TELECOM Digest OnLine - Sorted: Re: New Monopoly in Dept Stores; Federated and May to Merge

Re: New Monopoly in Dept Stores; Federated and May to Merge
7 Mar 2005 13:15:01 -0800

Bob Goudreau wrote:

> More to the point, the Bell system monopoly was actually sanctioned by
> the government. No analogous situation has ever existed in US
> retail, thankfully.

I don't know of anything major, but Pennsylvania's liquor stores (wine
and hard stuff) were and remain the sole source of that for within

At the end of WW II the govt had a monopoly on reactor by-products
used for medical and physics research.

> The defined market that Sears itself paid attention to was "retail",
> and Sears was for decades the market leader in the US.

Yes and no. While Sears had a big array of products, it didn't sell
everything and there were other retail stores that did. (Did Sears
have book departments? Grocery stores?) Further, Sears was a "full
service" store, but there were other high-end and low-end stores (esp
low-end discounters). Sears may have been the _biggest_, but it
certainly had plenty of competition in retail.

>> As a shopper, if Wanamaker's didn't have what I wanted, I'd go up
>> the street to Strawbridges, and then over to Gimbel's. Three
>> different stores, run by three different companies. As mentioned, I
>> also_ had the choice of numerous smaller specialty stores and
>> discount stores.

>> And we still do, including a vast plethora of new specialty and
>> discount stores out there in cyberspace. The way people choose to
>> shop is heavily influenced by the available technology. ...

Again, yes and no. I don't like buying clothing via the Internet
because size labels have terribly high variances (I have "large" items
that are too tight on me and "medium" items that swim on me. You have
to try something on every time regardless of the stated "size".)

I don't like the discount/specialty stores since they don't offer the
service/support/guarantee/integrity that the traditional stores do.
For instance, at "Best Buy" I bought software that came with a rebate.
It turned out I could've bought the same product at another store.
The other store had a cheaper price (no rebate). They never sent me
the rebate check (for $20) so I grossly overpaid. The big dept stores
will cheerfully take stuff back, the discounters don't like it even if
it's obviously defective merchandise. Further, the discounters are
fast and free on product spec labels, I remember them pushing TVs
supposedly having stereo but were actually mono.

Lastly, on sale items, the dept store prices are competitive.

Some specialty/discount stores have a relatively short life.

> I think this actually reinforces (not refutes) my point. (And the
> "railroad business vs. transportation business" observation isn't
> actually even my own; it's the one made famous by Theodore Levitt in
> his 1960 Harvard Business Review article entitled "Marketing Myopia".)
> The behavior of the railroad companies shows that they clearly saw
> their other business lines as mere adjuncts to support their crown
> jewels, which were the railroad lines. So much so that when they were
> forced to choose between the old, proven business and the new,
> higher-growth lines, the railroad execs chose to stick with what they
> knew and to sell off the other stuff. They could have chosen instead
> to sell off their rail assets and concentrate on the higher-growth
> markets.

As I said, the railroads were FORBIDDEN by the govt to do what you
suggest, and ORDERED to divest what things they had done. For
example, the railroads set up bus lines to more efficiently serve
light-volume areas, but the govt ordered them out. Railroads were
regulated, just like the phone company, and the phone company was
tightly limited into what communication product markets it could
enter. (Western Electric had sound systems they had to discontinue.)

Now Hollywood was late in shifting its resources to television,
initially it hated TV thinking of it as an enemy.

Further, IBM was exactly as you describe, seeing punch cards as its
business, not electronic computers, and had to rush to catch up when
they finally realized they missed the first boat. Fortunately, they
were doing some experiments and research, Watson Sr was not as
anti-electronics as claimed and he initiated basic research during the

> That's exactly right. The department stores have been trimming
> departments as business trickles away to other retailers, especially
> "category killers". How many people would buy a TV or a pair of skis
> at Macy's these days, when they know they could get a better selection
> and better prices at Best Buy or a sporting goods superstore?

The thing is, I'm far from convinced those other stores are truly
superior. They actually seem to have a smaller selection and not the
most desirable models. I recall shopping for a VCR and a TV (a few
years ago) at both types I ended up getting the best price and
selection from a traditional dept store, not the discounters or
specialty. I checked the mfr's web site and only the dept stores had
the most desirable model I wanted.

> People just don't particularly need department stores any more in
> order to purchase their clothes and furnishings. They can buy their
> clothes and furnishings elsewhere, and they increasingly are doing so,
> which is why the department store chains are having so much trouble in
> the first place.

I would be curious: take men's dress suits. What is the breakdown for
men buying suits? I dobut Walmart/Kmart are that big. One
discounter, Today's Man, went out of business.

> The radio station they started
> acknowledged this fact by its call sign: 'W'(orlds)'L'(argest)'S'(tore),
> based in Chicago. WLS is on AM radio 890 kc, which was and still is a
> clear channel frequency.

I used to listen to it at night in Phila.

[TELECOM Digest Editor's Note: WLS comes booming in at night here in
Independence, also. PAT]

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