑ Emerson, Frank D. (1 January 1956). "Congressional Investigation of Proxy Regulation: A Case Study of Committee Exploratory Methods and Techniques". Villanova Law Review. Villanova University. Retrieved 2014-05-20.
  10. ↑ Talley, Jim; Herzog, Carl (12 July 1985). "Jefferson Ward Store Closed". Sun-Sentinel. Retrieved 2014-05-20.
  11. ↑ Aldrich, Dave. "It's the Montgomery, Not the Ward". Pleasant Family Shopping. Retrieved 2014-05-20.
  12. ↑ Talley, Jim (1 November 1985). "Jefferson Closes Stores". Sun Sentinel. Retrieved 11 February 2013.
  13. ↑ https://www.youtube.com/watch?v=eL4rndCvQzo
  14. ↑ "Montgomery Ward to close doors". The Cincinnati Enquirer. 29 December 2000. Retrieved 2014-05-20.
  15. ↑ "1800 Washington Blvd, Baltimore, MD-street view". Google maps. Retrieved 2014-05-20.
  16. ↑ "Montgomery Park ushers in a new era of entrepreneurial spirit". Montgomery Park. Retrieved 2014-05-20.
  17. ↑ Staff (2010-07-09). "National Register Information System". National Register of Historic Places. National Park Service.
  18. ↑ "W 7th & Carroll Street, Ft. Worth, TX- Street view". Google maps. Retrieved 2014-05-20.
  19. ↑ "Trinity River flood of May 17, 1949 covered most of near west side". Fort Worth Architecture. Retrieved 2014-05-20.
  20. ↑ "Montgomery Ward Retail Store & Warehouse". Fort Worth Architecture. Retrieved 2014-05-20.
  21. ↑ "About Montgomery Plaza: Now". Montgomery Plaza. Retrieved 2014-05-20.
  22. ↑ "NW Vaughn St & NW 27th Ave, Portland, OR-street view". Google Maps. Retrieved 2014-05-20.
  23. ↑ Oregon Historical Quarterly Archived December 27, 2007, at the Wayback Machine.
  24. ↑ "Projects: Montgomery Park". Naito Development. Retrieved 2014-05-20.
  25. ↑ "Our Location". Super Flea. Retrieved 2014-05-20.
  26. ↑ Millett, Larry (15 September 1996). Twin Cities Then and Now. Minnesota Historical Society Press. ISBN 978-0873513272. Retrieved 2014-05-20.
  27. ↑ "Montgomery Ward Company". Oakland Public Library. Retrieved 2014-05-20.
  28. ↑ League for Protection of Oakland's Architectural and Historic Resources v. Oakland, 52 Cal.App.4th 896 A074348 (10 February 1997).
  29. ↑ "Cesar Chavez Education Center". Collaborative for High Performance Schools. Retrieved 2014-05-20.
  30. 1 2 Carpenter, Dave (10 December 2006). "Revival on Internet puts Montgomery Ward back in business". Seattle Post-Intelligencer. Retrieved 2014-05-20.
  31. ↑ Tierney, Jim (8 August 2008). "Swiss Colony Acquires DMSI". Multichannel Merchant. Retrieved 2014-05-20.
  32. ↑ Harrington, JGrry (14 January 2009). "Montgomery Ward catalog to return". United Press International. Retrieved 2014-05-20.
  33. ↑ "Montgomery Ward". Retrieved 2014-05-20.

Further reading

External links

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