E. J. Korvette
Encyclopedia
E. J. Korvette, also known as Korvette's, was an American
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 chain of discount department stores, founded in 1948 in New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...

. It is notable as one of the first department store
Department store
A department store is a retail establishment which satisfies a wide range of the consumer's personal and residential durable goods product needs; and at the same time offering the consumer a choice of multiple merchandise lines, at variable price points, in all product categories...

s to challenge the suggested retail price
Suggested retail price
The manufacturer's suggested retail price , list price or recommended retail price of a product is the price which the manufacturer recommends that the retailer sell the product. The intention was to help to standardise prices among locations...

 provisions of anti-discounting
Resale price maintenance
Resale price maintenance is the practice whereby a manufacturer and its distributors agree that the latter will sell the former's product at certain prices , at or above a price floor or at or below a price ceiling...

 statutes. Founded by World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...

 veteran Eugene Ferkauf and his friend, Joe Zwillenberg, E.J. Korvette did much to define the idea of a discount department store. It displaced earlier five and dime
Five and Dime
Five and Dime is a cartoon short by Walter Lantz which features Oswald the Lucky Rabbit. It is the 74th Oswald short produced by Lantz and the 125th overall. It also is among the number of shorts that feature Oswald in his fully clothed appearance....

 retailers and preceded later discount store
Discount store
A discount store is a type of department store, which sells products at prices lower than those asked by traditional retail outlets. Most discount department stores offer a wide assortment of goods; others specialize in such merchandise as jewelry, electronic equipment, or electrical appliances...

s, like Wal-Mart
Wal-Mart
Wal-Mart Stores, Inc. , branded as Walmart since 2008 and Wal-Mart before then, is an American public multinational corporation that runs chains of large discount department stores and warehouse stores. The company is the world's 18th largest public corporation, according to the Forbes Global 2000...

, and warehouse club
Warehouse club
A warehouse club is a retail store, usually selling a wide variety of merchandise, in which customers are required to buy large, wholesale quantities of the store's products, which makes these clubs attractive to both bargain hunters and small business owners. The clubs are able to keep prices low...

s such as Costco
Costco
Costco Wholesale Corporation is the largest membership warehouse club chain in the United States. it is the third largest retailer in the United States, where it originated, and the ninth largest in the world...

.

The company failed to properly manage its business success which led to decline and its 1980 bankruptcy and closure.

Innovations

E. J. Korvette's founder, Eugene Ferkauf, began his discounting career in a 400 square feet (37.2 m²) loft in mid-Manhattan
Midtown Manhattan
Midtown Manhattan, or simply Midtown, is an area of Manhattan, New York City home to world-famous commercial zones such as Rockefeller Center, Broadway, and Times Square...

, New York City. Inventory consisted of well known brands of luggage
Luggage
Baggage is any number of bags, cases and containers which hold a traveller's articles during transit.Luggage is more or less the same concept as "baggage", but is normally used in relation to the personal luggage of a specific person or persons Baggage is any number of bags, cases and containers...

, household appliances
Home appliance
Home appliances are electrical/mechanical machines which accomplish some household functions, such as cooking or cleaning. Home appliances can be classified into:*Major appliances, or White goods*Small appliances, or Brown goods...

 and some jewelry. Discounts were one-third off regular prices. Sales were over $2,500 per square foot. Ferkauf retired in 1968.

E.J. Korvette's used several retailing innovations to propel its rapid growth. It used discounting, even though most discounting was known to be outlawed at the time. Korvette's instituted a membership program, a technique from consumers' cooperative
Consumers' cooperative
Consumer cooperatives are enterprises owned by consumers and managed democratically which aim at fulfilling the needs and aspirations of their members. They operate within the market system, independently of the state, as a form of mutual aid, oriented toward service rather than pecuniary profit...

s that had never been applied to a department store before. It also expanded into suburban locations at a time when most department stores were in central business district
Central business district
A central business district is the commercial and often geographic heart of a city. In North America this part of a city is commonly referred to as "downtown" or "city center"...

s.

Discounting and membership program

Korvette's low-price, low-service model was in some ways similar to that of earlier five and dime
Five and Dime
Five and Dime is a cartoon short by Walter Lantz which features Oswald the Lucky Rabbit. It is the 74th Oswald short produced by Lantz and the 125th overall. It also is among the number of shorts that feature Oswald in his fully clothed appearance....

 retailers such as Woolworth's, McCrory's, and S.S. Kresge. But Korvette's was innovative in avoiding the anti-discounting provisions of the Robinson-Patman Act
Robinson-Patman Act
The Robinson–Patman Act of 1936 is a United States federal law that prohibits anticompetitive practices by producers, specifically price discrimination. It grew out of practices in which chain stores were allowed to purchase goods at lower prices than other retailers...

, and undercutting the suggested retail price
Suggested retail price
The manufacturer's suggested retail price , list price or recommended retail price of a product is the price which the manufacturer recommends that the retailer sell the product. The intention was to help to standardise prices among locations...

 on such expensive items as appliances and luxury pens.

Korvette used "membership cards" (which it distributed in front of its stores and to surrounding offices) to style itself as a retail cooperative. In so doing, Korvette's was able to accept deep discounts from suppliers— something that competing department stores, such as Macy's
Macy's
Macy's is a U.S. chain of mid-to-high range department stores. In addition to its flagship Herald Square location in New York City, the company operates over 800 stores in the United States...

 and Gimbels, could not do. In fact, Macy's and others filed numerous "fair trade
Fair trade
Fair trade is an organized social movement and market-based approach that aims to help producers in developing countries make better trading conditions and promote sustainability. The movement advocates the payment of a higher price to producers as well as higher social and environmental standards...

" lawsuits against Korvette's to stop it from undercutting their prices. None succeeded. Arguably, the lawsuits helped Korvette's by calling attention to prices so low that competitors thought them illegal.

Founder Eugene Ferkauf attributed his idea for membership cards and deep discounts to luggage wholesaler Charles Wolf. But where Charles Wolf made limited or even surreptitious use of these devices, Korvette's popularized them by instructing employees to distribute membership cards to any person entering any Korvette's.

Strip malls and the suburbs

While the first E.J. Korvette store was located between Third and Lexington Avenue
Lexington Avenue (Manhattan)
Lexington Avenue, often colloquially abbreviated by New Yorkers as "Lex," is an avenue on the East Side of the borough of Manhattan in New York City that carries southbound one-way traffic from East 131st Street to Gramercy Park at East 21st Street...

s on 45th street in Manhattan, its rapid growth in the 1950s was helped by its many stores in strip malls along arterial road
Arterial road
An arterial road, or arterial thoroughfare, is a high-capacity urban road. The primary function of an arterial road is to deliver traffic from collector roads to freeways, and between urban centres at the highest level of service possible. As such, many arteries are limited-access roads, or feature...

s leading out of urban centers. This made E.J. Korvette ideally situated to meet the demands of the suburb
Suburb
The word suburb mostly refers to a residential area, either existing as part of a city or as a separate residential community within commuting distance of a city . Some suburbs have a degree of administrative autonomy, and most have lower population density than inner city neighborhoods...

s, which grew in the United States during the that era.

The first of the modern type stores was opened in 1954, a 90000 square feet (8,361.3 m²) store in Carle Place
Carle Place, New York
Carle Place is a hamlet in Nassau County, New York, United States. As of 2010 the CDP population was 4,981...

, Long Island, which for the first time carried apparel. In 1956, Korvette's had six stores, including stores in Philadelphia and Harrisburg, Pennsylvania
Harrisburg, Pennsylvania
Harrisburg is the capital of Pennsylvania. As of the 2010 census, the city had a population of 49,528, making it the ninth largest city in Pennsylvania...

. By 1958, it had twelve stores. At its peak, it had 58 stores.

A Korvette retail floor had cashiers located in individual departments, with no checkout line area. Large stores included a full supermarket
Supermarket
A supermarket, a form of grocery store, is a self-service store offering a wide variety of food and household merchandise, organized into departments...

, pharmacy
Pharmacy
Pharmacy is the health profession that links the health sciences with the chemical sciences and it is charged with ensuring the safe and effective use of pharmaceutical drugs...

, pet shop, and tire
Tire
A tire or tyre is a ring-shaped covering that fits around a wheel rim to protect it and enable better vehicle performance by providing a flexible cushion that absorbs shock while keeping the wheel in close contact with the ground...

 center.

Korvette's expanded into the Chicago
Chicago
Chicago is the largest city in the US state of Illinois. With nearly 2.7 million residents, it is the most populous city in the Midwestern United States and the third most populous in the US, after New York City and Los Angeles...

 area in the 1960s. It successfully disputed the state and local Sunday closing
Blue law
A blue law is a type of law, typically found in the United States and, formerly, in Canada, designed to enforce religious standards, particularly the observance of Sunday as a day of worship or rest, and a restriction on Sunday shopping...

 ordinances and laws. Once those barriers were broken, many other retailers opened on Sunday.

Decline and closure

Korvette's decline and closure are variously attributed to inconsistent management , failure to focus on merchandise it knew (such as appliances), and ultimately attempting to compete directly with the department stores in areas such as fashion (when it had neither the expertise nor the right store atmosphere).

Of note was E. J. Korvette's venture into the home entertainment business. The retailer established a rather out of context series of high-end audio salons within selected stores. Korvettes went so far as to market its own "XAM" brand of stereo
STEREO
STEREO is a solar observation mission. Two nearly identical spacecraft were launched into orbits that cause them to respectively pull farther ahead of and fall gradually behind the Earth...

 receiver
Receiver (radio)
A radio receiver converts signals from a radio antenna to a usable form. It uses electronic filters to separate a wanted radio frequency signal from all other signals, the electronic amplifier increases the level suitable for further processing, and finally recovers the desired information through...

s, amplifier
Amplifier
Generally, an amplifier or simply amp, is a device for increasing the power of a signal.In popular use, the term usually describes an electronic amplifier, in which the input "signal" is usually a voltage or a current. In audio applications, amplifiers drive the loudspeakers used in PA systems to...

s (some manufactured by Roland
Roland Corporation
is a Japanese manufacturer of electronic musical instruments, electronic equipment and software. It was founded by Ikutaro Kakehashi in Osaka on April 18, 1972, with ¥33 million in capital. In 2005 Roland's headquarters relocated to Hamamatsu in Shizuoka Prefecture. Today it has factories in Japan,...

 Electronics of Japan) , television sets, and speakers
Loudspeaker
A loudspeaker is an electroacoustic transducer that produces sound in response to an electrical audio signal input. Non-electrical loudspeakers were developed as accessories to telephone systems, but electronic amplification by vacuum tube made loudspeakers more generally useful...

. At a number of the retail locations the audio department was, on dollar per square foot basis, one of the more profitable departments in the store.

In late 1965, Korvette's formed its own Home Furnishings Division and ceased subcontracting furniture and carpet
Carpet
A carpet is a textile floor covering consisting of an upper layer of "pile" attached to a backing. The pile is generally either made from wool or a manmade fibre such as polypropylene,nylon or polyester and usually consists of twisted tufts which are often heat-treated to maintain their...

 sales. A complex warehousing and distribution network was established. A central distribution warehouse
Distribution center
A distribution center for a set of products is a warehouse or other specialized building, often with refrigeration or air conditioning, which is stocked with products to be redistributed to retailers, to wholesalers, or directly to consumers. A distribution center is a principal part, the order...

 was established in Danville, Virginia
Danville, Virginia
Danville is an independent city in Virginia, United States, bounded by Pittsylvania County, Virginia and Caswell County, North Carolina. It was the last capital of the Confederate States of America. The Bureau of Economic Analysis combines the city of Danville with Pittsylvania county for...

. This location received furniture, purchased by its buyers located in East Paterson, New Jersey, and in turn reshipped individual customer orders based on promised delivery dates. The sold merchandise was then shipped to delivery warehouses in East Paterson and Pennsauken
Pennsauken Township, New Jersey
Pennsauken Township is a township in Camden County, New Jersey, USA, and a suburb of Philadelphia. As of the 2010 census, the township population was 35,885....

, New Jersey, and Jessup, Maryland
Jessup, Maryland
Jessup is an unincorporated town and census-designated place in Howard County, Maryland and Anne Arundel County, Maryland. The population was 7,865 at the 2000 census. The center of population of Maryland is located in Jessup. It was the location of Maryland House of Correction, which was one of...

 for final prep and delivery. This well-managed furniture distribution group was active until it closed at the end of 1977.

By 1966, Korvette's had begun to decline and chose to merge with Spartan Industries, a soft goods retailer. Eugene Ferkauf was eased out of the company leadership, and Spartan managers attempted to revive the company.

From 1971 to 1979, Korvette's was owned by Arlen Realty, a land development
Land development
Land development refers to altering the landscape in any number of ways such as:* changing landforms from a natural or semi-natural state for a purpose such as agriculture or housing...

 company that used Korvette's 50 stores as a source of cash flow. Under Arlen's ownership, Korvette's stores deteriorated and lost market share relative to other retailers to the point that the company was worth more for its real estate assets (such as its ownership or leasehold interests in valuable locations) than its retail sales. During this period, New York area Korvette's stores advertised heavily on local television, using popular game show host Bill Cullen
Bill Cullen
William Lawrence Francis "Bill" Cullen was an American radio and television personality whose career spanned five decades...

 as a spokesman.

In 1979, Korvette's was purchased by the Agache-Willot Group of France, which initially closed Korvette's least profitable stores and began selling off merchandise, fixtures
Fixtures
A fixture is a legal concept that includes any physical property that is permanently attached or fixed to real property which once removed will cause [permanent] damage to the real property, usually land. If the property is not affixed to real property it is considered chattel property...

, equipment, and real estate. In 1980, they declared bankruptcy
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....

 and on December 24, 1980, they closed all of their remaining 15 stores.

Name origins

According to Korvette's founder, Eugene Ferkauf, the name "E.J. Korvette" was coined as a combination of the initials of its founders (Eugene and Joe) and a re-spelling of the naval term Corvette
Corvette
A corvette is a small, maneuverable, lightly armed warship, originally smaller than a frigate and larger than a coastal patrol craft or fast attack craft , although many recent designs resemble frigates in size and role...

, which was the name of a Canadian marine sub-destroyer during World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...

. This claim, and the fact that the name pre-dates the Korean War
Korean War
The Korean War was a conventional war between South Korea, supported by the United Nations, and North Korea, supported by the People's Republic of China , with military material aid from the Soviet Union...

 by three years, contradict an urban legend
Urban legend
An urban legend, urban myth, urban tale, or contemporary legend, is a form of modern folklore consisting of stories that may or may not have been believed by their tellers to be true...

that the name stood for "Eight (or Eleven) Jewish Korean War Veterans".

External links

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