BUSINESS, RETAIL - The Encyclopedia of Cleveland History
BUSINESS, RETAIL. The segment of the economy that sells directly to the consumer diverse goods such as food, clothing, furniture, appliances, medicines, cosmetics, building materials, and automobiles and supplies, has employed annually 13-16% of the Cleveland area's workers during the 20th century. Although this percentage has remained fairly constant over time, the local retail business itself has gone through major changes. Foremost among these have been the locations of retail establishments and their size, structure, and methods of operation. The competition for the consumer's dollar since the 1830s has led to new procedures in marketing and management, to larger stores offering low prices and greater selection, and to many concentrations of retail establishments spread throughout the suburbs in regional shopping malls and neighborhood shopping centers.
There was little specialization among Cleveland merchants in the first half of the 19th century. The earliest merchants opened small shops, trading with the Indians and the few settlers. Men such as Nathan Perry, Jr., JOEL SCRANTON†, PETER M. WEDDELL†, and Orlando Cutter were general merchants, serving as both importers and exporters and selling their goods both retail and wholesale. They purchased their supply of goods from eastern wholesalers and shipped grains and other western goods to eastern markets. In the 1810s and 1820s, merchants accepted in trade such items as pork, whiskey, corn, tallow, butter, and a "few barrels of good mercantile flour." Some offered "a liberal discount on Eastern cash." Newspaper advertising, extremely limited until the 1840s, announced new shipments, new stores, the terms of trade, and called in debts prior to a merchant's departure from the city. By the 1860s, local merchants had begun to specialize in retailing and began to establish large dry-goods stores, such as that of Hower & Higbee, opened in 1860. The railroad gave merchants more reliable access to eastern markets and cheaper newsprint expanded advertising, which gave the retailer greater access to his customers. Catchy phrases and bold claims appeared in ads as did illustrations of goods, bold print, and more white space to attract the reader's eye. By 1860 advertisers were beginning to publish prices of their goods and to advertise clearance sales. Another way in which retailers sought to attract customers was with the location and distinctiveness of the stores themselves. When Cleveland's retail business was centered on Superior St. west of PUBLIC SQUARE from 1815 until the 1830s, stores resembled the private dwellings they had taken over or shared with their proprietors. Expansion of the warehouse district forced retailers to move into the residential areas north from Superior along Ontario, Seneca (W. 3rd), Bank (W. 6th), and Water (W. 9th) streets. As the town and its businesses accumulated wealth and maturity, merchants built commercial blocks for businesses, along Superior and its side streets. By 1850 distinct commercial centers also had formed on the west side at the intersections of Pearl (W. 25th) with Detroit and Lorain Rds.
The emerging business district was further congested in the 1860s and 1870s as industry displaced businesses in the FLATS and forced expansion of the warehouse and wholesale district farther into areas inhabited by retailers. By 1878 EUCLID AVE.. near Public Square was lined with stores on both sides, pushing east while another shopping district was growing west from the railroad crossing at Willson (E. 55th) and Euclid. The convergence of streetcar lines at Public Square made it a prime business location by the 1880s.
The period 1860-1920 witnessed changes in business that laid the foundation for modern retailing and saw the development of a number of important local retail establishments. New technologies, such as the railroad and the telegraph, and improved administrative communication reduced the number of transactions involved in shipping, improved the flow of goods, enhanced the efficiency of operations, and thus lowered operating costs and prices. Along with large population increases, these developments made possible the rise of modern retailing by 1920. The growth of Cleveland's population from 43,417 in 1860 to 381,768 in 1900, and further to 796,841 in 1920 was a key factor in expanding the volume of retail sales and the number of retail establishments: the number of dry-goods stores went from 20 to 200 between 1860-1900 and to 504 in 1920; the number of grocers jumped from 240 to 1,125 to 2,107. As some families acquired wealth, a market was created for specialty stores, such as the KINNEY & LEVAN CO. in home furnishings, COWELL AND HUBBARD CO. in jewelry, and specialty grocers CHANDLER & RUDD CO.. As dry-goods stores established in the late 19th century added new product lines to their inventories, the department store began to develop. However, it did not come into full blossom locally until the leading retailers built new, palatial stores for themselves between 1900-15. Their impressive new buildings offered a wide variety of goods and catered to the expectations of their mostly female middle- and upper-class patrons. By 1915 the department stores that would dominate Cleveland retailing until the 1960s--stores such as WILLIAM TAYLOR SON & CO., FRIES & SCHUELE CO., BAILEY CO., MAY CO. OF CLEVELAND (see KAUFMANN'S, A DIVISION OF THE MAY DEPARTMENT STORES CO.), HIGBEE CO. (see DILLARD DEPARTMENT STORES, INC.), and HALLE BROTHERS CO.--were firmly entrenched as downtown landmarks to Cleveland's economic progress.
Emerging department stores took several measures to strengthen themselves financially and organizationally between, 1880-1920. As Alfred Chandler has pointed out, the life of the typical 19th-century business usually was only as long as its proprietor. About 1880-1910, retailers and manufacturers began to incorporate and to adopt hierarchical and self-perpetuating forms of management, allowing the company to outlive its founders. At the same time, these merchants formed the RETAIL MERCHANTS BOARD, INC. to promote business to their mutual benefit, to protect themselves against unscrupulous "itinerant merchants" and other unfair competition, and to guard against being cheated by both customers and employees. Like department stores elsewhere, Cleveland stores also developed an elaborate plan of internal management to improve the efficiency of their operations. While Cleveland's new department stores prided themselves on quality, integrity, and service, other merchants developed new policies that would systematically provide lower prices, enabling their establishments to compete more effectively. One such effort was the chain store, which began to appear in Cleveland in the 1870s but did not become a major part of local retailing until the 1920s. National chains such as the Great Atlantic & Pacific Tea Co., Grand Union, the S.S. Kresge Co., F.W. Woolworth, and the United Cigar Stores Co. entered the local market gradually and added more and larger stores in the 1920s. In 1929 chain stores accounted for 35% of sales in Cleveland.
Grocery and drug chains were the first to make significant inroads into their respective local markets. The Marshall Drug Co., founded in 1884 by Wentwork G. Marshall, was an early important drug chain which created a national controversy within the industry by introducing cut-rate prices in 1901. Other important local drug chains were the Standard Drug Co., formed in 1899 (see REVCO D.S., INC.), and Weinberger Drug Stores, which began in 1912 with a single store, took shape as a chain in 1928, and provided the foundation for GRAY DRUG STORES, INC. Development of these local chains and their later expansions into larger regional and national organizations were part of an ongoing quest for the benefits from economies of scale. Mergers, acquisitions, and cooperative buying and advertising agreements were frequent among local retailers after 1920.
The highly competitive local grocery business illustrates many of the general changes retailing has gone through in policies and operations. Prior to 1930, the number of grocery stores in the area grew steadily along with the population. But as national chains entered the local market, local grocers fought back by opening their own branches and developing their own chains, such as Kroger, the local Fisher Bros., and the national A&P, each of which operated about 300 stores locally. In all, Cleveland had 5,358 food stores in 1929, with 4,849 proprietors and 8,410 employees. Food sales accounted for 22% of all retail business in 1929 and generally have remained between 22-26% of, total retail sales since that time; in 1982, for example, food sales accounted for 23% of the county's retail sales and 26% of sales in the city. The food group historically has accounted for the largest percentage of retail sales in the area.
Although the percentage of retail food sales has remained stable, the consolidation of small neighborhood stores into much larger supermarkets sharply reduced the number of retail food stores but increased the average number of employees per store. The 5,358 food stores in the area in 1929 represented 43% of all retail stores. By 1982 the number of food stores had declined to 1,235, only 15% of the county's retail establishments. Several developments enabled the larger self-serve supermarkets to cut costs and lower prices. Increased use of the automobile and adoption of the cash-and-carry system helped eliminate deliveries; cash-and-carry also did away with the costs of extending credit. Self-service and checkout counters in the front of the store eliminated the necessity of personal service for each customer. Able to offer lower prices, the larger stores gave customers a much greater selection of items and brands than did the corner store. The supermarket concept was adopted by local grocers, who formed their own chains (see FISHER FOODS, INC., and FIRST NATIONAL SUPERMARKETS, INC. (FINAST)) and cooperative associations such as Foodtown (1948) and Stop-N-Shop (1961), both of which were creations of Julius "Julie" Kravitz, a leading grocery executive during the formative years of the local industry. The supermarket idea was elaborated into the "food warehouse" notion of the giant supermarket in the 1970s and 1980s.
As the supermarket developed in the 1940s and 1950s, its operational design proved attractive to other retailers, especially to the discount stores that became popular after World War II and developed into major forces in retailing in the next several decades. Discount stores applied the large-volume, high-turnover, low-markup strategy of retailing first to appliances and hardware and later to clothing, furniture, and other department-store items. Discounters ignored and broke some accepted rules of business, first by taking less of a markup in order to undersell their competition, and then by breaking the Sunday closing laws, quickly eroding adherence to that custom. The local pioneer discounter was Louis Weisberg, who in 1947 established an operation known first as Big Bear and then Giant Tiger. Weisberg's operation had grown to 15 stores in 1968, when he sold it to Gaylords Intl. Corp. of New York. Another early local discounter was Uncle Bill's, formed in 1955 by Sidney Axelrod. In 1961 Uncle Bill's became a complete discount department store by adding clothing and furniture to its offerings, and Axelrod sold his stores to the Cook Coffee Co. (see COOK UNITED, INC.). Although both Giant Tiger and Uncle Bill's suffered under the ownership of large, diversified corporations in, the 1970s, the development of discount stores and the movement of people into the suburbs seriously hurt the downtown department stores. After 1960, many of the prominent department stores were closed, and others were taken over by discount department-store chains.
Movement away from the central business district had been a gradual process. During the 1880s, 1890s, and early 1900s, smaller retail businesses serving the daily needs of customers for such items as groceries and meats moved into the residential districts. This process continued and accelerated as the 20th century progressed. Many neighborhood shopping centers also were built in emerging SUBURBS such as LAKEWOOD and CLEVELAND HEIGHTS. In 1918 Cleveland Hts. had its first planned neighborhood shopping center at Cedar-Fairmount; by 1927 Cleveland Hts. had 220 retail establishments, EAST CLEVELAND 423, and Lakewood 691. Together these close-in suburbs had 72% of the 1,848 retailers counted in a survey of 18 communities surrounding the Cleveland area. In 1935 food stores in the suburbs accounted for 40.8% of all suburban retail sales, the automobile group for 17.26%, and filling stations for 10.56%. Food and transportation thus accounted for two-thirds of all suburban retail sales in 1935. As the population of the suburbs grew in the 1950s and 1960s, a wider variety of retail businesses sprang up to service customers in the convenience of their own neighborhoods. The suburban retail industry grew to resemble that of the city in its diversity. By 1982 the food group (21.8%) and the automobile group (16.96%) still dominated the suburban retail market, but with much lower percentages compared to 1935; the general merchandise group was the 3rd-largest segment of suburban retail sales in 1982, with 15% of the market.
The suburban retail industry also came to resemble the city's retail industry in size and ultimately surpassed it in the mid-1960s. In 1929 Cleveland had 84% of the retail stores in the county and 87% of the county's retail business; by 1967 the city had 57% of the stores in the county but only 45% of the sales, and by 1987 only a third of the stores and less than a quarter of the business. While much of this decline is due to increased population in the suburbs and to the boom in suburban shopping mall construction, it also reflects the decline in the number of retail stores and in retail employment within the city. Between 1954-67, the number of retail establishments in Cleveland declined from 10,754 to 7,008; it dropped further to 2,952 stores with payrolls in 1987. During this same period, retail employment in the city declined from 63,225 in 1954 to 47,244 in 1967 and to 30,230 in 1982, rising slightly to 30,413 in 1987. In these same years, the county saw its number of stores shrink from 14,573 in 1954 to 12,403 in 1967 and to 8,755 with payrolls in 1987, yet employment increased from 82,130 in 1954 to 94,252 in 1967 and again, to 116,100 in 1987. Retailers clearly followed the area's population as it moved farther away from downtown, but they followed with varying degrees of enthusiasm.
Department stores were often reluctant to make the move, having heavy investments in their buildings, believing that downtown was still an important and accessible shopping district, and fearing that suburban branches would only compete with their downtown locations. Only at the end of the 1920s did department stores begin to move into important shopping districts that were still within the city limits. In 1928 Sears, Roebuck & Co., the large mail-order house whose declining rural customer base forced it to change its marketing strategy in order to remain strong, built 2 large stores in Cleveland, 1 on each side of the city. In 1929 Bailey's became the first downtown department store to establish a branch in the outer part of the city, opening a store in the Euclid-E. 105th shopping center and following it in 1930 with a store in Lakewood. In 1948 Halle's became the first major local department store to move into the suburbs, opening a branch store in SHAKER SQUARE.
An early shopping center, Shaker Square was one of the first attempts to meet the special needs of automobile-oriented suburban shoppers. Easily accessible by public transportation, it could also accommodate patrons who came by automobile, something for which many early neighborhood shopping centers had not planned. By 1940 the Real Property Inventory counted 257 "shopping centers" in the Cleveland area; these often were no more than a "strip" of retail businesses along a major thoroughfare or a collection of stores at an intersection. Provisions for automobile parking at such centers often were inadequate. In the 1950s, ideas to remedy this led to the development of the integrated shopping center such as SOUTHGATE SHOPPING CENTER: a group of storefronts built together, linked by a covered walkway, and served by 1 or more large parking lots. The design soon was modified by the introduction of "regional suburban shopping centers" containing 1 or more full-line department stores and a host of other stores; that concept in turn was altered by the enclosed, climate-controlled shopping mall, such as SEVERANCE TOWN CENTER. Later area shopping centers were elaborations on this idea, with RANDALL PARK MALL being the most elaborate locally and one of the world's largest malls at the time of its construction.
Shopping centers going up at a surprising rate in the 1950s and 1960s lured the major department stores out of downtown and into the suburbs. By Oct. 1956, according to the Real Property Inventory, Cuyahoga County had 26 modern or modernized shopping centers offering offstreet parking; 10 had been built since 1951, and 23 more were built in the next 11 years. Erected on large plots of vacant land, many planned shopping centers attracted other construction and development in housing,, offices, and businesses; developers such as the Glazer-Marotta Co., who specialized in shopping malls, thus played an important role in suburban growth. Between 1954-72 the number of retail stores in the suburbs increased by 3,079 (80.6%), creating 38,707 new jobs, a 204.7% increase. In addition to the large shopping malls, traditional retail business enterprises continue to exist--single-unit operations owned by 1 or only a few people, dealing in a single product line, and governed by market and price mechanisms, making them highly vulnerable to changes in the market and the economy. But most marketing techniques are variations on old themes using new products (e.g., manufacturers' outlets retailing computers) or adaptations to fill gaps in the marketplace (e.g., the rise of convenience food stores in the 1960s and drugstores carrying food items in the 1970s). By 1989 Greater Cleveland shoppers were becoming more affluent as the local economy shifted away from its industrial base and became more service-driven. In Cleveland, as in other major cities, customers were moving away from traditional department stores and toward specialty retailers and mass-merchandise warehouse clubs.
Last Modified: 10 Jul 1997 02:16:50 PM
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