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A 1936 Book Explains Why Wal-Mart
Will Have a Bad Year

| published October 28, 2015 |

By R. Alan Clanton, Thursday Review editor

 

Thursday Review writer and features editor Earl Perkins is a hoarder. He admits as much, and because he is in the process of downsizing—a sometimes emotionally complex business of donating, hauling to the street, and giving things away to friends and associates—lots of little gems have been uncovered or rediscovered. Since he has collected about one gazillion books, this makes for interesting work.

Among those printed items: a book by Robert H. Givens titled The Outlawry of Chainstores, published in 1936 by Martello Publishers, Tampa, Florida. Perkins says he has no idea how the book came into his possession, but it includes his father’s signature written inside the front cover; Earl assumes his dad must have picked up the book decades ago.

The book is short, only about 140 pages long, including some appendixes and the entire wording of a piece of pending legislation called The Florida Recovery Act, brought before the Florida House of Representatives sometime during late 1936, perhaps only weeks or months after the book was first published.

The premise of the little tome is simple: chain stores are rapidly replacing “little” stores and independently-owned retail operations all over the country, with horrendous effects on the economy, wages, workmanship, and the balance of trade between states and cities. Though Givens states that chain stores are not the cause of the Great Depression—which was at its miserable height the year the book was published—the author very clearly explains why he believes the ascension of chain stores has made the effects of economic depression worse, with perhaps irreversible impacts on how people shop and employees are paid.

At first, the strange little book with its archaic worries and concerns and fears, seemed untouchable and unreadable. I saved it from the dustbin—literally—after a brief examination of its contents, and after deciding that reading a few pages might be worth a yuck and a giggle. But as I plowed into it the first evening, I was fascinated by the weird ironies which abound in his arguments.

Givens quickly establishes, right in the first pages, why he thinks the “chainstore” is an outlaw operation bent on avoiding taxes, colluding monopolistically to control prices, and interested only in instant profits for unseen stockholders. “Chainstores” were also, according to Givens, responsible for suppressing wages and streamlining the workforce by cutting itself loose from the need for certain skilled people: local accountants and bookkeepers, local payroll experts, local drivers and package handlers, local and regional suppliers. Givens also asserts that the chain store seeks to topple local business owners who make their living selling everything from shoes to stationery, from Sunday hats to garden hoes, from sugar to cigars. He almost continually uses the word “evil” to describe the practices of the chain store and its unseen owners, and on more than one occasion Givens uses the word “disruption” to describe what is happening in the country.

Remember that in 1936 there was no Wal-Mart, no Target, no Costco, no Sam’s Club, no BJ’s Discount Store. There were no Home Depots and not a single Office Max. There were few, if any, major interstate chains of grocery stores. Though he almost never mentions a specific “chainstore” by name, he appears to be referring to the dominant brands of the day: Sears, Roebuck; J.C. Penney; Woolworth; Montgomery Ward; and so forth. He may also be referring to the largest of the grocery retailers in those days, among them A&P.

The irony of course is that all those chains he most feared at the time are either now on the ropes, or two or three steps from their graves. Sears, and its subsidiary Kmart, have each been facing difficult times for a decade or more. Wal-Mart has effectively killed both. Montgomery Ward operates no retail storefronts, and is now a distinctly different corporate entity which sells only online and by mail order. JC Penney’s woes are deep and probably irreparable: the chain has been in decline for a decade, and then underwent a drastic makeover which by all measures made the situation worse. Woolworth (aka F.W. Woolworth) died amid its whimpers in 1997. Its only vestiges live under the Foot Locker banner, the only one of its subsidiaries to have survived the Wal-Mart onslaught. In its heyday, Woolworth was the nation’s third largest clothing retailer.  A&P, which traces its roots back to 1859, recently filed for bankruptcy.

The death of these once mighty retail operations has been largely blamed on the big discount stores: Wal-Mart, Target, Costco and others. Indeed, thousands of business articles and hundreds of books have been written about how the mega-stores killed the local shopkeeper: jewelers, optical stores, hardware shops, milk and dairy stores, stationery and office supply stores, gun shops, fishing suppliers.

But early in October, retail giant Wal-Mart announced that it may be facing its worst holiday quarter in years—with slower sales, it says, than even at the height of the Great Recession in 2008-2009. It has lowered Wall Street expectations, and begun bracing for the impact of what some of its own analysts think might be a tough 2016. Target, already still deeply troubled after its catastrophic cyber-breach in late 2013, and still reeling from its disastrous experiment with stores in Canada, has also lowered expectations. Target says it too will have a slow holiday season, and says it has no reason to expect the first two quarters of 2016 to be any better. Residual effects of a slow economy? Difficulty coping with increased wages for employees? Maybe.

But both retail giants, along with discount clubs like Sam’s, Costco and BJ’s, have said they expect to have their worst holiday season ever as a direct result of online shopping. Amazon, it seems, is the new “outlaw” among the retail sector, diverting shoppers, luring them with cheap prices, and stealing business from on-site retailers, and in effect disrupting the business model. Many of the complaints used by Givens in his 1936 tome against “chainstores” are the same grievances we now hear from JC Penney, Kmart, Target, and—yes—even Wal-Mart, for whom a few actually shed genuine tears at the thought that Americans will spend billions of dollars shopping, using little more than their computer, laptop, or hand-held device.

Another irony: the U.S. Postal Service celebrates the renewed business. Amazon alone does so much business that it overloads the distribution systems of both FedEx and UPS, and must enlist so much effort from USPS that mail carriers, once in danger of complete extinction, are now working even Sundays to keep up with the flow of packages. Storage of all those boxes has become a critical problem for UPS, FedEx and the Postal Service in more than 300 cities and towns, spawning a cottage industry of collaborations and start-ups whose sole purpose is to billet and stack boxes as they move from one of Amazon’s vast shipping centers via UPS or the postal worker to someone’s home, office or apartment. Crowded apartment buildings in cities like New York, Chicago, Atlanta and Los Angeles are banning boxes, forcing residents and delivery people to take their mutual business off site, and out of the overloaded lobbies and foyers. This spawns still more business opportunities for any local shopkeeper with enough spare room to temporarily house the ubiquitous packages with the smiling arrow logo.

Many experts suggest that the shift toward the internet was inevitable, perhaps even irreversible. The only question is why it took the retailers so long to catch-on to the change. Wal-Mart acknowledges that its decade of complacency led it to this point. The mega-retailer, one of the world’s biggest companies, says its own analysts expect to lose 15% of potential holiday sales to Amazon and other online retailers this year. Late to the game, it has revamped and upgraded its own online presence, but experts say it may be too late to catch up this year or next.

Even the major grocery stores are feeling the impact. Online food services have become so popular—jumping in sales by some 400% just within the last two years—that some of the largest grocery chains are being forced to adapt almost overnight. Publix, Winn-Dixie, Albertsons, Harris-Teeter, and Kroger all plan to roll out online ordering processes and direct-to-the-door delivery services this year, and all plan to expand those programs just as fast as possible, before web-based grocery start-ups turn into tomorrow’s Amazon.

Publix is partnering with a Birmingham, Alabama-based company called Shipt, which allows buyers to use an app on their smartphone or computer to order any product in the Publix store. Customers can “browse” the entire store, have a virtual (proxy) shopper load up the items, then have the stuff delivered via a driver right to the residence, and at a scheduled time. The process involves no cash, and tips are not required; the whole transaction is managed through Shipt’s app, which can be downloaded in seconds. Best of all, there is no delivery charge on orders which exceed $35. The only cost is an annual or monthly fee for the app. Shipt is one of scores of such companies which plan to cash-in on the lucrative business of being the facilitator of online shopping, which has grown at an astounding rate in the last few years.

Meanwhile, the U.S. Postal Service, once in such danger of collapse that it was questionable it would be able to operate profitably past the end of last year, is now buried in packages, and has expanded to-the-door delivery of packages to Sundays. Its infamous plan to lay off thousands and begin early retirement for thousands more now seems like a quaint memory. And so much for all that talk about ending Saturday delivery.

A note to Mr. Givens of Tampa, Florida (May You Rest in Peace, ye eloquent curmudgeon!), the changes you fear came and left long ago, and they were neither worse nor better than you thought, simply different, and yes disruptive. We bid Radio Shack a fond farewell, adios to Blockbuster, and adieu to Woolco as well.

One more ironic note: one can still order your book, Mr. Givens, on Amazon.com for only $6.99, with two day delivery an extra $3.75. No need for that trip to the local bookstore.

Related Thursday Review articles:

Wal-Mart’s Tough Times Ahead; Thursday Review staff; Thursday Review; October 19, 2015.

A&P Files for Bankruptcy Protection; Thursday Review; July 22, 2015.