Montgomery Ward

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Montgomery Ward
Former typePrivate
Original Incarnation, mail order and department store
Current Incarnation, online retailer
and catalog merchant
IndustryRetail
FateBankruptcy in 2000; Namesake Retailer Launched in 2004 after purchase of trademarks.
Founded1872 (as mail order company and later department store, defunct 2000)
2004 (as current online retailer)
DefunctJune 2001 (original company)
HeadquartersOriginal company in Chicago, Illinois, United States
2004 to 2008: Namesake company Monroe, Wisconsin, United States.
Key peopleOriginal company: 1872 founder, Aaron Montgomery Ward
namesake company: John Baumann, president of parent company Swiss Colony
ProductsClothing, footwear, bedding, furniture, jewelry, beauty products, appliances, housewares, tools, and electronics.
DivisionsWards Kids
Montgomery Ward Catalog
Websitehttp://www.wards.com
 
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Montgomery Ward
Former typePrivate
Original Incarnation, mail order and department store
Current Incarnation, online retailer
and catalog merchant
IndustryRetail
FateBankruptcy in 2000; Namesake Retailer Launched in 2004 after purchase of trademarks.
Founded1872 (as mail order company and later department store, defunct 2000)
2004 (as current online retailer)
DefunctJune 2001 (original company)
HeadquartersOriginal company in Chicago, Illinois, United States
2004 to 2008: Namesake company Monroe, Wisconsin, United States.
Key peopleOriginal company: 1872 founder, Aaron Montgomery Ward
namesake company: John Baumann, president of parent company Swiss Colony
ProductsClothing, footwear, bedding, furniture, jewelry, beauty products, appliances, housewares, tools, and electronics.
DivisionsWards Kids
Montgomery Ward Catalog
Websitehttp://www.wards.com

Montgomery Ward is 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 original name of the online retailer currently known as Wards.

Original Montgomery Ward (1872–2000)[edit]

Company origins[edit]

"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 offered no 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 had two partners and used $1,600 they had raised in capital. The first catalog in August 1872 consisted of an 8 by 12 in. single-sheet price list, showing 163 articles for sale with ordering instructions. Ward wrote the first catalog 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 attracted by the wide selection of items unavailable to them locally. Customers were also attracted by the innovative and unprecedented company policy of "satisfaction guaranteed or your money back", which Ward began using in 1875. Ward turned the copy writing over to department heads, but he continued poring over every detail in the catalog for accuracy.

Ward became widely popular among residents of Chicago, where he championed the causes of the common folk over the wealthy. He was notable for his successful fight to establish public parkland along Lake Michigan.

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, Roebuck and Co., and the two companies were to struggle for dominance for much of the 20th century. By 1904, the company had grown such that three million catalogs, weighing 4 pounds each, were mailed to customers.[3]

In 1908, the company opened a 1.25 million ft² (116,000 m²) building stretching along nearly 14 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. It 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, Oregon, and Oakland, California. 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
1992–1999 Montgomery Ward logo

Expansion into retail outlets[edit]

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. Avery cut staff and stores, changed lines, hired store rather than catalog managers, refurbished places, and started to turn a profit before the end of the 1930s.

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." Six million copies of the storybook were distributed in 1946. The song was popularized nationally by the actor and singer Gene Autry.

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

After World War II, 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 and was obsessive in his fear of another Great Depression following the latter war as it had the first. Nonetheless, for many years Wards was still the 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[edit]

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 the president 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] The president of Montgomery Ward 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]

Downfall[edit]

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 their boards 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." 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. 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, it purchased a small discount store chain, the Miami-based Jefferson Stores, Inc.[9] In 1976, the company was acquired by Mobil, which was flush with cash from the recent rise in oil prices. By 1980, Mobil noticed that the Montgomery Ward stores had been 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, Mobil quintupled the size of the operation, now called Jefferson Ward, to over 40 units, with plans 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, and who had no experience in dealing with some of the product categories they were now required to carry, not to mention their unfamiliarity with buying for northern markets. Almost immediately, Jefferson had turned from a small moneymaker into a good-sized loss operation.[10] The chain's 18-store Northern Division was sold to Bradlees, a division of Stop & Shop, in 1985. The remaining stores were closed.[11]

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 into boutique-like specialty stores, as these were drawing off business from department stores. In 1988, the company management undertook a successful $3.8 billion leveraged buyout, making Montgomery Ward a privately held company.

In 1987, it 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 Sony, Toshiba, Hitachi, Panasonic, JVC, and other major international brands. This strategy was led by V.P. Vic Sholis, who later became President of the Tandy Name Brand Retail Group (McDuff, VideoConcepts, and Incredible Universe). 1994 brought a 94% increase in revenues, largely due to Montgomery Ward's tremendously successful direct-marketing arms. For a short while Wards was also back in 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 were 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[edit]

In 1999 the logo was changed to say simply "Wards". The logo was used until the chain was liquidated in 2000.

By the 1990s, however, even its old rivals had begun to lose ground to low-price competition from Kmart, Wal-Mart, and especially Target, which stripped away even more of Montgomery Ward's old customer base. In 1997, it filed for Chapter 11 bankruptcy, emerging from bankruptcy court protection in August 1999 as a wholly owned subsidiary of GE Capital, 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, closed all the Lechmere stores, 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.[citation needed]

On December 28, 2000, the company, after lower-than-expected sales during the Christmas season, announced it was going out of business and would 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 bankruptcy liquidation in American history. Roger Goddu, Montgomery Ward's CEO, was offered the CEO position of JCPenney. Goddu declined on pressure from GE. One of the last stores to close was the Salem, Oregon location in which the head of the human resources division was located. All of Montgomery Ward was liquidated by the end of May 2001.

Termination of pension plan[edit]

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[edit]

Four of the six massive catalog distribution centers built by Montgomery Ward from 1921 to 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[edit]

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.[26]

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.[27]

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."[28]

In July 2008, DMSI was announced to be on the auction block, with an auction scheduled for August 2008. The Catalog retailer Swiss Colony purchased DMSI on 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.[29] 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.[30] 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.[31]

See also[edit]

References[edit]

Notes

  1. ^ Robertson, Patrick. Robertson's Book of Firsts: Who Did What For the First Time Bloomsbury USA, 2011.
  2. ^ "A. Montgomery Ward Park" on the Chicago Park District website
  3. ^ "About Us" on the Wards website
  4. ^ http://www.ci.chi.il.us/Landmarks/W/Wards.html
  5. ^ "National Register Information System". National Register of Historic Places. National Park Service. 2008-04-15. 
  6. ^ "Maryland Historical Trust". Montgomery Ward Warehouse and Retail Store, Baltimore City. Maryland Historical Trust. 2008-11-21. 
  7. ^ "Montgomery Ward Seizure Stirs Wide Criticism". New York Times. April 30, 1944. Retrieved 2010-11-22. "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. ^ History: FDR seizes control of Montgomery Ward
  9. ^ Jim Talley; Carl Herzog (12 July 1985). "Jefferson Ward Store Closed". Sun Sentinel. Retrieved 11 February 2013. 
  10. ^ Aldrich, Dave. "It's the Montgomery, Not the Ward". Pleasant Family Shopping. Retrieved 11 February 2013. 
  11. ^ Talley, Jim (1 November 1985). "Jefferson Closes Stores". Sun Sentinel. Retrieved 11 February 2013. 
  12. ^ Google maps street view
  13. ^ Montgomery Park web site
  14. ^ Google map street view
  15. ^ Photographs from Trinity River flood of May 17, 1949
  16. ^ Fort Worth Architecture web site
  17. ^ Montgomery Plaza web site
  18. ^ Google map street view
  19. ^ Oregon Historical Quarterly
  20. ^ Developer web site
  21. ^ Super Flea website
  22. ^ Larry Millett, Twin Cities Then and Now
  23. ^ Photo from the collection of the Oakland Public Library
  24. ^ League for Protection of Oakland's Architectural and Historic Resources v. Oakland
  25. ^ Cesar Chavez Education Center
  26. ^ Carpenter, Dave (2007-01-01). "Montgomery Ward brand name is back as an Internet and catalog retailer". Retrieved on 2007-01-10
  27. ^ "Montgomery Ward brand makes revival". Austin American-Statesman, (December 10, 2006)
  28. ^ Associated Press. "Montgomery Ward back in business, as online retailer". Retrieved on 2007-01-10[dead link]
  29. ^ "Swiss Colony Acquires DMSI"
  30. ^ United Press International (UPI), "Montgomery Ward catalog to return" Retrieved January 14, 2009
  31. ^ Wards website

Further reading[edit]

External links[edit]