Service Merchandise

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Service Merchandise
Type defunct private catalog merchant and showroom
Founded 1934
(revived as an Internet site in 2004)
Headquarters Original company in Brentwood, Tennessee;
current company in Boca Raton, Florida
Industry Retail
Products home furnishings, consumer electronics, jewelry, watches, toys
Website http://www.servicemerchandise.com
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To comply with Wikipedia's lead section guidelines, it should be expanded to summarize the article.

Service Merchandise is a defunct chain store carrying fine jewelry, toys, sporting goods, and electronics that existed from 1934 to 2002. The company's former chairman, Raymond Zimmerman, resurrected Service Merchandise as an Internet-only retailer in 2004 after buying the name and logo at auction, and later forwarded the website to another online store in 2007.

Contents

[edit] History

[edit] Beginnings

Service Merchandise was founded by Harry and Mary Zimmerman as a "five and dime" in 1934. The first catalog showroom opened in 1960 on Broadway 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 were moved from Nashville to nearby Brentwood, Tennessee, becoming one of the first businesses to plant itself in the area that is now known as Cool Springs. On May 9th 1985 the H.J. Wilson Co was acquired by Service Merchandise for approximately $200M. Raymond Zimmerman 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 15,000 sq feet. Service Merchandise also had wholly-owned subsidiaries featuring retail stores such as Zim's Jewelers, HomeOwners Warehouse (later called Mr. HOW Warehouse), The Lingerie Store, and a children's clothing superstore.

[edit] Downfall

Final logo before store closure used from 1999-2002. (The 1985-1999 logo was revived on the website.)
Final logo before store closure used from 1999-2002. (The 1985-1999 logo was revived on the website.)

The company survived into the 1980s but gradually lost business to giant discounters such as Wal-Mart and Best Buy. Until its closure, however, Service Merchandise continued to be the largest watch retailer in the United States. Service Merchandise was also late to embrace the Internet in the mid-1990s as a method of doing business, on both the internal and retail levels.

The company responded to its plight with a series of restructuring plans that included the discontinuation of unprofitable product lines such as electronics, toys and sporting goods, and focusing on fine jewelry, gifts, and home decor products. Many showrooms closed, and many that remained open were downsized significantly. The company succeeded in dividing many of its company-owned buildings into two or three parcels and then renting the newly-created space to other national chain retailers.

[edit] Bankruptcy and 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 its relations with its vendors and creditors, and to stabilize its business.

Raymond Zimmerman, son of the company founders, resigned as chairman of the board in November 2000. The company had 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 [1]. With only 200 catalog showrooms left, stock valued at less than one cent per share, and no profitability in sight, Service Merchandise ceased operations and shuttered all of its stores by early 2002, owing over US$500 million to creditors.

[edit] Return of the name

Service Merchandise resurfaced on the World Wide Web in 2004, selling a similar line of merchandise. Raymond Zimmerman bought the former company's name and logo at auction, and he continues to be the owner of the newly formed company. However, in 2007, ServiceMerchandise.com was forwarded to another of Zimmerman's internet efforts, 99centstuff.com.

[edit] Showroom ordering process

Service Merchandise was well-known for its unique ordering process which emphasized the catalog, even within the showrooms.

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 and pay by credit card 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", 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.[1]

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.

One of the major complaints by customers, which was never addressed by management, was the necessity of providing a telephone number in order to make a purchase. While the store had a valid reason - it used the number as an identifier to collect customer's mailing addresses for catalog shipments - most customers preferred anonymity when making simple purchases for self-service items, such as batteries, small toys, coolers, and other items that could be purchased off the shelf. In customers' opinions, this unwanted collection of their personal information negated any cost savings that Service Merchandise provided, and possibly drove customers to more traditional retailers. It was not uncommon for the cashiers to enter bogus telephone numbers and mailing addresses during busy retail shopping seasons, simply to speed up the ordering process and move the lines along. This created a situation where the company was spending money to unnecessarily attempt to ship catalogs to addresses that didn't exist.

[edit] Muscular Dystrophy Association

Older logo used from the 1970s-1985.
Older logo used from the 1970s-1985.

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.

[edit] Former locations

The following is a list of the former Service Merchandise locations in the United States.

Former Service Merchandise locations 

[edit] References

  1. ^ Service Mdse. quickly expands, renames home center chain - Mr. How Warehouse | Discount Store News | Find Articles at BNET.com

[edit] See also

[edit] External links