NRF Turns 100
The lead story in this historical overview of the industry is adapted from an article originally published in the January 1986 edition of STORES to commemorate the 75th anniversary of the National Retail Merchants Association. Its author, longtime STORES contributor David P. Schulz, has updated it to mark NRF’s 100th anniversary, celebrated last month at Retail’s BIG Show.
Also included are an industry timeline, brief histories of the founding and charter members of what was then the National Retail Dry Goods Association and a look back, through the pages of STORES, at how issues impacting the industry have — and haven't — changed over the years.
Special thanks to DSHistory for providing many of the vintage store images.
The year is 1911. Patrician President William Howard Taft is feuding with his predecessor, Rough ‘n’ Ready Teddy Roosevelt. General Motors introduces the electric self-starter for automobiles, Willis Carrier invents the air conditioner and Irving Berlin has his first big hit with “Alexander’s Ragtime Band.”
Improved working conditions and factory safety receive vigorous legislative attention in the aftermath of the Triangle Shirtwaist Factory fire that killed 146, most of them young women. Europe is sparking with friction as the Germans and French engage in saber-rattling and gunboat diplomacy over African territories, while Italy and Turkey get into a shooting confrontation that ends with Italy’s annexation of Tripoli.
Sun Yat-sen establishes the Republic of China, and Marie Curie receives the Nobel Prize in chemistry for her discovery of radium and polonium. The big news in the newspapers, though, is that Norwegian explorer Roald Amundsen is the first to reach the South Pole.
Into this world was born a trade association for the retailing industry, with Andrew M. Cooper, president of Howland Dry Goods Co. of Bridgeport, Conn., one of the driving forces.
However appropriate, the name of the group — National Retail Dry Goods Association – already reflected more on the industry’s past than its future. Even as the merchants were banding together, the nation was altering the way it put clothes on its back, changing from home-produced or custom-shop apparel to factory-made goods. Yard goods and patterns remained an important part of department stores for many years to come, but ready-to-wear was moving into a position of dominance.
As an industry, however, retailing was under siege. Following years of unfettered growth and expansion fueled by entrepreneurial spirit and the push westward through North America, merchants were lumped together with robber barons of the coal fields and railroad trusts. In an age of muckraking writers like Ida Tarbell and Upton Sinclair, business was condemned for many abuses, not the least of which was the presumed exploitation of employees, particularly female workers who were portrayed as being forced to turn to crime and vice to supplement meager wages.
Politically, retailers were somewhat on the defensive, but in the stores, business was booming. Merchandise was jam-packed on high-back fixtures and every available ledge, all sporting mahogany finishes amidst the plush green carpeting that was almost ubiquitous in finer retail establishments. Floor plans, where they existed at all, looked like nothing so much as a crazy quilt pattern. In an era of carbon and tungsten filament lighting, goods were sold with the tagline “This will look so much better in better light,” although demanding customers preferred to take the garment outside prior to purchase in order to see for themselves.
Upscale department stores were going through a phase of displaying women’s ready-to-wear fashions on headless wax figures, soon to become known by their French appellation: mannequin.
There was only one unanimous shibboleth in fashion and it, too, was French. The mail order catalogs of Sears, Roebuck, J.C. Penney and Montgomery Ward could fill the needs of working America, but the clientele of the finer department stores required le dernier cri, a phrase which quickly devolved into a cliche and was stricken, though not fatally, by the Great War.
As the United States initially watched from the sidelines, World War I’s most significant impact on retailing was the fuel restrictions which closed stores down on specific days. Following the sinking of the Lusitania and the U.S. entry into the war, stores were stripped of much of their work force as young men rushed to join the fight to “make the world safe for democracy.”
In many ways, a greater crisis arose following the war, when prices on consumer goods soared and retailers were forced to battle charges of profiteering, accusations that merchants were somehow responsible for prices spiraling upward. At the request of President Woodrow Wilson, the Justice Department investigated the charges and — with the NRDGA playing a major part — retailers voluntarily held margins down on low-cost merchandise. General inflation continued, however, and stores were helpless in holding the line on their own.
The Justice Department had several retailers arrested for profiteering in what was more of a publicity stunt for the government’s position than a legitimate legal maneuver, since the arrests were based on a wartime law against hoarding essential materials. With Charles Evans Hughes arguing for the retailers and their trade association, the merchants were exonerated when the Supreme Court declared the law unconstitutional and the arrests invalid. The question of profiteering – and the inflation that inspired it – was resolved by a disastrous price break in the early 1920s which ushered in a recession of several months duration.
One of retailing’s responses to the whole incident was the issuance of the first Harvard Report, forerunner of the Financial and Operating Results. The foundation had been laid back in 1916 when an NRDGA committee chaired by Jay Iglauer of Halle Brothers, Cleveland, developed the standard classification of accounts for retailing, the first step in the standardization of retail reporting.
Throughout the war years and their immediate aftermath — until the ’20s really got roaring — there was a seriousness about America that had a profound effect upon retailing. Minimum wage laws and shorter work weeks were being legislated state by state, many of which had already banned or restricted the sale of alcoholic beverages. Textile workers at mills, and their counterparts in urban garment factories, were striking for wage concessions, improved working conditions and union recognition. The Federal Trade Commission had been established, in part, to maintain competition in commerce and to fight monopolies.
Retailers were changing the face they presented to the public. Though there was the occasional monument like the 57-story Woolworth building in lower Manhattan, merchants were abandoning the Greek and Roman designs of the past and were building utilitarian structures that emphasized eye-level show windows and minimized the architectural gingerbread above.
Prohibition had come with the 18th Amendment and the bootleggers weren’t far behind, supplying much of the roar in the Roaring Twenties. Bobbed hair, which female factory workers had adopted during the war as a safety measure, continued to be popular. The zipper had been gaining favor since the war years and continued to grow in popularity.
Another product of modern technology was synthetic textile fibers. Usually referred to as artificial silk or “art silk,” the textiles came under FTC scrutiny, and producers themselves were worried that one of their number might try to appropriate the term art silk as a trade name. Amidst the confusion, NRDGA emerged with ownership of the trademark for art silk’s new designation: rayon.
What designers were doing with rayon and the traditional natural fabrics included simple, youthfully feminine clothes inspired by a young French designer named Gabrielle Chanel. At the other end of the scale, the 1920s was an era where dresses with a nod toward fashion and style could be purchased by consumers for $16.95 and manufacturers with the lucky hunch became ready-to-wear kingpins selling a million or more dresses in a single season.
The giddiness that seemed to propel business during the decade came to a thudding halt on October 29, 1929. Black Tuesday, as it would become known, was not so much a day of infamy as one of foreboding, signaling the end of a prosperous boom era when land speculators began developing suburban areas and Sunbelt vacation spots; when decent folk could wink at violations of the Volstead Act; and when consumers were being promised a car in every garage, a chicken in every pot and a closetful of clothes for every occasion.
Antidote to ‘dreary reality’
With millions out of work and families forced into the streets begging for food and clothing, it was easy to make retailers — the essential middlemen in the nation’s distribution system — the fall guys. Within a year of Black Tuesday, there were critics carping that retail prices had not come down proportionately to the drop in wholesale and commodity prices.
Once President Franklin Roosevelt assumed office in 1933, he acted precipitously to remedy a financial crisis that had been deepening for nearly four years. One of his first moves was to ram the National Industrial Recovery Act (NIRA) through Congress. And one of the first retailers to raise his voice in protest was Percy S. Straus of R.H. Macy & Co., who complained that retailers were in no way protected from a confusion of codes covering several areas of vested interest.
There was nothing in retailers’ experience, either individually or collectively through their association, to prepare them for the NIRA. Faced with hundreds of industry codes written by manufacturer groups, retailers struck back. The Retailers Protective Committee, under the direction of Walter N. Rothschild of Abraham & Straus, was in Washington battling against manufacturers’ attempts to unilaterally control prices, terms, discounts and other conditions of sale.
A Retail Code that imposed minimum wages and hours, uniform store hours, minimum resale prices and a list of restrictions on negotiations with vendors was eventually hammered out. Even before the Supreme Court got around to declaring the NIRA unconstitutional, however, much of the Retail Code was roundly ignored by all concerned.
Inspired by NRDGA, retailing’s first strategy to combat the Depression was to try to convince consumers to buy value and quality rather than price. At the same time, merchants pressured manufacturers to put more serviceability into their products.
This is not to imply, however, that retailers were spending more time in courts and legislative chambers than in their stores. Just as Hollywood, epitomized by Busby Berkeley’s extravagant musicals, was providing escapist films for the public, so were stores contributing fantasy of a different sort.
The cotton evening dress for summer, as introduced by Elizabeth Hawes, quickly became a perennial. Nude fashions swept the country as women bared shoulders and backs in formal attire and midriffs in shorts-and-tops warm weather ensembles. Cotton fashion received a real boost with the introduction of the Sanforizing process to help minimize shrinkage.
Cosmetics moved into an important place in department store retailing during this era. Makeup had moved from “painted lady” stigma to drug store specialty item to fashion accessory, encompassing entire lines of “treatments.” Menswear, too, had undergone a transformation. Where a man and his tailor once meant patronizing a small business, years of consumer-oriented advertising by manufacturers had induced men to select clothing from a rack. Department stores capitalized on this trend in the ’30s at a time when menswear was getting lighter and sportier. Topcoats replaced heavy ulsters, year-round clothing used lighter weight fabrics and summer fabrics and sportswear played an increasingly larger role in wardrobes.
The department store settings in which these goods were sold also changed with the times. The ubiquitous mahogany fixtures and green carpeting of yesteryear were replaced by exotic woods in a variety of shades; marble floors were de rigeur on main floors, with soft hues introduced in carpeted departments. New structures were windowless above ground level, the better to control the balky and bulky air conditioning installed to salvage something of the July and August sales period. Show windows were becoming narrower and shallower, with the sales floor less than 18 inches from the sidewalk.
Retailers forged a new spirit of cooperation during this period, particularly through the NRDGA. They even took to the airwaves in a series of 30-minute broadcasts on NBC radio grouped under the title “Retailing and Recovery.”
As the decade drew to a close, far-reaching government actions included the 1938 Fair Labor Standards Act, which enacted a minimum wage of 25 cents an hour, shortened the work week to 44 hours and banned child labor in industries engaged in interstate trade.
Pervasive price controls
Patriotism was running high as militarism engulfed large chunks of Europe and the Far East. The cooperative spirit fostered during the days of the New Deal would serve retailers well in the years ahead, particularly when the massive defense effort during World War II precipitated the implementation of wage and price controls.
Wartime controls were nothing new, but during WW II these restrictions were much more stringent and lasted longer, a combination of voluntary actions and federally imposed measures designed to aid the war effort. In promising to do everything in their power to fight inflation and keep prices down, some 10,000 buyers, representing retail organizations all across the country, signed a six-point Buyers Pledge to resist price increases. Store personnel everywhere encouraged customers to “take your change in war stamps.”
Rationing’s biggest impact was on food products, but by 1942 shoes were also subject to it. The war effort stripped the stores of commodities, limiting styles and selections. Women who had been excited by the introduction of nylon hosiery before the war had to content themselves with older, less essential materials. Fashion was out of fashion as defense priorities shortened skirts, dispensed with pockets in ladies’ apparel, eliminated rubber for foundation garments and lopped the cuffs off men’s pants. All the colors of the rainbow were no longer available — especially the olives and earth tones required by the military.
World War II was a great struggle for everyone, but stores were assaulted on two fronts: They battled manufacturers subject to irregularities of wartime commodity supplies and the volatile price fluctuations that accompanied them, while at the same time fending off complaints of price gouging and profiteering that arose from the consuming public despite retailers’ pledges and public relations efforts.
Merchants objected to limitations on price ceilings that disrupted the traditional markup method, as well as the freedom manufacturers were granted in raising prices that retailers were not allowed to pass along to the consumer.
By the time of V.E. Day (May 8, 1945) and V.J. Day (August 14, 1945), retailers were enthusiastically following NRDGA’s plan to re-integrate a million service personnel in retailing and merchandising jobs within a year of the war’s conclusion. By September the War Production Board had revoked a number of restrictions, but the price controls so detested by retailers remained in effect. One result was that production of many lower-priced lines of merchandise was postponed indefinitely.
Part of retailing’s campaign against the controls included an article, “Why You Can’t Buy a Shirt,” in the Saturday Evening Post under the byline of NRDGA general manager Lew Hahn. He made the point that unrealistic price ceilings had forced manufacturers to cut back production in certain lines in order to step up manufacture of less essential goods with higher ceilings. The situation became so intolerable that a group of NRDGA retailers stormed Washington with a “Consumer Suffers” display that created headlines all across the country. The focal point was a merchandise exhibit showing the shoddy goods produced as a result of the stifling OPA policies, as well as the equally unintended result of creating artificial shortages.
Americans were eagerly awaiting the flow of consumer goods to turn from a trickle to a torrent. Television became a consumer reality at the same time Jackie Robinson became the first African-American to play Major League Baseball in modern times. The ranch-style home gained in popularity, with its low-slung, single-story profile filled with wall-to-wall carpeting, a cocktail table, lamps for display in the picture window and garbage disposals and automatic dishwashers in the kitchen. Other rooms were used as well, for by the end of the decade 30 million babies were born — an unprecedented boom.
One major side effect of the United States’ efforts to rebuild war-ravaged Europe and Asia was a Department of Commerce program that encouraged retailers to make an extra effort to market imported merchandise. Though intentions may have been good, “Made in Japan” quickly became synonymous with cheap and inferior.
A golden time
The road to recovery and prosperity in the 1950s was blocked for a brief period during the Korean War, when price controls were re-imposed and the retail industry was again subjected to strict regulation. One concession to the industry was the Herlong Amendment, which allowed retail prices to be set in accordance with the markup practices in place prior to the war.
With little on the international front to distract them and a sympathetic administration headed by Gen. Eisenhower in Washington, retailing began the trek to the suburbs alongside returned GIs and their new families. Not far behind was the shopping center, a surrogate for the retailing districts of cities. Department store branches anchored a center filled with smaller satellite stores, fostering spectacular growth of retailers specializing in narrow merchandise lines in spaces of 5,000 sq. ft. or less.
Fads seemed to mark fashion in the 1950s. Young men were heavily influenced by entertainers like James Dean, Marlon Brando and, later, Elvis Presley, as well as movies like “The Wild One” and “Blackboard Jungle.” Women discovered Bermuda shorts for summer wear; winter fashions included the sheath, the sack and the chemise.
Housewares, home furnishings and appliances were designed to free mom from the drudgery of housework. Toasters, roasters, deep fryers, lazy Susans, electrified pans and vacuum cleaners with tailfins were all part of the merchandise mix.
It was during this period — 1958, to be exact — that NRDGA finally got around to changing its name to the National Retail Merchants Association. The trade organization that had been founded largely by independent merchants was now developing multiple personalities. There were large downtown department stores with branches in the suburbs and specialty retailers with a chain of stores selling narrow but deep classifications, though the independents still formed the vast majority of membership.
The 1960s began with the hope of a new Camelot inspired by John Kenedy, the youngest man ever to be elected president, and ended with a nation divided over a war in southeast Asia.
To mark the 50th anniversary of what was now the NRMA, association president Alfred C. Thompson, executive vice president of Miller & Rhoads, proudly noted the strides American retailing had made both in employing people and the efficiency with which it delivered consumer goods.
The rapid changes of the 1950s seemed to accelerate in the early 1960s. Music exerted a major influence on fashion, particularly following the Beatles-led British Invasion. For a while, at least, London’s Carnaby Street eclipsed Seventh Avenue, and hemlines rose so high that hosiery makers seemed to be using more fabric in their textured stockings than skirtmakers did in their merchandise.
Martin Luther King Jr. and Ho Chi Minh rose from relative obscurity to dominate domestic and international events. A World’s Fair in New York portrayed the future as many would have liked to have seen it evolve, but riots in inner cities, escalation of fighting in Vietnam and anti-government demonstrations in cities throughout the country indicated that such dreams don’t always come true. A decade of assassinations, riots, bombings and deep rifts within the nation ended on something of an up note when Neil Armstrong became the first human to walk on the moon, making “one giant leap for mankind.”
The computer and the transistor, both having made their first appearance in the ’40s, took hold in the 1960s. While transistorized appliances were the hottest thing among consumers — starting an electronics boom that has continued unabated ever since — computers were helping to tame the paper flow in business offices. In 1961, Macy’s New York unveiled a data processing system that could handle information at the rate of 300,000 sales slips an hour and was capable of preparing 50 bills a minute.
NRMA recognized the implications of these innovations, developing technical committees to work with suppliers and equipment manufacturers in order to put the electronic-based technology and computers to the most efficient use for the industry.
On the business side, retailing was undergoing some major changes, too, as it engaged in a prolonged period of acquisition and merger, growth and intensified competition. Department stores strove to hold their own as discounters nibbled away at one end of their customer base and specialists took dead aim on the other.
With the wounds of the Vietnam War still fresh, various “movements” occupied large chunks of people’s time in the 1970s. Retailers responded with changes in market strategy, downgrading reliance on raw demographic statistics in favor of psychographic data and lifestyle merchandising. Efforts were hampered by a major recession in the middle of the decade that was soon supplanted by rampant inflation. President Gerald Ford, who had replaced Richard Nixon in the wake of the Watergate scandal, tried to “whip inflation now” with campaign buttons; his successor, Jimmy Carter, was even less effective.
A multitude of influences were impacting consumer decisions, and retailers responded with flexible store designs. Visual merchandisers and store planners grew in importance, staging theatrical productions in sales areas that were in a constant state of change. Regional retailers like Neiman-Marcus, Saks Fifth Avenue, Lord & Taylor and Bonwit Teller grew into national chains, and Macy’s New York, Bloomingdale’s and Marshall Field’s were striving to become national department store companies. Consolidation and conglomeration among larger companies opened the way for a spate of entrepreneurial specialists at the other end.
Growth during the 1980s proved to be a special challenge to retail executives, who responded with strategies as diverse as their merchandise selections. Some companies grew through acquisition and mergers, others through expansion of selected divisions and still others through diversification. Specialty and discount operations received particular attention from the larger retail conglomerates.
Retail sales increased steadily, with real growth coming as inflation abated. Profits, too, showed growth, but nowhere near as strong as sales. During this period, most retailers explored the accounting tactic of LIFO inventory valuation. The change produced a positive impact on tax rates and profit levels.
Bottom-line pressures also prompted retailers to look at new strategies like beefing up private label merchandise lines and being more selective in carrying the same national brands and designer labels sold by their competitors. Credit and collections efficiencies were enhanced through massive investment in information processing technology. Operations — whether on the sales floor, in the distribution center, the merchandising office or at headquarters — were streamlined wherever possible.
Merchandising also took a curious turn. After years and years of fads and mercurial changes in public taste, consumers became more restrained, perhaps reflecting the conservative style of President Ronald Reagan.
The ’80s also saw the birth of celebritization as actors, singers and athletes — no longer content to merely endorse products — actively engaged in the creation of their own lines of lifestyle merchandise. Large downtown department stores — and even their mall-anchoring branches — were falling out of favor, and it was specialty chains like The Limited and the Gap that were becoming the big draws at suburban malls.
Technology’s influence was on the rise as well. Cash registers became point-of-sale terminals as computers moved out of the financial department and into every aspect of the business, from the design of store interiors, fixtures and floor layouts to labor scheduling and supply chain management.
Off-price general merchandisers opened up another front in the assault on the traditional department store. Kmart was the largest discount operator, but Wal-Mart was gaining substantial ground with each passing year. Also emerging on the retail landscape were wholesale clubs like Sol Price’s Price Club, Wal-Mart’s Sam’s Club and Waban’s BJ’s Wholesale and HomeClub. Fading from the scene were catalogue showrooms, down to a pair of large operators: Service Merchandise and Best Products.
The NRMA was changing, as well: In 1990, it merged with the American Retail Federation and adopted a new moniker — the National Retail Federation. Reflecting the broad expansion of retail formats, STORES Magazine’s annual ranking of the Top 100 retailers was opened to formats other than department stores for the first time.
Retail’s broadening scope
America was prospering during most of this period, but events were transpiring that would impact the retail landscape for years to come. The first was the U.S. response to Saddam Hussein-led Iraq’s invasion of Kuwait, a strike — swift, sure and, it would be determined a decade later, incomplete — known as the Gulf War. The Soviet Union dissolved, and along with it what was left of Churchill’s Iron Curtain. The Berlin Wall tumbled, and the republic of Yugoslavia devolved into civil war.
In 1994, a Seattle-based company named Cadabra was formed. As the story goes, however, the name was too easily confused with “cadaver” and the company was renamed Amazon. Jeffrey Bezos was a tad late in coming to the dotcom boom, but his approach to selling books via the Internet helped establish the e-commerce blueprint. Many experts predicted that Internet shopping would lead to the demise of the bricks-and-mortar store, but virtually all of the start-up etailers burned through more cash than they generated. Even Amazon.com took five years to turn its first quarterly profit and a couple more years before posting its first full year in the black.
Inner city music and fashion moved squarely into the mainstream by the mid-1990s as America became the epicenter of global sports, hosting the FIFA World Cup in 1994 and the Summer Olympics in 1996.
As the millennium approached, there was much speculation as to what havoc would be wrought when all the world’s processors had to begin recognizing the year 2000. As it turned out, the most mystifying occurrence in Y2K was a Presidential election that wasn’t declared over until six weeks prior to Inauguration Day, when the Supreme Court said “stop counting.” George W. Bush was president for less than eight months when Islamic radicals crashed hijacked airliners into both towers of the World Trade Center, the Pentagon and a Pennsylvania field — the latter believed to have been headed for the White House or U.S. Capitol, its mission aborted by the actions of a handful of passengers.
Everything came to a stop. The grieving began, the economy plunged, the fear remained — and was heightened only weeks later by the threat of anthrax-laced letters. Markets bottomed out in 2002, and the slow process of recovery began, soon bolstered by a housing boom fueled by subprime mortgages.
NRF helped nurse the industry through those difficult times, creating new forums and embracing the broadening scope of retail. It absorbed Shop.org and the National Council of Chain Restaurants, in the process growing into the largest retail trade association on the planet.
As NRF marks its centennial, the industry it serves continues to recover from the worst economic recession since the Great Depression. But ever resilient and ready to adopt new technologies, its retail members have developed online and mobile business plans, used social media to connect with customers in ways the founders of NRDGA could never have imagined and stand poised to embrace the challenges sure to emerge over the next 100 years.
emerge over the next 100 years.