Von Maur Inc. Business Information, Profile, and History

Company Perspectives:

Von Maur creates an enjoyable and unique shopping experience through its wide selection of brand-name merchandise, its open and attractive store design, amenities that enhance customer convenience and comfort, and its commitment to customer service.

History of Von Maur Inc.

Based in Davenport, Iowa, family-owned Von Maur Inc. operates a chain of department stores in the Midwest, with stores in Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, and Nebraska. During the early 2000s, the company operated 22 stores in all. These were tailored to the unique needs and tastes of each market, and ranged in size from 42,000 to 203,000 square feet in size.

1870s Origins

Von Maur's roots can be traced back to 1872, when immigrant J.H.C. Petersen, a native of Germany's Schleswig-Holstein region, established J.H.C. Petersen & Sons. The Petersen family had initially settled in a log cabin in Maysville, Iowa, trying to survive by farming. After enduring a difficult year, however, the family relocated to Davenport, where J.H.C. Petersen unsuccessfully tried to establish a business manufacturing matches. Ultimately, he opened a small store with partner Henry Abel, and the two men sold goods at auction.

By 1872, Petersen had sold his share of the business back to Abel and had opened his own store. With $1,400 in working capital, he based the new venture in a 20-by-50-foot former storeroom on Davenport's West 2nd Street. As partners, Petersen's sons Max, William D., and Henry F. were instrumental in making the new family business a success.

In addition to upholding the motto "Quality Goods at Honest Prices," the three brothers burned the midnight oil. As writer Jim Arpy explained in the April 30, 1972, issue of the Davenport Times-Democrat: "In order to lose no more time away from the business than absolutely necessary and to be on hand whenever a customer might appear, the boys at night often made up their beds under the store counters and slept there."

J.H.C. Petersen & Sons did well in its first year, and was soon growing at a healthy clip. The Petersen enterprise was located in the east end of a building that also housed another retailer, T. Richters & Sons. After several years, the Petersens purchased the entire building, followed by an adjacent structure that was home to the Klug store. In 1875 the Petersens ventured into the wholesale trade and added a third story to the former Klug building. In the coming years, other physical expansions occurred at both sites.

In January 1892, J.H.C. Petersen retired from the business, which had evolved considerably during the previous 20 years. Under his sons' management, progress continued as a four-story building was constructed on West 2nd and Main Streets. Behind this new structure, another four-story building was erected several years later. This became the base of operations for the Petersens' wholesale business and allowed them to further expand their retail division.

Ownership Changes in the New Century

In 1905, more than 30 years after establishing his family's retail enterprise, J.H.C. Petersen died at the age of 88. Max and Henry F. Petersen died approximately ten years later, leaving William D. Petersen at the helm of what had become the city's largest retailer. With 400 employees, J.H.C. Petersen's Sons was considered "the finest department store west of Chicago," according to Arpy.

From this solid position, William Petersen and the administrators of his brothers' estates sold the business in 1916. The new owners included three partners: C.J. von Maur, president; R.H. Harned, vice-president; and Cable von Maur, secretary.

Prior to acquiring J.H.C. Petersen's Sons, C.J. von Maur got his start in the retail trade at a young age. The son of German immigrant George A. von Maur, a contractor who came to New York from Stuttgart in 1863, C.J. von Maur benefited from educational opportunities that had eluded the Petersens. In addition to attending New York schools, von Maur was educated at a commercial college that helped to prepare him for employment in dry goods retailing. C.J. von Maur's managerial skills were affirmed when he was chosen to manage an entire store in Pittston, Pennsylvania, at the age of 17. Although he established his own store about five years later, von Maur sought employment with another retailer when his partner died from typhoid.

It was around this time that von Maur moved to Peoria, Illinois, where he formed a partnership called Harned, Bergner and Von Maur. After selling that business, von Maur relocated to Davenport, Iowa, where he established The Boston Store in 1887 with partners E.C. Pursel and R.H. Harned on the corner of 2nd and Brady Streets. The new store grew to eight times its original size in only three years. Although Pursel died in 1889, the company continued to prosper under the name of Harned and Von Maur. Expansion included a new facility on West 2nd and Harrison Streets, and ultimately the acquisition of J.H.C. Petersen's Sons in 1916.

Although they shared a common ownership, the two large Davenport retailers, which had both flourished after modest beginnings, continued to operate as separate stores for more than a decade. In 1926, ten years after the acquisition of J.H.C. Petersen's Sons, C.J. von Maur died. In one respect, his death marked the end of one era and the beginning of another.

On May 7, 1928, a major development occurred when J.H.C. Petersen's Sons was combined with Harned and Von Maur to form one retail offering named Petersen Harned Von Maur. The buildings that had housed Harned and Von Maur were leased to a company from New York, and operations moved into the former Petersen store. Presiding over the newly combined enterprise was C.J. von Maur's son, Cable G. von Maur. R.H. Harned was elected chairman, and C.J. von Maur's other sons, James and Richard, both served as officers.

When R.H. Harned died in 1937, his family sold its interest to the von Maurs. Although the store retained the name Petersen Harned Von Maur, members of the von Maur family--including Richard B. von Maur and his sons Charles and Richard B., Jr.--assumed responsibility for guiding it. As the fabric of American society changed from the 1940s through the 1960s, Petersen Harned Von Maur prospered, consistently providing Iowans with quality goods and dependable customer service. Under these principles, the business operated as a downtown department store until its 100th birthday.

Expansion in the 1970s-80s

Petersen Harned Von Maur celebrated a century of operations in 1972. By this time, American shopping malls were beginning to grow in popularity. To capitalize on this trend, the company opened its first mall location in 1972, in Bettendorf, Iowa's Duck Creek Plaza. A second Iowa store opened in West Des Moines' Valley West Mall that same year, followed by one at the SouthPark Mall in nearby Moline, Illinois, in 1974. This steady pattern of growth continued through the 1970s, as locations were added in the Iowa cities of Muscatine (1979) and Cedar Rapids (1980).

By the early 1980s, the migration away from downtown stores and the need for differentiation became increasingly important. As former Von Maur President John R. Arth recalled in the January 1996 issue of Chain Store Age: "We asked ourselves how are we going to survive? Several things came to mind. One, we had to do some things [the majors] don't do. And two, we had to leave downtowns for regional malls. But that's not all. It was important that we do more for the customer."

Based on this realization, Petersen Harned Von Maur began making changes. Some, like free year-round gift-wrapping, were small. More dramatic changes included the elimination of entire departments, including bridal, home goods, hair salons, and furniture. By removing these lines, the company was able to focus more strongly on apparel and accessories. In addition, the retailer eventually introduced computer systems that allowed sales associates to locate items for customers at any one of its stores.

In 1981, a new location was established in Davenport's NorthPark Mall, followed by stores in Cedar Rapids' Lindale Mall and Iowa City's Sycamore Mall the same year. As part of its larger strategy, Petersen Harned Von Maur closed its downtown department stores midway through the decade. These closures included a location in Clinton, Iowa, in 1985, followed by the Davenport store in 1986.

One benefit that Petersen Harned Von Maur introduced in the mid-1980s was unprecedented among department store retailers. At that time, the company began offering customers an interest-free store charge card. The well-received customer perk helped the company to secure customers when entering new markets. As proof of the card's popularity, approximately 70 percent of Petersen Harned von Maur's sales were charged on it by the mid-1990s, in contrast to an industry average of about 40 percent.

Not only did Petersen Harned von Maur sacrifice lucrative interest income by offering this benefit to customers, some analysts speculated that the program cost the company a great deal in the way of annual interest charges. Not including delinquent accounts, one August 2000 estimate placed this number between $8.5 and $10 million. While some observers were concerned that the interest-free charge program could lead to financial problems, the company stood by its effectiveness for increasing business.

As the 1980s progressed, Petersen Harned Von Maur continued to expand. Another Iowa store opened its doors in 1987, in Cedar Falls' College Square Mall. In the summer of 1989, the company established a retail foothold in Illinois by purchasing stores in Decatur's Hickory Point Mall and Normal's College Hills Mall.

As the 1980s came to a close, Petersen Harned Von Maur shortened its name simply to Von Maur. According to the company, this change provided an updated image and better reflected the management of the previous 60 years.

Regional Growth in the 1990s

Von Maur began the 1990s by moving into new headquarters, relocating from the former Petersen store to a 200,000-square-foot site in north Davenport. In addition to corporate offices, the new site also contained Von Maur's distribution center. By the following year, Von Maur employed more than 1,500 people, including 50 buyers who traveled to New York, Los Angeles, Dallas, and Chicago to search for the latest fashions.

As Von Maur emerged as a regional retail competitor, it remained focused on the need to do more for its customers. By the 1990s several differentials had been introduced to set the company apart from such competitors as Younkers and Nordstrom. Instead of advertising specials and weekend sales, Von Maur relied largely on word-of-mouth promotion. The money it saved from advertising was used to offer unique customer benefits, including interest-free credit, free shopping bags, and complimentary shipping via UPS to any location in the United States. Along with a no-questions-asked return policy that did not require customers to provide receipts, Von Maur also offered to match any competitor's price--without verification or the approval of a store manager.

Von Maur also set itself apart from other retailers by creating a retail environment where customers felt relaxed and at ease. Spacious lounges were provided to women, where they could relax and make complimentary local phone calls, and pianists played melodies on grand pianos for the enjoyment of patrons. In addition to wide aisles, decor included unique antique items and fresh flowers. Singing canaries and shoe departments with fireplaces were other unusual touches that set Von Maur's stores apart from other retailers.

"Our store feels like your home rather than a commercial situation," said Von Maur President Jack Arth in a 1998 issue of the Indianapolis Star and News. "We don't have mannequins. We don't have big signs. We don't scream at customers." Instead of discouraging customers from handling items for sale, Von Maur stores included small cards that read: "Please touch the merchandise. You'll love it."

In addition to offering costly customer perks, Von Maur also shouldered higher labor costs than other retailers. The company reportedly paid its sales associates more than other department stores did, hired them in adequate numbers, and rewarded them for efficient and friendly customer service. Sales associates became known for developing relationships with customers, learning about their preferences and keeping the information on file in order to provide personalized service. Although it cost Von Maur more to hire good employees, the strategy increased both productivity and sales.

To compete against the stronger buying power of large national competitors, Von Maur set a goal of being first to market with branded apparel items. In exchange for being the first department store to place an order, the company asked vendors to ship goods to its stores first. With the majority of vendors honoring this request, Von Maur was able to roll out merchandise six or eight weeks ahead of other department store chains. This strategy enabled the retailer to identify bestsellers early and place large reorders before other chains had even introduced the same goods. At the same time, poor sellers were immediately marked down in price.

In July 1994, Von Maur entered the Chicago market for the first time when it opened a 207,000-square-foot flagship store in Lombard, Illinois' Yorktown Center. Rick von Maur, great-grandson of founder C.J. von Maur, was selected to manage the new store, which had a 30,000-square-foot shoe department. Von Maur invested $20 million to renovate the retail space, which had been empty for five years after housing a Wieboldt's Department Store.

Many observers considered Von Maur's Chicagoland debut a litmus test, the results of which would determine if the family-owned company could compete with the likes such Chicago-area heavyweights as Carson Pirie Scott, Marshall Field's, and Nordstrom. According to the August 16, 1994 issue of WWD, the new flagship store achieved a strong start. In its first ten days of operation, mall management revealed that Von Maur generated between four and five times its projected volume. The store continued to do well and soon developed a loyal customer base.

After its foray into the Chicago market, Von Maur opened a store in Omaha, Nebraska in 1995. The following year, the company's 12 stores generated sales of $200 million, or $200 per square foot. Based on National Retail Federation figures, this exceeded the industry average of approximately $169 per square foot. After achieving annual sales of $230 million in 1997, Von Maur added two Indianapolis stores in 1998.

In 1999, Von Maur's sales reached an estimated $248.5 million. By this time, Ric von Maur had been named as the company's president, leading a chain of 15 stores in four states. That year, Von Maur closed what had been its very first mall store, in Bettendorf, Iowa's Duck Creek Plaza. However, it also added a new location in Lincoln, Nebraska.

A Third Century: 2000 and Beyond

By opening new stores in Eden Prairie, Minnesota; Fort Wayne, Indiana; and St. Charles, Illinois; Von Maur began the 21st century by immediately strengthening the midwestern foothold it had established during the previous decade. In particular, the St. Charles store was proof of the company's staying power in the Chicago market.

Despite a weak economic climate in which few department store retailers were expanding, Von Maur continued to extend its geographic reach during the early 2000s. In 2002, the company established a store in Wichita, Kansas. Locations were added in Louisville, Kentucky, and Ann Arbor, Michigan, in September 2003, followed by new stores in Livonia, Michigan, and Glenview, Illinois, in October. Von Maur obtained the two Michigan stores at auction, after Jackson, Michigan-based Jacobson Stores Inc. filed for bankruptcy and opted to liquidate them.

While Von Maur expanded during the early 2000s, an important leadership change occurred at the company. In 2001, James D. von Maur was named company president, representing a fourth generation of family leadership. His father, Richard B. von Maur, as well as Charles R. von Maur, remained involved as co-chairmen.

In the March 11, 2003 issue of WWD, James von Maur commented on the road ahead, explaining: "For the short-term, we're expanding in the Midwest, and from there we may take the chain national, depending on economic conditions. Our philosophy is steady, but well-planned growth. We open at least two new stores a year and usually only one or two stores per market. We take a micro-intensive approach to merchandising and buy based on a store's unique local needs. Our plan is always to build trust and loyalty by focusing on customer service, literally from the ground up."

With estimated sales of $400 million and approximately 3,000 employees, Von Maur was poised for continued growth. Although the retail landscape had changed considerably since the company was established, the company remained mindful of the traditions and business practices that had resulted in success for more than a century. Expansion of Von Maur to become a national presence seemed likely.

Principal Competitors: Federated Department Stores Inc.; May Department Stores Company; Nordstrom Inc.

Chronology

• Key Dates:
• 1872: J.H.C. Petersen & Sons is established in Davenport, Iowa.
• 1887: C.J. Von Maur establishes The Boston Store in Davenport, Iowa, with partners E.C. Pursel and R.H. Harned.
• 1889: After Pursel's death, the renamed Harned and Von Maur continues expanding.
• 1916: The Petersen business is sold to C.J. von Maur, R.H. Harned, and Cable von Maur.
• 1928: After operating as separate stores under common ownership, J.H.C. Petersen's Sons is combined with Harned and Von Maur, forming Petersen Harned Von Maur.
• 1937: After R.H. Harned dies, the von Maurs obtain complete control of the company.
• 1972: Petersen Harned Von Maur celebrates a century of operation and opens its first mall location in Bettendorf, Iowa.
• 1986: Von Maur closes its downtown Davenport store.
• 1989: Petersen Harned Von Maur shortens its name to Von Maur.
• 1990: Company headquarters relocate from the former Petersen store to a 200,000-square-foot site in north Davenport.
• 1994: Von Maur enters the Chicago market with a flagship store in Lombard, Illinois' Yorktown Center.
• 2000: Von Maur enters the Minnesota market, with a new store in Eden Prairie.
• 2001: James D. von Maur is named company president, representing a fourth generation of family leadership.
• 2003: Von Maur extends its geographic reach by opening new stores in Kentucky and Michigan.