Articles

WHEN SEARS JOINS UP WITH SIMPSON’S

ERIC HUTTON November 1 1952
Articles

WHEN SEARS JOINS UP WITH SIMPSON’S

ERIC HUTTON November 1 1952

WHEN SEARS JOINS UP WITH SIMPSON’S

some of the most fabulous salesmen North America has ever seen will merge their talents and their histories—which all began in Toronto—in an all-out campaign for your shopping dollar

CONCLUSION

ERIC HUTTON

FIFTEEN-YEAR-OLD Charlie Luther Burton decided to quit the law business in 1891, and his father walked him down Yonge Street. Toronto, on a job-hunting expedition. Yonge had but recently won from King Street its place as the city’s fashionable shopping district and mercantile history was even then incubating on this narrow muddy thoroughfare.

Eaton’s, north of Queen, was already Toronto’s biggest store and showing signs of becoming the biggest factor in Canadian retailing, as it is today, via a chain of departme"t stores and mail-order selling. Robert Simpson, south of Queen, was constantly adding to the premises of his dry goods and ladies' wear store and converting it into a full-fledged department store. Two short blocks to the south, at 112 Yonge Street, a twenty-eight-year-old man with a crew haircut and fierce mustaches ran a hole-in-the-wall store, its small window crammed with yellow watches and cheap jewelry. From the back room the young man. whose name was Alvah Curtis Roebuck, addressed bv hand and mailed out to Ontario farmers and small-town folk a small catalogue on cheap paper extolling the wares of his company, the R. \V. Sears and A. C. Roebuck Watch Co.

Sixty-one years after the day he walked down Yonge Street looking for a jo >. Charles Luther Burton was to announce that Simpson's, now his own store and grown a hundid times bigger, had joined with the heirs of the little watch-and-trinket shop at 112 Yonge Street to form Simpsons-Sears Limited. The new company, under tne presidency of Burton's son Edgar will start next January to bring a new kind of department-store and mail-order snopping to Canadians and provide the most serious threat in eighty years to Eaton’s still-leading position in Canada's retail market. What Sears Roebuck has put into Simpsons-Sears is twenty million dollars for a half share in the new company, plus a wealth of hard-earned experience in buying good-quality goods cheap—and selling them cheap: a process which Sears Roebuck has learned so well that the companv has become North America's largest retailer of things people wear and use. with all-time record sales last vear of S2.660.000.000. Simpsons-Sears. with largely Canadian personnel but with key Sears Roebuck executives pitching in, is already expanding Simpson's sixty-million-dollars-a-year mail-order business and is planning up to forty modern medium-sized department stores across Canada, set in suburban areas in huge parking lots. The first store, near Vancouver. B.C.. should open late in 1953.

In this colossal deal between two of the largest merchants in North America, indeed in the parallel saga of the two companies. C. L. Burton is the unique figure. Burton, just twelve vears younger than both Sears and Roebuck, was already buying a partnership in a Toronto wholesale fancy goods company in 1898 at the age of twentv-two and out of a modest salary - when the fabulous partners were still trying to find a formula which would put the mail-order selling of watches on a sound footing. And Burton was at the helm of Simpson's in 1952 when the seventh generation of management in succession to Richard Sears and Alvah Roebuck came to Toronto to negotiate with Simpson’s over the proposed partnership.

But on that day in 1891 Burton did not get a job either with Simpson's or with Sears Roebuck. His father led him down Yonge Street past l>oth stores. It is fascinating, if futile, to speculate on what might have happened to the course of Sears’ and Simpson’s history if Alvah Roebuck had had a "Boy Wanted" sign in his window that day.> Instead. George Burton took his son to the comer of Wellington Street where H. H. Fudger ran a fancy goods wholesale store.

Fudger was a man of great dignity and strictness. "Can you make out an invoice, boy?” he asked the fifteen-vear-old lad. Burton said he thought he could, and Fudger handed him a complicated document involving the conversion of pounds into dollars. "And ta e off a seven-and-three-quarterspercent discount,” Fudger said.

"Fortunately,” Burton later recalled, "Mr. Fudger left the room for some

time and I was able to work out the invoice. When he returned and examined it closely, he told me I could have the job—at two dollars a week.”

It was a fifty-cent cut from the salary he had been earning as junior student in the law firm of Thompson, Henderson and Bell, but Burton was glad to be out of law and into commerce.

Of the dozen men who have guided Sears and Simpson’s during the companies’ combined existence of nearly one hundred and fifty years, C. L. Burton has served longest and is the first one literally bom into shopkeeping. Burton and his present opposite number in Sears. General Robert Wood, are as unlike in temperament and background as two men could be; Wood, West Point and jungle warfare; Burton, Jarvis Collegiate and a bookkeeper’s stool. Yet they share points of surprising similarity in large and small things. Both are patriarchs of large four-generation families 'although only Wood could afford to offer his daughters mink coats every time they made him a grandfather): both are fond of candy but Burton, a less precipitate type, always removes the wrapping papier which Wood has been known to overlook in moments of stress: both were invited into the companies they now head to perform the tasks of efficiency expierts, long liefore that profession was known. Both gained reputations as "firing bosses.”

Burton’s parents, George and Elizabeth, ran „ general store at Green River, northwest of Toronto and five miles from Markham. An elder brother daily trudged the dusty roads to and from Markham high school, but Burton’s recollection is that his own education was sidetracked while he helpied in the store. He remembers, at the age of eight, candling endless dozens of eggs.

Sears and Roebuck, on the other hand, were farm boys. In his teens Richard Sears learned telegraphy from the station agent at Spring Valley, Minn., and later got a station of his own, North Redwood, at six dollars a week. One day in 1881 a C.O.D. box of watches arrived for the village jeweler, who could not pay. Sears asked the shipper for instructions, and received this answer: "To save cost of shipping back we will let you have watches at half price $12.” Sears accepted. He wrote other station agents up and down the line offering "Twenty-five-dollar watches for only fourteen dollars.”

The response to Sears’ letter to his fellow agents was so great that he reordered fresh supplies from the Chicago wholesaler to fill the demand. In a few months Sears netted five thousand dollars and quit railroading. In 1887 he opened the one-room R. W. Sears Watch Company in Chicago. He invested most of his capital in advertisements written by himself, offering low-priced watches for fifty cents down. He scon saw that he could make bigger profits by buying watch parts in job lots and hiring a man to assemble them. On April 1, 1887, he put this advertisement into the Chicago Daily News

WANTED. Watchmaker with reference who can furnish tools. State age, experience and salary required Address T39, Daily News.

The advertisement has become famous in newspaper want-ad offices and has been reproduced in full-page blow-ups by the News and other papers as a proof of the mighty oaks that can grow from three-line acorns.

Alvah Roebuck read the advertisement in his back room above a delicatessen shop in Hammond, Ind. Roebuck, also farm-bom near Lafayette, Ind., was then repairing watches in a corner of the delicatessen at three and a half dollars a week. Roebuck had long planned to go west as soon as he could save up a stake, so he threw the paper aside and went to bed. But in the middle of the night he awoke with the advertisement on his mind. He got out of bed, answered it and got the job.

The slow-speaking, easy-going Roebuck was only a hired hand in the expanding Sears Watch Co., and an overworked hand at that. Often he worked far into the night to keep up with Sears’ repair and rssembly orders.

Sears meanwhile had discovered an unexpected source ol revenue. Some pa|iers in which he advertised watches had a small circulation in Canada and a surprisingly large numlier of orders came from north of the border. In 1889 Sears opened an office in Toronto to exploit and expand the Canadian demand for his wares.

Three months later, without warning. Sears sold his Chicago business. One contemporary said of the deal, "Sears could sell u farmer a breath of air, and when Moore and Evans offered him seventy-two thousand dollars for his firm, he couldn’t resist selling, even though it put him out of business.”

But, instead of putting Sears out of business, it put him into partnership with Roebuck for the first time. His Toronto branch was not included in the sale and Sears persuaded his watch-repair man to buy a half share in it for $1,475, half the inventory value. Thus in 1889 the names of Sears and Roebuck became coupled for the first time. not. as many have taken for granted, in Chicago but in Toronto. The store at first was located at 69 Adelaide Street east, a site now occupied by a new insurance building. Roebuck boarded just around the corner at 85 Church Si reet Sears was accorded a personal listing in the Toronto city directory, but his residence was listed as "Chicago, 111.”

In 1891 Sears Roebuck moved to slightly larger and more desirable premises at 112 Yonge Street, and Roebuck lived above the store. Roebuck was happier in the quiet atmosphere of Victorian Toronto than he had been in raw rambunctious Chicago, and he tried to [lersuade Sears to move here permanently. But Sears decided instead to do in reverse what he had done before—to open a branch in the United States.

A year later Sears persuaded Roebuck that they should sell out in Toronto and go back to the United States. Now that Sears Roebuck and Co. of the United States had killed its Continued on pape 2b

Continued on pape 26

THESE MEN MADE MERCHANDISING HISTORY

As young men all three worked on Toronto's Yonge Street: Simpson with his growing department store, Sears and Roebuck with their mail-order watches. Sixty-one years later, their successors have come together.

When Sears Joins Up With Simpson's

CONTINUED FROM PAGE 21

Canadian parent, Richard Sears stoked up a full head of steam. First, since a fifty-fifty partnership with Roebuck did not satisfy him, Sears persuaded Roebuck to give him a two-thirds

The new Sears Roebuck catalogue became a fat volume offering i great array of new goods—clothing, patent medicines, baby carriages, furniture, buggies and harness, hardware, crockery and sporting goods. Sears has been called a man with a single purpose —to make money. But his makeup was more complex than that. He thoroughly enjoyed his power to write words which had the effect of making people covet the article he described.

Once Sears admired a dashing suit in a Chicago store window. He wrote a glowing description of it, set an arbitrary price of 84.9-5, and inserted it in his catalogue—without having r single such suit in stock. When several hundred orders for the “swagger suit” came in immediately after the catalogue was issued Sears was gratified. When the orders reached fifteen thousand within a few weeks he was horrified. He and a disapproving Roebuck spent several weeks hunting up tailors who would make cheap suits in a hurry.

The truth is that Richard Sears was more of an impresario than a merchant. One student of Sears history decided that “it is doubtful whether Sears really cared for business except as a showcase and sounding board for his promotional antics.” Once he petulantly dumped a bundle of orders into i stove because he had netrlected to r-plenish his stock of the goods ordered.

?k.'ars' exploits literally gave Roebuck ulcers. Roebuck was a gentle man who wanted nothing more than to work for a salary at some job which involved linkering with machinery. In 189-5 he could stand the Sears merry-go-round no longer. He asked his partner to buy him out and readily accepted Sears’ offer of twenty-five thousand dollars for his one-third interest. This has been cited since as the worst deal ever accepted by a businessman. Five years later Roebuck's shares would have been worth three millions Today a one-third interest in Sears Roebuck would be worth well over half a billion dollars.

But Roebuck never regretted it He recovered his health, started a typewriter company and a movie-projector concern, neither of which made much money, and finally went broke in Florida real estate. In 1933 officials of the now gigantic Sears company heard that Roebuck was living in poverty. “It was the first time.” a Sears executive admitted recently, “that most of us knew he was even living.” Roebuck was taken back into the company at one hundred dollars a week and given a unique title: Co-tounder He toured the company's stores, each of which staged a special “day" for him. Roebuck would sit at a table near the entrance under a sign. “Meet our Co-founder. Col. A. C. Roebuck" — lie had picked up a Kentucky colonelcy somewhere along the route-and talk endlessly about the old days to anyone who would listen The man who might have been a multimillionaire was perfectly happy with his lot. On his seventy-fifth birthday he mused: "Sears made fifteen million dollars and died before he was fifty. Me. I never made any money in my life—and I've never felt better.” Roebuck retired to

California in 1940 and died in 1948 at eighty-four.

At Roebuck’s withdrawal in 1895 Sears found a new partner, Julius Rosenwald, whose small tailor shop had helped Sears Roebuck out of its "swagger suit” debacle. Rosenwald had been amazed at the possibilities of mail order as indicated by the orders which poured in on Sears. He disliked Sears’ irresponsible methods, but figured Sears could be persuaded to tone down his exuberance.

Early on the morning of the day after they agreed on partnership terms the two men went looking for a lawyer to draw up the necessary' papers. It was far too early for successful lawyers to be at work, and the new partners finally had to settle for the only lawyer they could find, a recent graduate named Albert Loeb. As his fee Loeb was appointed the company’s attorney and given four shares of new stock worth four hundred dollars. (Loeb later climbed to the presidency of Sears Roebuck and was a millionaire when he died in 1924.)

Sears Roebuck now entered a period of almost incredible prosperity. When Roebuck pulled out he left Sears Roebuck with a theoretical capital of fifty thousand dollars, and there was actually a small deficit on that year’s trade. Five years later Sears Roebuck’s gross was eleven millions, and between Dec. 13. 1903 and Dec. 13. 1904 the partners split dividends of 87,454,000. Sears regarded these lush profits as vindication of his flamboyant selling methods, but Rosenwald held out for more conservative policies. By 1908 the disagreement reached the showdown stage and Sears sold his interest to Rosenwald for ten million dollars. He died in 1914.

Today Sears is honored as founder, but scarcely revered by his successors. Most of his methods are regarded as a blueprint of how NOT to run a mailorder business. Not long ago a Sears Roebuck annual report described Sears as “a swashbuckling genius of promotion, a dynamic entrepreneur who viewed the mail-order business as a means to an end and that end was the production of profits.”

In Canada, as the twentieth centurygot under way, young Burton too was concerned with promotion and personal profits. Years later, when he and his friends were celebrating his acquisition of Simpson's, someone said: “I bet, C. L.. this is the biggest thrill of vour life.” Burton shook his head and his eyes twinkled behind the spectacles he had worn since he was a young boy. “No.” he said, "only the second biggest. The biggest was wben Mr. Fudger doubled my salary from two dollars to four dollars a week.”

While still in his teens, Burton became Fudger’s head bookkeeper with six thousand accounts to handle. In 1S98 further responsibility descended on him. as Fudger joined with two other elders of Sherboume Street Church. Joseph Flavelle and A. E Ames, to buy Robert Simpson's store, and thereafter was seldom in his wholesale store.

Simpson had died in 1897 leaving the second-largest department store in Toronto, plus an expanding mailorder business. The value of this business in 1898 is a startling indication of the growth of Canadian retail volume since the turn of the century, for Fudger and his partners paid just 813-5.000—the fair valuation of Simpson's stock, trade and accounts. By 1912 when Burton entered Simpson’s the store's assets were 86.500.000. In the next thirty-nine years under Burton’s guidance. Simpson's grew into a one-hundred-million-dollar concern.

Robert Simpson had been an Elgin-

shire. Scotland, farm boy who emigrated to Canada in 1850. He worked a year in R. H. Smith’s dry goods store in Newmarket. Ont., then opened a rival store, worked hard and saved his money for a planned assault on the big city—Toronto then had a population of fifty-six thousand. Simpson was a handsome well-dressed man. and soon Toronto matrons were flocking to ‘"that nice Mr. Simpson’s little store” on Yonge Street. Simpson is credited with elevating the social status of the retailer—the tradesman—to the level of the comparatively elite wholesaler. Every morning he arrived at his store in his own carriage and pair, wearing top hat and morning coat.

Simpson introduced a daring innovation—he put an illustration of a corset into an advertisement. Toronto women were shocked, and only the grave dignity of the “nice Mr. Simpson” saved him from disapproval. He made amends by two additional firsts: A female shop assistant, and a huge tea um from which shoppers were invited to refresh themselves.

One day an out-of-town woman who had bought some cloth wrote to Simpson asking him to send more of the same, needed for making a dress. It was Simpson's first mail order. Within « year the "write-in” orders became so numerous that Simpson had to assign a girl to handle them, and then a boy had to be hired to help the girl wrap the orders.

When Fudger became a partner in Simpson’s and left his original business largely in Burton's hands, he also sold the youngster a share in the latter company. Burton put all his salary above his barest living requirements into buying the stock. The first year of the new century was one of the biggest in Burton’s life. He got married and he climbed down from his bookkeeper’s stool to become a traveling salesman.

In June 1900 Burton married his "church sweetheart," Ella Maud Leary, in the living room of her parents' home on Manning Avenue. Toronto. Burton was. and still is. a staunch member of the Church of Christ (Disciples' which his mother had joined soon after the family moved to Toronto.

In 1929, when Burton became majority owner of Simpson's, he recalled in an interviewhis big decision to become a salesman. “Those knights of the big trunks fascinated me.” he said. "Why, a few of them even went all the wav to Vancouver. The west was pushing out the horizons of business.

I had heard about the new empire of packing-case towns on the prairies and I wanted to see them — and to sell goods to their frontier merchants.

Burton went wide-eyed into the west. "I remember writing to my wife about my fi^st trip." he once recalled, "and some of the things I told her about that banging big El Dorado of a country were wild enough for the Arabian Nights." Burton himself was unlike any drummer hom the east that the new-west storekeepers had ever encountered. Instead of extravagant sales spiels Burton told tales about the far places the goods came trom. about the processes by which they were made, and about the kind of people who made them.

On train journeys and in the long evenings in hotel rooms Burton caught up on some of the education he had missed in school and in his busy teens. He worked his way through .Scott. Dumas and Thackeray, and he literally took possession of Dickens. A Simpson’s accountant to whom Burton told the tale of his reading took the trouble recently to work out the boss’ actual consumption of Dickens: twenty-five thousand pages in seven years.

In 1912 Burton came in direct contact with Simpson’s for the first time. Fudger, his absentee boss, asked him to come into the company “and see what’s wrong with it." On the surface nothing was wrong. Simpson’s sales were increasing as the city and the country grew, but Fudger shrewdly sensed that there was work for Burton under the surface.

“I didn’t have a title, an office, a desk or even a place to hang my hat.” Burton recalled in 1929. “I had to invent my job." He uncovered confusion. Mail orders would come into the retail store and compete for filling from the same shelves He ordered the mail-order and retail departments separated. He set up a complaints and adjustment bureau, where formerly the shop clerks had to bear the brunt of complaints without having anyone in authority to pass them on to. He reorganized departments in which overhead was eating up more than the profits. He made a number of “personnel changes," but regretted every firing he had to order. By the time he had put Simpson’s on an even keel World War I had started, and Burton had a title general manager. In 1929 Burton and a few associates bought the majority interest in Simpson’s from Sir Joseph Flavelle who had previously bought out Fudger’s holdings in Simpson’s. Fudger died in 1930.

Sears Roebuck experienced only one father-and-son succession, when Lessing Rosenwald became chairman of the board for a few years after his father's death None of the Simpson's owners had sons who survived, or who cared, to follow in their father’s footsteps until now. Today the Burton family is firmly entrenched in Simpson's management. In addition to C.L., who is chairman of the board, his son Edgar is president both of Simpson’s Limited and of Simpsons-Sears; another son. G. Allan Burton, is general manager of Simpson’s Toronto store; Gordon Graham, husband of C. L 's daughter Dorothy, is vicepresident of Simpson's mail order; Robert Wessels, husband of daughter Blanche, is in charge of the men’s furnishings department at the Toronto

Edgar in Women’s Coats

Edgar Burton, like his father, first entered a law firm, and like his father soon decided the law was not for him. He decided he wanted to work at Simpson’s.

“No." the elder Burton answered. “If you start with Simpson’s and succeed, people will say your father pushed you along. If you fail, they'll say. "there’s another fellow who thinks he doesn’t have to work.’ ”

So Edgar got a job with Carson Pirie Scott and Co., a Chicago department store, as a helper in the receiving department, at twenty dollars a week -exactly enough to pay room, board and carfare. Two years later he was assistant manager of the women's coat department, and resigned to join Simpson’s as a buyer of women’s suits. He worked his way up to the general managership of the Toronto store at thirty-three.

During World War II Edgar and his father found themselves, so to speak, on opposite sides. C. L. was staunchly opposed to government control of business —and the Canadian government selected Edgar to head its pricecontrol machinery. Father and son maintained family harmony simply by never mentioning the subject. In 1948 Edgar was promoted to the presidency of Simpson’s, and his father became chairman of the board.

The outstanding personality which

the Simpsons-Sears partnership brings to the Canadian scene is General Robert Wood, chairman of the board of Sears Roebuck. After graduating from West Point. Wood spent two years in the Philippines chasing guerrillas at the head of a troop of a hundred cavalrymen. In 1907 he was ordered to Panama, where the canal was being built under great difficulties, and was put in charge of all recruiting, housing and distribution of labor. “Everything I’ve done since then has seemed easy,” he said later, recalling the long hours and vile climate. “The commissaries were actually a chain of small department stores, and that’s how I acquired my knowledge of mass buying.” He also acquired the reputation of “never talking to a man except to fire him.”

A Thousand Dollars a Day

In World War I, Wood reorganized the chaotic army procurement setup and was promoted to brigadier-general. When the war ended Montgomery Ward grabbed him for general merchandise manager. Wood studied the mail-order business and came to a firm conclusion: Better roads and massproduced automobiles were changing the buying habits of rural dwellers: no longer was it a major undertaking for a farmer to drive ten miles to the nearest town to shop. Therefore mail-order houses must supplement their catalogues by retail stores, or lose rural customers.

Wood kept badgering Montgomery Ward executives with this idea, and they kept rejecting it. In 1924 Wood and Montgomery Ward finished in a dead heat: he quit and got fired

simultaneously. Julius Rosenwald, of Sears, hired him immediately and raised his salary from thirty thousand a year to three hundred thousand Sears Roebuck was scarcely more receptive to Wood’s ideas but they couldn’t afford to ignore the recommendations of a man whom they were paying a thousand dollars per working day. Tentatively Sears opened a retail store in a comer of its Chicago mailorder department.

The rest is history. A few years later, at the height of Sears' retail-storebuilding program, new stores were being opened at the rate of one every two days. Today there are seven hundred Sears stores from coast to coast in the U. S. In 1933 retail sales passed mail-order sales for the first time, and today maintain a 70-30 supremacy.

Rut. in one peculiar way, the influence of the automobile on people’s buying habits has gone the complete cycle. “Nowadays." Wood explains, “cars have increased to the point where traffic conditions discourage many people from traveling to stores So we are actually finding an increase in mail orders from residents of big cities they find it more convenient to write or phone in an order than to go shopping.”

.Sears preoccupation with mass distribution has given the store an unofficial motto: “Sell 'em what thes want, where they want it. when thev want it ” In several Sears stores twenty-four-hour service is available. A customer can telephone at any hour of the day or night for quick delivers of a refrigerator, a gallon of paint or a diamond ring

This is the kind of selling that is coming to Canada. Probably the “Sears touch” will be tempered bs Simpson’s policies which are both enterprising and conservative, but the net result will undoubtedly be mights interestingboth to competitors and to customers. if