The Romance of a Great Store Part 8

The exposition of the workings of the Macy organization is yet to lead us into other chapters in which various separate subjects of interest will be treated at greater length than here; but now is the time and place to focus our attention upon one of the small, but extremely important, departments that works unseen--but not unfelt--behind the scenes. It is known as the comparison department and the work that it does is of vast importance in the operation of the store. Its functions are unending--and continuous. Macy's policy of underselling its compet.i.tors is an unhalting one.

I have before me a Macy advertis.e.m.e.nt from a New York newspaper of recent date. In a conspicuous place in it there is a card which says: "For sixty-two years we have sold dependable merchandise at lowest in the city prices. We are doing so now and shall continue to do so." This was published at a time when the recent reaction from the extremely high prices of the war period already had begun to set in; and yet this was the big store's sole acknowledgment of the deflation sentiment--to say nothing of hysteria--which was sweeping the town. Its compet.i.tors had been offering their wares at reductions of from twenty to fifty per cent. from their topmost prices, but, serene and secure in the knowledge that its policy in selling had been consistently adhered to, Macy's only reiterated that its prices would continue to be the lowest in the city--quality for quality.

To hold fast to this policy, through thick and thin, has not always been easy. Macy's has fought some royal battles in its behalf--yet not so much because it was a policy as because with the big store in Herald Square it has become a principle of the most fundamental sort.

More than twenty years ago the principle became extremely difficult to maintain, because of the growing tendency of the proprietors of articles, so patented or copyrighted as to make their imitation practically impossible, to attempt to fix their final retail sales price. It no longer became the mere question of whether Macy's or any other store would have the right to undersell its compet.i.tors; it became the fundamental question of whether the great centuries-old open market of the world could continue to remain an open market, in the interest of the consumer; and not a closed market, in the interest of the producer.

To maintain the first of these positions, in behalf of its patrons, Macy's entered upon and won, almost single-handed, one of the notable legal battles in the history of this country.

As far back as 1901--if you are a stickler for exact dates--this whole question of price maintenance became an acute issue with Macy's. It came to pa.s.s that when the prominent publishers of America formed an a.s.sociation, one prime purpose of which was to fix the prices at which their books would sell at retail, the store quickly saw that if this trust agreement was permitted to stand unchallenged, its cardinal principle of underselling its compet.i.tors, would have to be sacrificed.

Macy's did not propose to make such a sacrifice--to permit its customers to be sacrificed--without a protest. And such a protest it prepared to make.

Isidor Straus, then the head of the business, sat in the office of his friend and counsel, Edmond E. Wise, in a downtown office. Mr. Wise put the thing frankly and without equivocation before his client. He said that it would be a hard legal fight, no doubt of that, but that a great principle was at stake; the keen mind of the lawyer was convinced of the economic fallacy of the position of the publishers' a.s.sociation.

Quietly Mr. Straus told his attorney to go ahead. He said that he would fight the fight, to the last ditch. No expense was to be spared. The case would be carried, if necessary, in every instance to the highest court of appeal.

Accordingly, Mr. Wise prepared a suit against the American Publishers'

a.s.sociation which holds the record for appeal in the history of jurisprudence in this country. Three times it went up to the Court of Appeals of the State of New York; finally, after nine years of legal battle, it was carried to the United States Supreme Court, which, after due deliberation, decided every point in favor of R. H. Macy & Company.

That was in December, 1913. Early in the following May the firm had the satisfaction of having the publishers hand over a check on the Park National Bank for $140,000. This sum represented a settlement for the difficulties that Macy's had had to undergo for more than a dozen years past in getting stock for its book department. Ofttimes it was necessary to follow devious paths indeed to gain this end--and still hold fast to the fundamental underselling policy of the store. Sometimes the store had to go so far as to send to other retail stores to buy a certain volume, at the full retail price, and then resell it to its patrons, at its customary ten per cent. off the price of the store at which it had just purchased it. So much if you please for the expense of standing by a principle!

A short time after this signal victory of Macy's, certain large manufacturers of patented articles, who for a time had sustained in the lower courts their claim to a fixed retail price standard, sought definitely to control Macy retail prices upon their products. Macy's, however, defied them, and the Victor Talking Machine Company, one of the leading adherents of price maintenance, brought an action in the United States courts to compel Macy's adherence to the rules for resale at a certain price. Again there was a royal battle and again Macy's triumphed signally, for on final appeal, the United States Supreme Court again decided in favor of the store in Herald Square, on every one of its contentions. Macy's then retaliated and brought suit against the Victor Company, under the Sherman Law. In a bitterly contested action, which culminated in one of the longest trials before a jury on record--consuming more than ten weeks--Macy's recovered a judgment of $150,000, and a counsel fee of $35,000; after which no paths apparently were left open to the manufacturers who sought to maintain the retail prices that suited them best. Court decisions seemingly blocked all possible pathways.

One path did remain, however--legislation. Effort was made to pa.s.s a measure down at Was.h.i.+ngton to permit and sustain retail price maintenance, which in reality meant the emasculation of the Supreme Court's decisions. When that measure came to a hearing before the Interstate Commerce Committee of the House one of the Macy partners, accompanied by Mr. Wise, the store's counsel, and Mr. E. A. Filene, the well-known Boston merchant, came before it in opposition. Up almost to that hour, Macy's had gone it alone. Now the attention of the country was focussed upon its fight and the National Retail Dry Goods a.s.sociation came in with both its sympathy and its active co-operation--hence the appearance of Mr. Filene, who made a most excellent argument in support of the Macy contention.

It was shown definitely to the members of this House committee that many, if not all, branded and patented articles took a retail profit of from fifty to seventy-five per cent. The member of the Macy firm took a watch nationally advertised at $2.50 and duplicated it with a watch which his store sold at sixty-five cents, going so far as to take the two watches apart so as to show conclusively that the one was quite as good as the other. Certain other commodities went under similarly critical a.n.a.lyses. When the hearing was completed, the committee laughed the bill out of court. Since then the question of price maintenance by the original producer has been permitted to drop. Macy's had won its hard-fought fight; won it cleanly and honestly. By performance it had made good its statements that it proposed wherever it was humanly possible to undersell its compet.i.tors. That was no idle phrase.

It is indeed one thing to make a statement--whether in print or by word of mouth--and another and ofttimes a far more difficult thing to make good that statement by performance. No one knows this better than Macy's. Having set down such a definite and distinct statement it must be prepared to make good. It must be so covered and protected at every possible point that if challenged it can give a good account of itself.

In fact, challenges come in every day--they have been coming in every day for a good many years now--and the house continues to make good its statement willingly--even joyfully. Here it is, then, that the comparison department functions; here it is that the original fundamental policy of Rowland H. Macy--to buy and sell only for cash--strictly adhered to during the sixty-four years' life of the business--makes it possible for the house to make good.

How, then, is it done?

The answer is easy.

Suppose, if you will, that Smith, Brown & Jones are having a special sale of Mother Hubbard wrappers. There are advertised as their regular $4.97 stock, marked down (at a heartbreaking sacrifice) to $3.79.

Manifestly, it is up to R. H. Macy & Company to sell the same quality of Mother Hubbard for less than $3.79, if they are to live up to their oft-stated policy. It is quite as patent that Macy's must know just what kind of wrappers Smith, Brown & Jones are selling, if it is to compete on an exact basis. Nothing simpler. One of the Macy staff of shoppers is hurried forthwith to the scene of the bargain and, purchasing one of the garments, brings it back post-haste to the Macy comparison department. Furthermore, it is in this department by ten o'clock of the morning of the sale. It is then matched as closely as possible with a Mother Hubbard from the Macy stock, and the two garments compared, point by point. If, after careful examination, it is found that Macy's is charging more, or even the same price, for equal quality, then its prices are immediately marked down to a figure at least six per cent. lower than that advertised by the other store. And this, mind you, is not an exceptional performance but a daily procedure in the carrying out of which an exceptionally alert woman manager and twenty expert shoppers are constantly kept busy.

If you make inquiry regarding the ins and outs of this remarkable policy you will find that it is far broader than you may have imagined. Here, again, is proof of the pudding. It is a typical letter, received from a customer and copied verbatim, with only the name left out:

November 12, 1920.

R. H. Macy & Co., New York City.

Dear Sirs:

I purchased a banjo clock at $13.89 from you on Tuesday. Yesterday I saw the same clock, with same works, etc., identical in every way, at ----'s, for $11.25. Now, inasmuch as you claim that you sell goods at the very lowest figure, I think that is too much difference in price to overlook. I trust that I shall receive your check for the difference in the amount, otherwise please call for the clock at once. I purchased clock in the bas.e.m.e.nt.

Yours very truly,

This letter was received by the store and acknowledged that very day. It then was turned over to the comparison department, from which a shopper was despatched to the store at which the customer claimed to have seen the clock for less money. The shopper reported that the claim was correct, and a check was immediately forwarded to the customer for the difference between the price which she paid for the clock and six per cent. less than the other store's price for it. Nor did the matter end there. All this kind of clocks in the bas.e.m.e.nt were at once repriced to conform to the adjustment made with the customer.

There are, too, the occasional tests made by customers who, while they are not dissatisfied, cannot believe that the low-price policy can be consistently carried out. As an example, this half-jocular letter:

November 15, 1920.

R. H. Macy & Company, Broadway & 34th Street, New York.

Gentlemen:

Lest you regard this as a complaint from an ordinary .22 calibre chronic kicker let me say in the first place that I merely want to see to what extent you will make good on your brazen claim to sell goods at a lower price than other stores. Now then:

On November 10th, I purchased a toy "cash register" bank in your toy department for $1.98. (I want the kid to learn frugality better than I did.) On November 14th my wife saw the same toy at Hahne's in Newark, N. J., for exactly the same price. So far, so good. It was worth it. But, Mr. Macy, you said your prices were _less_.

Besides, I have an account at Hahne's. By the time I would have needed to pay for that bank there would have been enough in it to settle the bill.

Here is your chance, but I'm from Missouri.

Yours,

The answer to this complaint was prompt and to the point. It reads:

R. H. MACY & CO.

HERALD SQUARE, NEW YORK

December 4, 1920.

Mr. ------ ------ ------

Dear Sir:

We acknowledge your letter of November 24th, with regard to a toy-bank, which you purchased from us for $1.98. We have investigated your complaint and find, as you state, Hahne & Co. in Newark are selling this article at the same price at which you purchased it from us. Our price on these banks is now $1.89, in keeping with our claim that we sell dependable merchandise for "lowest-in-the-city" prices.

We appreciate your courtesy in calling this matter to our attention and also for the opportunity to demonstrate the upholding of our policy. A refund of nine cents in stamps is enclosed.

Yours very truly, (Signed) R. H. MACY & CO.

------ Mgr.

Bureau of Mail Order and Adjustment.