| Montgomery Ward retailer logo, also store's 1982-1992 logo | |
| Type | Private — Original Incarnation, mail order and department store Current Incarnation, online retailer and catalog merchant |
|---|---|
| Industry | Retail |
| Fate | Bankruptcy in 2001; Namesake Retailer Launched in 2004 after purchase of trademarks. |
| Founded | 1872 (as mail order company and later department store, defunct 2001) 2004 (as current online retailer) |
| Headquarters | Original company in Chicago, Illinois, United States 2004 to 2008; Namesake company Cedar Rapids, Iowa and Monroe, Wisconsin, United States. |
| Key people | Original company: 1872 founder, Aaron Montgomery Ward ; namesake company: John Baumann, president of parent company Swiss Colony |
| Products | Clothing, footwear, bedding, furniture, jewelry, beauty products, appliances, housewares, tools, and electronics. |
| Divisions | Wards Kids Montgomery Ward Catalog |
| Website | http://www.wards.com |
Montgomery Ward is the name of two historically distinct US retail enterprises. It can refer either to the original name of current online retailer Wards, or to the defunct mail order and department store retailer which operated between 1872 and 2001.
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Montgomery Ward was founded by Aaron Montgomery Ward in 1872. Ward had conceived of the idea of a dry goods mail-order business in Chicago, Illinois, after several years of working as a traveling salesman among rural customers. He observed that rural customers often wanted "city" goods but were often victimized by monopolists who offered no guarantee of quality. Ward also believed that by eliminating intermediaries, he could cut costs and make a wide variety of goods available to rural customers, who could purchase goods by mail and pick them up at the nearest train station.
After several false starts, including the destruction of his first inventory by the Great Chicago Fire, Ward started his business at his first offices at the corner of North Clark and Kedzie streets, with two partners and using $1,600 they had raised in capital. The first catalog in August 1872 consisted of an 8 by 12 in. single-sheet price list, showing 163 articles for sale with ordering instructions. Ward himself wrote the first catalog copy. His two partners left the following year, but he continued the struggling business and was joined by his future brother-in-law Richard Thorne.
In the first few years, the business was not well received by rural retailers, who considered Ward a threat and sometimes publicly burned his catalog. Despite the opposition, however, the business grew at a fast pace over the next several decades, fueled by demand primarily from rural customers who were attracted by the wide selection of items unavailable to them locally. Customers were also attracted by the innovative and unprecedented company policy of "satisfaction guaranteed or your money back", which Ward began using in 1875. Although Ward turned the copy writing over to department heads, he continued poring over every detail in the catalog for accuracy. Ward himself became widely popular among residents of Chicago, championing the causes of the common folk over the wealthy, most notably in his successful fight to establish parkland along Lake Michigan.
In 1883, the company's catalog, which became popularly known as the "Wish Book", had grown to 240 pages and 10,000 items. In 1896, Wards acquired its first serious competition in the mail order business, when Richard Warren Sears introduced his first general catalog. In 1900, Wards had total sales of $8.7 million, compared to $10 million for Sears, Roebuck and Co., and the two companies were to struggle for dominance for much of the 20th century. By 1904, the company had grown such that three million catalogs, weighing 4 pounds each, were mailed to customers. [1]
In 1908, the company opened a 1.25 million ft² (116,000 m²) building stretching along nearly 1/4 mile of the Chicago River, north of downtown Chicago. The building, known as the Montgomery Ward & Co. Catalog House, served as the company headquarters until 1974, when the offices moved across the street to a new tower designed by Minoru Yamasaki. It was declared a National Historic Landmark in 1978 and a Chicago historic landmark in May 2000. [2] In the decades before 1930, Montgomery Ward built a network of large distributions centers across the country in Baltimore, Fort Worth, Kansas City, St. Paul, Portland, Oregon, and Oakland, California. In most cases, these reinforced concrete structures were the largest industrial structures in their respective locations. The Baltimore Montgomery Ward Warehouse and Retail Store was added to the National Register of Historic Places in 2000.[1][2]
Ward died in 1913, after 41 years running the catalog business. The company president, William C. Thorne (eldest son of the co-founder) died in 1917, and was succeeded by Robert J. Thorne. Robert Thorne retired in 1920 due to ill health.
In 1926, the company broke with its mail-order-only tradition when it opened its first retail outlet store in Plymouth, Indiana. It continued to operate its catalog business while pursuing an aggressive campaign to build retail outlets in the late-1920s. In 1928, two years after opening its first outlet, it had opened 244 stores. By 1929, it had more than doubled its number of outlets to 531. Its flagship retail store in Chicago was located on Michigan Avenue between Madison and Washington streets.
In 1930, the company turned down a merger offer from rival Sears. In 1939, as part of a Christmas promotional campaign, staff copywriter Robert L. May created the character and illustrated poem of Rudolph, the Red-Nosed Reindeer. Six million copies of the storybook were distributed in 1946. The song was popularized by Gene Autry.
After World War II, Montgomery Ward had become the third-largest department store chain. In 1946, the Grolier Club, a society of bibliophiles in New York City, exhibited the Wards catalog alongside Webster's dictionary as one of 100 American books chosen for their influence on life and culture of the people. The brand name of the store became embedded in the popular American consciousness and was often called by the nickname Monkey Ward, both affectionately and derisively.
In April 1944, four months into a nationwide strike by the company’s 12,000 workers, U.S. Army troops seized the Chicago offices of Montgomery Ward & Company.[3] Montgomery Ward refused to comply with a War Labor Board order to recognize the unions and institute the terms of a collective bargaining agreement. Eight months later, with Montgomery Ward continuing to refuse to recognize the unions, President Roosevelt issued an Executive Order seizing all of Montgomery Ward’s property nationwide, citing the War Labor Disputes Act as well as his power under the Constitution as Commander in Chief. In 1945, Truman ended the seizure and the Supreme Court ended the pending appeal as moot.[4]
In 1955, investor Louis Wolfson waged a high-profile proxy fight to obtain control of the board of Montgomery Ward. This fight led to a state court decision that Illinois corporations are not entitled to stagger their boards under that state's laws, to tax litigation over whether the costs of a proxy fight are an "ordinary and necessary business expense," and, in time, it helped inspire new Securities and Exchange Commission rules concerning proxies.
Meanwhile, throughout the 1950s, the company was slow to respond to general movement of the American middle class to suburbia. While its old rivals Sears, J.C. Penney, Macy's, McRae's, and Dillard's established new anchor outlets in the growing number of suburban shopping malls, the top executives thought such moves as too expensive, sticking to their downtown and main street stores until the company had lost too much market share to compete with its rivals. Its catalog business had begun to slip by the 1960s. In 1968, it merged with Container Corporation of America to become Marcor Inc.
During the 1970s, the company continued to flounder. In 1976, it was acquired by Mobil, which was flush with cash from the recent rise in oil prices. In 1985, the company closed its catalog business after 113 years and began an aggressive policy of renovation of the remaining stores. The renovations centered on restructuring many of the store layouts into boutique-like speciality stores. In 1988, the company management undertook a successful $3.8 billion leveraged buyout, making Montgomery Ward a privately held company.
In 1987, it began a push into consumer electronics using the "Electric Avenue" name. Montgomery Ward greatly expanded their electronics presence by shifting from a predominantly private label mix to an assortment dominated by Sony, Toshiba, Hitachi, Panasonic, JVC, and other national brands. This strategy was led by V.P. Vic Sholis, who later became President of the Tandy Name Brand Retail Group (McDuff, VideoConcepts, and Incredible Universe). Seemingly on the right track for a rebound in market share, in the late 1980s and early 1990s Montgomery Ward was one of the hottest retail chains in the country. 1994 brought a 94% increase in revenues, largely due to Ward's tremendously successful direct-marketing arms. For a short while Wards was also back in the mail-order business, through "Montgomery Ward Direct", a mail order business licensed to the catalog giant Fingerhut. But by the mid 1990s sales margins were eroded even further in the competitive electronics and appliance hardlines, which traditionally were Ward's strongest lines.
The company also spun off Jefferson Ward (known as "Jeffersons"), a discount department store version of Montgomery Ward, introduced in 1980. The chain was sold to Bradlees, a division of Stop & Shop, in 1985. All Jefferson Ward stores were former Two Guys, J.M. Fields, or Almart (not to be confused with Wal-Mart) stores.
In 1994, it acquired the now-defunct New England retail chain Lechmere.
By the 1990s, however, even its old rivals had begun to lose ground to low-price competition from Kmart, Target, and especially Wal-Mart, which stripped away even more of Montgomery Ward's old customer base. In 1997, it filed for Chapter 11 bankruptcy, emerging from bankruptcy court protection in August 1999 as a wholly owned subsidiary of GE Capital, by then its largest shareholder. As part of a last-ditch effort to remain competitive, the company closed 250 retail locations in 30 U.S. states, closed all the Lechmere stores, abandoned the speciality store strategy, renamed and rebranded the chain as simply Wards (although unrelated, Wards was the original name for the now-defunct Circuit City), and spent millions of dollars to renovate its remaining outlets to be flashier and more consumer-friendly. But GE reneged on promises of further financial support of Wards' restructuring plans.
On December 28, 2000, the company, after lower-than-expected sales during the Christmas season, announced it was going out of business and would close its remaining 250 retail outlets and lay off its 37,000 employees. All the stores closed within weeks of the announcement. The subsequent liquidation was at the time the largest retail bankruptcy liquidation in U.S. history. Roger Goddu, Wards' CEO, was offered the CEO position of J.C. Penney. Goddu declined on pressure from GE. One of the last stores to close was the Salem, Oregon location in which the head of the Human Resources Division was located. By May 2001 Montgomery Ward was gone.
In 1999, Montgomery Ward completed a standard termination of its $1.1 billion Employee Pension Plan (Wards Retirement Plan WRP and Retired/Terminated Associate Plan RTAP) , which at that time had an alleged estimated surplus of $270 million. The termination of the Pension Plan included 30,000 Ward retirees and 22,000 active employees who were employed by Ward's in 1999. According to tax rules at that time (to avoid paying a 50% Federal Excise tax on the plan's termination), Wards then placed 25% of the plan's surplus into a new Replacement Pension Plan, and paid federal tax of just 20% on the balance of the surplus. The final result: the estimated remaining $25 to $50 million of the Employee Pension Plan surplus went to Ward's free of income taxes, because the company, which was in Chapter 11 bankruptcy proceedings, had huge operating losses. In reality, Ward's received an alleged estimated $25 to $50 million for ending the Employee Pension Plan and avoided paying hundreds of thousands in yearly pension premiums to the Pension Benefit Guarantee Corporation. Employees and retirees vested in the Pension Plan were given a choice of receiving an annuity from an insurance company or a lump sum payment.
Four of the six massive catalog distribution centers built by Montgomery Ward from 1921 to 1929 remain and three of these have been the focus of projects of adaptive reuse that have become perhaps the most tangible legacy of Montgomery Ward. Two others have been demolished for various types of redevelopment.
At its height, the original Montgomery Ward was one of the largest retailers in the United States. After its demise, the familiarity of its brand made its name, corporate logo, and advertising were considered valuable intangible assets. In 2004, catalog marketer Direct Marketing Services Inc. (DMSI) purchased much of the intellectual property assets of the former Wards,[19] using the brand for a new online and catalog-based retailer with no physical stores headquartered in Cedar Rapids, Iowa.[20] The new firm began operations in June 2004, selling much the same categories of products as the former brand.
"Montgomery Ward" and "Wards" trademarks were purchased by Iowa-based direct marketing company Direct Marketing Services Inc. (DMSI), a catalog marketer, for an undisclosed amount of money. DMSI then began operating under the same branding as the original company and managed to get it up and running in three months and started a new, smaller catalog. It is not the same company as the original, however. As such, the new company does not honor obligations of the previous company, such as gift-cards and items sold with a lifetime guarantee. David Milgrom, then president of the new firm, said in an interview with the Associated Press: "We're rebuilding the brand, and we want to do it right." [21]
In July 2008, it was announced that DMSI was on the auction block, with an auction scheduled for August 2008. Catalog retailer Swiss Colony purchased DMSI on August 5, 2008. Swiss Colony has announced that it will keep the Montgomery Ward catalog division open. The Web site launched on September 10, 2008, with new catalogs mailing in February 2009.[22] A month before the catalogs' launch, Swiss Colony President John Baumann told United Press International the retailer might also resurrect Wards' Signature and Powr-Kraft store brands.[23]
