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He Took Failure And Turned It Into One Of The Country's Biggest Retailers
Rowland Hussey Macy was a failure. He'd opened four retail dry goods stores between 1843 and 1855, and all of them had flopped. But Macy knew to make the most of his experiences. He'd gained a firsthand knowledge of the dry goods trade and learned which mistakes to avoid. Macy, a native of Nantucket Island, MA, had thought he had it figured out when his fourth store, a shop in Haverhill, MA, opened in 1851. Using unorthodox business practices, he believed, would attract customers. Macy had seen the dangers of doing business on credit, so he sold and bought goods only for cash to keep the prices of his items down. He didn't bargain - then the custom - and charged everybody the same prices. They were so low as to be unheard of, and he called his shop the Original Haverhill Cheap Store. He also relied on newspaper advertising much more than his competitors did. Macy (1822-77) prospered for a time but couldn't compete over the long run in Haverhill, which had six dry goods stores and under 10,000 people. He was certain his methods would succeed, though, in a big city. So in 1858, he opened a dry goods store at Sixth Avenue and 14th Street in New York City, the hub of an area of about 1 million people. His strategy worked. He posted $90,000 in sales in his first 13 months and $1 million in revenue in 1870. It set the foundation for R.H. Macy & Co., which became one of the world's largest and most successful department store chains. "One of six children, (Macy) valued a dollar and instinctively sympathized - much as retailer Sam Walton did a century later - with customers who hungered for bargains," Jeffrey Trachtenberg wrote in "The Rain on Macy's Parade." Macy wasn't alone in his business practices, but he executed them better than his competitors. Some other merchants, for example, used the same-price-to-all system and charged low fees. But in ads they avoided giving specific prices, using only percentages of discounts. Macy would quote exact prices. "He refused to haggle on price, which is what made Macy's different, and the customers liked it," Macy's one-time chairman, Edward Finkelstein, once said. Macy saw that he needed to do something special because his store was outside the premier shopping district. Only people who walked in front of the 20-foot-wide by 60-foot-deep store noticed its sign or a window display. He soon crafted a series of colorful newspaper ads. Ads then typically crammed words into small spaces and were dull and difficult to read. Instead of filling an entire area with copy, writes Ralph Hower in "History of Macy's of New York: 1858-1919," he left white space by breaking up the text and making zigzag patterns or narrow columns with words. He repeated key words and phrases over and over to emphasize them. Macy deployed large block headlines in a way rarely used by competitors. He'd capitalize the items on sale, and note after each item that it was "marked way down" to make sure people got the message. "The modern observer is bound to be struck by the contrast between the typical Macy advertisement of this period and the announcements of competitors," Hower wrote. "Macy's copy was lively, interesting and informal. It reflected a talent for modern methods of publicity which was apparently unique at the time." Macy increased the chances his message would be seen by breaking it into a series of small, boxed ads on the same page. He advertised more often and widely than competitors, buying space in five different newspapers. He usually waited until after the big rush of spring and fall seasonal announcements to advertise. Macy knew he'd need to increase his floor space to expand his business. But now that people knew where his store was, he didn't want to move. He acquired the leases of 11 neighbors and created a department store that sold clothes, jewelry, toiletries, plants, toys, dolls and many other items. He began accepting mail orders. Shoppers who lived in Brooklyn or across the Hudson River in the New Jersey towns of Hoboken and Jersey City received free deliveries. Customers loved the service. In 1873, Isodor and Nathan Strauss, who owned a wholesale china and crockery operation in lower Manhattan, asked Macy whether they could rent space in his store for a fixed percentage of their sales. A recession was under way, and Macy was eager to keep his sales alive. He offered the Strausses 2,500 square feet of prime selling space in the basement. They opened an extensive china store that sold everything from plates to glassware. It soon became the most popular area in Macy's and increased customer traffic throughout the store. Its success "enhanced Rowland Macy's reputation as a skilled businessman with an eye for value," Trachtenberg wrote. Macy also had an eye for talent and wasn't concerned about what people thought of his choices. He hired the first woman executive in retail sales, promoting Margaret Getchell from cashier to bookkeeper to store superintendent over a five-year period. Macy was born into a Quaker family. He probably adopted his single-price-for-all-customers policy because of the Quaker principle of charging only one fee for an item, and a belief that "departing from that principle was a form of dishonesty, to say nothing of the waste of time involved," Hower wrote. Macy never lost confidence in himself. "Macy had failed, but he was not daunted," Hower wrote. "He had met adversity before and knew that he would meet it again. Like his contemporaries in American business, he was full of courage, energy and resource. A failure simply meant that one began a new."

Investor's Business Daily newspaper runs a daily short biography of a "leader" or "successful person." They've published a book or two containing back entries, but you can also get them daily from http://investors.com (view today's newspaper then click on "Leaders & Success" icon.)

Date :01/18/2000
Investor's Business Daily newspaper
Author :Michael Richman
Copyright :Investor's Business Daily
Title :Entrepreneur R.H. Macy -