Service Merchandise
Encyclopedia
Service Merchandise is an online retailer and former retailer chain of catalog showroom stores carrying fine jewelry, toys, sporting goods, and electronics
that existed for 68 years (from 1934 to 2002). The company's former Chairman & CEO, Raymond Zimmerman, resurrected the Service Merchandise name to create a new web store in 2004 (ServiceMerchandise.com) after buying the name and logo at an auction.
, near Nashville. The first of what evolved into a huge chain of catalog showrooms opened in 1960 on Broadway St. in downtown Nashville, Tennessee
.
During the 1970s, Service Merchandise was the Nation's top catalog-showroom retailer. At its peak, the company achieved more than $4 billion in annual sales. As the company expanded, it began to open showrooms nationwide, mostly in the vicinity of major shopping malls, which were coming into vogue in the mid-1970s. In the early 1980s, the Service Merchandise headquarters moved from Nashville to nearby Brentwood, TN, becoming one of the first businesses to plant itself in the area that is now known as Cool Springs. In May of 1985 the H.J. Wilson Co was acquired by Service Merchandise for approximately $200M. Raymond Zimmerman, CEO was attracted to Wilson's stores to gain a firmer foothold in the Sunbelt states. Several of these Wilson's locations included an off-priced apparel department of about 15000 square feet (1,393.5 m²). Service Merchandise also had other wholly owned subsidiaries featuring retail stores such as Zim's Jewelers, HomeOwners Warehouse (later called Mr. HOW Warehouse), The Lingerie Store, and The Toy Store.
The company lost market share in its housewares and electronics sectors to giant discounters such as Wal-Mart
and Bed, Bath & Beyond, and later Best Buy
and Circuit City. Although Service Merchandise was early to embrace the Internet in the 1990s, generating tens of millions of dollars in sales, it was not enough to offset the damage being done by the mega-chain stores springing up nationwide. Until its closure however, Service Merchandise enjoyed a strong jewelry department, continuing as the largest watch retailer in the United States.
The company responded to the enormous market pressures with a series of restructuring plans that included the discontinuation of unprofitable product lines such as electronics, toys and sporting goods, and refocusing on fine jewelry, gifts, and home decor products. Many of their showrooms were also closed or downsized significantly. During this timeframe, the company was successful in sub-dividing a number of its company-owned stores into two or three units and sub-leasing the newly created spaces to other national chains thus reducing costs and at the same time, generating more mall / store traffic.
Raymond Zimmerman, son of the original founders (who had been instrumental in the process of building the family business into a multi-billion dollar empire) resigned as Chairman of the Board in November 2000. The company subsequently attempted to pull itself out of bankruptcy once again in the summer of 2001, but the economic downturn following the September 11, 2001 attacks
proved to be a hurdle the company could not clear http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/01-04-2002/0001641992&EDATE=.
With only 200 catalog showrooms left, the stock valued at less than one cent per share, and no profitability in sight, Service Merchandise ceased operations and shuttered all of its remaining stores by early 2002.
and Best Products
they too eventually suffered the same fate. None were as successful as Service Merchandise.
The reason behind offering the catalog showroom approach to retailing was that it reduced the risk of merchandise theft (known in the industry as shrinkage
) and also enabled customers to shop without the inconvenience of physically dragging their purchases throughout the store. The downside to this approach was that it required the customers to give their names, addresses, and phone numbers whenever an order was placed. The risk of identity theft made some customers wary of shopping in such stores, particularly when purchasing simple household items such as batteries.
For non-jewelry orders, customers would enter the showroom and be given a tablet which included an order form to record the catalog numbers of desired items. Items were displayed in working order in the showroom, allowing customers to test products as they shopped. Current Service Merchandise catalogs were placed in strategic locations throughout the store to allow customers to shop for items that were not on display. When ready to place their orders, customers would take the tablet to a clerk who would act as a cashier and submit the order to the store's stockroom (this process was altered in the late 1980s to allow customers to place their own orders with a self-service computer terminal named "Silent Sam", which later was renamed "Service Express"). The customer would then move to the "Merchandise Pickup Area" near the exit, where the order would emerge from the stockroom on a conveyor belt.
In addition to jewelry and catalog showroom display items, Service Merchandise also had several self-service items, which were located on shelves, and taken to the checkout to be paid for as in a traditional retail store. These items included many of those in the toy department as well as smaller, low priced items (such as batteries, film, and video cassettes).
The jewelry department, which was featured prominently in the center of every showroom, operated on a first-come, first-served
system, in which each customer would be individually served by a jewelry clerk.
Also in the mid-1980s, Service Merchandise experimented with the installation of Drive-Thru windows at two showrooms (near Chicago and Nashville), allowing customers with phone-in orders to pick up their orders without leaving their automobiles. The concept was not expanded beyond its test stores, but remained in place at those locations.
In the mid 1990s, the tablets were replaced with barcoded pull tags placed on/near each item in the showroom. These were taken to the cashier instead of the tablet in order to purchase the item, which would still be retrieved from the stockroom. By the late-1990s, many of the showrooms had been converted to allow a more traditional approach to shopping in addition to the catalog ordering process. By 2000, all of the remaining showrooms had been downsized and the catalog-style shopping approach was officially abandoned.
Service Merchandise was known as one of the largest corporate donors to the Muscular Dystrophy Association
during its time as an established company. Chairman/CEO Raymond Zimmerman would appear multiple times on the yearly Jerry Lewis MDA Telethon
to present donations on behalf of the company and its customers. Around each showroom were several collection boxes for MDA, and each store also sold MDA fundraising shamrocks at St. Patrick's Day. Even during its bankruptcy and liquidation, Service Merchandise continued to be a large supporter of MDA.
Electronics
Electronics is the branch of science, engineering and technology that deals with electrical circuits involving active electrical components such as vacuum tubes, transistors, diodes and integrated circuits, and associated passive interconnection technologies...
that existed for 68 years (from 1934 to 2002). The company's former Chairman & CEO, Raymond Zimmerman, resurrected the Service Merchandise name to create a new web store in 2004 (ServiceMerchandise.com) after buying the name and logo at an auction.
History
Service Merchandise was originally founded in 1934 by Harry and Mary Zimmerman as a five-and-dime store in the town of Pulaski, TennesseePulaski, Tennessee
Pulaski is a city in Giles County, Tennessee, United States. The population was 7,870 at the 2010 census. It is the county seat of Giles County. It was named to honor the Polish-born American Revolutionary War hero Kazimierz Pułaski...
, near Nashville. The first of what evolved into a huge chain of catalog showrooms opened in 1960 on Broadway St. in downtown Nashville, Tennessee
Nashville, Tennessee
Nashville is the capital of the U.S. state of Tennessee and the county seat of Davidson County. It is located on the Cumberland River in Davidson County, in the north-central part of the state. The city is a center for the health care, publishing, banking and transportation industries, and is home...
.
During the 1970s, Service Merchandise was the Nation's top catalog-showroom retailer. At its peak, the company achieved more than $4 billion in annual sales. As the company expanded, it began to open showrooms nationwide, mostly in the vicinity of major shopping malls, which were coming into vogue in the mid-1970s. In the early 1980s, the Service Merchandise headquarters moved from Nashville to nearby Brentwood, TN, becoming one of the first businesses to plant itself in the area that is now known as Cool Springs. In May of 1985 the H.J. Wilson Co was acquired by Service Merchandise for approximately $200M. Raymond Zimmerman, CEO was attracted to Wilson's stores to gain a firmer foothold in the Sunbelt states. Several of these Wilson's locations included an off-priced apparel department of about 15000 square feet (1,393.5 m²). Service Merchandise also had other wholly owned subsidiaries featuring retail stores such as Zim's Jewelers, HomeOwners Warehouse (later called Mr. HOW Warehouse), The Lingerie Store, and The Toy Store.
The Rise & Fall
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 Bed, Bath & Beyond, and later Best Buy
Best Buy
Best Buy Co., Inc. is an American specialty retailer of consumer electronics in the United States, accounting for 19% of the market. It also operates in Mexico, Canada & China. The company's subsidiaries include Geek Squad, CinemaNow, Magnolia Audio Video, Pacific Sales, and, in Canada operates...
and Circuit City. Although Service Merchandise was early to embrace the Internet in the 1990s, generating tens of millions of dollars in sales, it was not enough to offset the damage being done by the mega-chain stores springing up nationwide. Until its closure however, Service Merchandise enjoyed a strong jewelry department, continuing as the largest watch retailer in the United States.
The company responded to the enormous market pressures with a series of restructuring plans that included the discontinuation of unprofitable product lines such as electronics, toys and sporting goods, and refocusing on fine jewelry, gifts, and home decor products. Many of their showrooms were also closed or downsized significantly. During this timeframe, the company was successful in sub-dividing a number of its company-owned stores into two or three units and sub-leasing the newly created spaces to other national chains thus reducing costs and at the same time, generating more mall / store traffic.
Bankruptcy & Eventual Liquidation
While in the process of changing its retail format, a group of creditors forced an involuntary petition for bankruptcy under Chapter 11 on March 15, 1999, seeking court supervision of the company's restructuring. The company later filed a voluntary Chapter 11 petition to improve relations with its vendors & creditors in an effort to stabilize its business.Raymond Zimmerman, son of the original founders (who had been instrumental in the process of building the family business into a multi-billion dollar empire) resigned as Chairman of the Board in November 2000. The company subsequently attempted to pull itself out of bankruptcy once again in the summer of 2001, but the economic downturn following the September 11, 2001 attacks
September 11, 2001 attacks
The September 11 attacks The September 11 attacks The September 11 attacks (also referred to as September 11, September 11th or 9/119/11 is pronounced "nine eleven". The slash is not part of the pronunciation...
proved to be a hurdle the company could not clear http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/01-04-2002/0001641992&EDATE=.
With only 200 catalog showrooms left, the stock valued at less than one cent per share, and no profitability in sight, Service Merchandise ceased operations and shuttered all of its remaining stores by early 2002.
Return of the Name
Service Merchandise resurfaced again in 2004, as an online only web store, selling a similar line of merchandise. Raymond Zimmerman bought the former company's name and logo at an auction, and he continues to be the owner of the newly formed company, which is still in operation.Showroom Ordering process
Service Merchandise was well-known for its unusual ordering process which emphasized the catalog, even within the showrooms. Although there were other chains that used this model such as Brendle'sBrendle's
Brendle's was a chain of catalog showrooms based in Elkin, North Carolina, USA. Its showrooms carried jewelry, toys, sporting goods, and electronics...
and Best Products
Best Products
Best Products is a defunct chain of American catalog showroom retail stores founded by Sydney and Frances Lewis, formerly headquartered in Richmond, Virginia.- History :...
they too eventually suffered the same fate. None were as successful as Service Merchandise.
The reason behind offering the catalog showroom approach to retailing was that it reduced the risk of merchandise theft (known in the industry as shrinkage
Shrinkage
Shrinkage has multiple meanings, depending on the context.* Shrinkage – the loss of products* Shrinkage – a technique to improve an estimator* Shrinkage – a common problem when doing laundry...
) and also enabled customers to shop without the inconvenience of physically dragging their purchases throughout the store. The downside to this approach was that it required the customers to give their names, addresses, and phone numbers whenever an order was placed. The risk of identity theft made some customers wary of shopping in such stores, particularly when purchasing simple household items such as batteries.
For non-jewelry orders, customers would enter the showroom and be given a tablet which included an order form to record the catalog numbers of desired items. Items were displayed in working order in the showroom, allowing customers to test products as they shopped. Current Service Merchandise catalogs were placed in strategic locations throughout the store to allow customers to shop for items that were not on display. When ready to place their orders, customers would take the tablet to a clerk who would act as a cashier and submit the order to the store's stockroom (this process was altered in the late 1980s to allow customers to place their own orders with a self-service computer terminal named "Silent Sam", which later was renamed "Service Express"). The customer would then move to the "Merchandise Pickup Area" near the exit, where the order would emerge from the stockroom on a conveyor belt.
In addition to jewelry and catalog showroom display items, Service Merchandise also had several self-service items, which were located on shelves, and taken to the checkout to be paid for as in a traditional retail store. These items included many of those in the toy department as well as smaller, low priced items (such as batteries, film, and video cassettes).
The jewelry department, which was featured prominently in the center of every showroom, operated on a first-come, first-served
First-come, first-served
First-come, first-served – sometimes first-in, first-served and first-come, first choice – is a service policy whereby the requests of customers or clients are attended to in the order that they arrived, without other biases or preferences. The policy can be employed when processing sales orders,...
system, in which each customer would be individually served by a jewelry clerk.
Also in the mid-1980s, Service Merchandise experimented with the installation of Drive-Thru windows at two showrooms (near Chicago and Nashville), allowing customers with phone-in orders to pick up their orders without leaving their automobiles. The concept was not expanded beyond its test stores, but remained in place at those locations.
In the mid 1990s, the tablets were replaced with barcoded pull tags placed on/near each item in the showroom. These were taken to the cashier instead of the tablet in order to purchase the item, which would still be retrieved from the stockroom. By the late-1990s, many of the showrooms had been converted to allow a more traditional approach to shopping in addition to the catalog ordering process. By 2000, all of the remaining showrooms had been downsized and the catalog-style shopping approach was officially abandoned.
Muscular Dystrophy Association
Muscular Dystrophy Association
The Muscular Dystrophy Association is an American organization which combats muscular dystrophy and diseases of the nervous system and muscular system in general by funding research, providing medical and community services, and educating health professionals and the general public...
during its time as an established company. Chairman/CEO Raymond Zimmerman would appear multiple times on the yearly Jerry Lewis MDA Telethon
Jerry Lewis MDA Telethon
The MDA Labor Day Telethon is an annual telethon in the United States to raise money for the Muscular Dystrophy Association . The first MDA telethon was during the Thanksgiving Day weekend of 1952 and titled Party for MDA. It has been held annually since 1966...
to present donations on behalf of the company and its customers. Around each showroom were several collection boxes for MDA, and each store also sold MDA fundraising shamrocks at St. Patrick's Day. Even during its bankruptcy and liquidation, Service Merchandise continued to be a large supporter of MDA.
See also
- Best ProductsBest ProductsBest Products is a defunct chain of American catalog showroom retail stores founded by Sydney and Frances Lewis, formerly headquartered in Richmond, Virginia.- History :...
- Brendle'sBrendle'sBrendle's was a chain of catalog showrooms based in Elkin, North Carolina, USA. Its showrooms carried jewelry, toys, sporting goods, and electronics...
- a regional competitor in the southeastern United States - Consumers DistributingConsumers DistributingConsumers Distributing was a catalogue store in Canada and the United States that operated from 1957 to 1996...
- a similar (and also failed) retailer in Canada and the US. - WitmarkWitmarkWitmark was a catalog showroom and jewelry/electronics chain that operated in West Michigan from 1969 to 1997. The chain was founded by Paul Leven.Over its nearly 30 year history, Witmark dominated the jewelry market with an average of a 34% market share...
- a regional competitor in Michigan