Marshall Field'S Business Information, Profile, and History
Minneapolis, Minnesota 55402-2040
At Marshall Field's stores, the guest is always first. This guest-focused approach has inspired millions of shoppers across the Midwest and beyond to look to Marshall Field's for fashion leadership, superb guest service and a commitment to community involvement.
History of Marshall Field'S
Marshall Field's, a division of Target Corporation, is a major mid-market to upscale department store chain operating in eight states in the Upper Midwest: Illinois, Indiana, Michigan, Minnesota, North Dakota, Ohio, South Dakota, and Wisconsin. Of the 62 Marshall Field's stores, more than half of them are located in three major metropolitan areas: Chicago, Detroit, and Minneapolis/St. Paul. This geographic range is a reflection of the Chicago-founded Marshall Field's having absorbed the Minneapolis-based Dayton's and the Detroit-based Hudson's department stores following the 1990 purchase of Marshall Field's by Dayton Hudson Corporation (now Target Corporation). Target's three department store chains were united under the Marshall Field's banner in 2001. With roots dating back more than 150 years, Marshall Field's is one of the oldest and most venerated names in American retailing.
Laying of the Foundation by Potter Palmer: 1852-65
Although the early history of Marshall Field's is most often associated with the company's namesake, Marshall Field, it was Potter Palmer who actually launched the business, which would eventually develop into the world's leading retailer. Palmer arrived in Chicago from Lockport, New York, in 1852, at the young age of 26 but already with eight years experience as a clerk and country merchant. Chicago, incorporated only in 1833, still had the appearance of a frontier town at the time of Palmer's arrival--complete with largely unpaved roads and wooden sidewalks--but it was in the midst of a boom fueled by Easterners seeking their fortune in the West and by the hundreds of towns being founded in the surrounding prairies. Chicago's growth was ignited by several other factors as well, including its central location, its position at the foot of Lake Michigan (making it a natural port), and its development into a main hub for the burgeoning system of railroads. The population growth of Chicago was astounding: from less than 30,000 in 1850 to nearly 300,000 in 1870 to almost 1.1 million in 1890 to 1.7 million in 1900. This environment created a ready opportunity for merchants of both the wholesale and retail variety.
Palmer came to this boomtown with $5,000 as seed capital for a new venture, and he soon rented out the first floor of a four-story frame building on Lake Street, then known as "the street of merchants," and opened a retail dry goods store called P. Palmer & Company. From his modest first-year gross sales of $73,000 in 1852, Palmer fairly rapidly created a thriving enterprise. Key to his success were several innovations. After first centering his merchandise inventory on the less refined needs of the many pioneer settlers passing through town, Palmer added to his stock higher quality, fashion-conscious goods--such as silks, velvets, laces, and fine carpeting--arranging them into inviting displays. This attracted the more well-to-do into the store--particularly women. According to Tony Jahn, Marshall Field's corporate archivist and historian, "[Palmer] created the store as a sanctuary for women. It was a place where they could be treated well, could see some of the finest things available in the day and be treated with dignity and respect" (quoted in Women's Wear Daily, October 9, 2003). Palmer's innovative approach went well beyond his unique inventory. In place of the haggling over price then prevalent, he instituted fixed pricing, placing price tags on every piece of merchandise. This practice irritated his competitors, as did his undercutting the prices his rivals charged for certain items. Palmer also allowed his customers to buy on credit. Perhaps playing the biggest role in securing loyal customers was Palmer's "no questions asked" return and exchange policy--unheard of at the time. Cementing his goal of making "respectable" women comfortable browsing his establishment was the absence of the spittoons and whiskey barrels common in rival stores of the day.
Palmer's formula proved highly successful. In October 1857 he moved his store out of its original cramped quarters into the building next door, taking all four floors. That same year he placed his first newspaper advertisement. In September 1858 Palmer moved his store one block east, into an even larger, newly built, five-story marble-fronted building. Around this same time, Palmer branched out into wholesaling. He thrived at this endeavor as well, particularly by avoiding as much as possible having to deal with Eastern importers and jobbers. He made his own buying trips abroad and also dealt directly with manufacturers in New England. By 1865 his enterprise was able to post a $300,000 profit on sales of $8 million--with wholesaling revenues now outstripping retail sales. P. Palmer & Co. was now the largest enterprise of its kind in Chicago.
From Partnership Between Marshall Field and Levi Leiter to Marshall Field & Company: 1865-81
During this period when Palmer was developing his business, Marshall Field was arriving in town to find his fortune. Field moved to Chicago from Pittsfield, Massachusetts, in 1856, having been raised in a strict New England farm family. He had spent four years as a clerk in a country store in Pittsfield, before heading west in 1856 at the age of 21 with his savings of less than $1,000. He gained employment as a clerk at what was then the leading wholesale dry goods house in Chicago, Cooley, Wadsworth & Company, at the starting salary of $400 per year. Finding his métier, Field progressed quickly, becoming a junior partner in the firm (by then known as Cooley, Farwell & Company) in 1860. Four years later, senior partner Francis Cooley retired, and the company was reorganized as Farwell, Field & Company, with John V. Farwell a senior partner and Levi Z. Leiter a junior partner. Leiter, who several years earlier had moved to Chicago from Springfield, Ohio, was the company bookkeeper.
Personal disagreements and differing ideas about how to run the business led Field to seek a way out of his partnership with Farwell. Coincidentally, Palmer began suffering from ill health, and his doctor in 1864 strongly urged him to retire from business. Seeking partners outside his firm, Palmer approached Field and Leiter, whom Palmer had admired for their obvious merchanting acumen, and the parties agreed to a deal. In January 1865, then, P. Palmer & Company was reorganized as Field, Palmer & Leiter. Field and Leiter were now in charge of Palmer's very successful business, although Palmer had agreed to leave $330,000 in the firm as a silent partner. Potter Palmer's brother Milton, a salesman at the company, signed on as a junior partner, contributing $50,000. Field and Leiter signed notes that would come due in two years for their respective shares of the initial capital, $250,000 and $120,000. (During the brief time that the company operated as Field, Palmer & Leiter, in 1866 to be exact, Aaron Montgomery Ward briefly clerked for the firm before founding his famous mail-order business early the following decade.)
With some further financial assistance from Potter Palmer, Field and Leiter were able to survive a rough beginning as the boom prices of the Civil War era came to a sudden end. The company's new leaders also helped themselves by continuing the innovative ways of their predecessor. For instance, a new notions department was set up featuring such items as combs, brushes, spools of thread, scissors, and sun umbrellas. Three female clerks were hired to help make women more comfortable buying items such as skirts, frocks, and lingerie. Field and Leiter also wisely continued Palmer's still unusual money-back guarantee policy. By January 1867 Field and Leiter were secure enough to buy out the Palmers in large part (though Potter retained part of his original investment). They renamed the firm Field, Leiter & Company.
Potter Palmer still had one last major influence on the company he had founded. In the mid-1860s he began buying up a string of properties on Chicago's State Street, seeking to turn a nondescript street into a new retail center. Palmer spent more than $2 million on his State Street project, which eventually included an eight-story hotel--the first Palmer House--as well as a six-story marble-fronted building, complete with Corinthian columns, at the corner of State and Washington. Upon its completion in late 1868, Field, Leiter & Co. promptly took a lease on the new building, which became known as the "Marble Palace." The company was thus able to expand its retail business and place itself in the center of what indeed developed into Chicago's new trade center, just as Palmer had envisioned; competitors soon followed Field, Leiter to State Street. Further expansion came in 1871 when Marshall Field sent his older brother Joseph to England to set up a buying office in Manchester. Field, Leiter thus became the first U.S. retailer to open a European buying office.
As it turned out, the firm's palatial new store would last only three years. In October 1871 the Great Chicago Fire burned down nearly the entire central business district, including the Field, Leiter & Co. store. More than $2.5 million in Field, Leiter merchandise was destroyed. The partners acted quickly to find a new location, hoping to get a jump on their competitors. Just three weeks after the fire, they reopened at a temporary location, an old trolley barn at Twentieth and State Streets. Simultaneously, a decision was made to physically separate the retail and wholesale divisions for the first time. In March 1872, then, the company's wholesale side moved into a newly constructed building on Madison Street just west of the modern-day Loop. That same year, the retail side continued its innovative ways by introducing free, same-day delivery service to customers' homes via a horse and wagon. The firm's wagons eventually featured the company logo painted in green, the color that eventually would become synonymous with Marshall Field & Company.
For a short while, Field, Leiter & Co. operated retail stores at both the converted trolley barn and the wholesale site, but Field and Leiter soon decided to return to State Street. To finance the building of a new Palmer House (what would become the first wholly fireproof hotel in the nation), Potter Palmer had sold much of his Chicago property holdings. Field, Leiter & Co.'s old site at State and Washington was sold to Singer Sewing Machine Company, which soon built a new five-story structure featuring a large glass dome in the middle of its mansard roof. Field, Leiter signed a three-year lease on the building, which had 30 percent more square footage than its predecessor, and reopened their retail store there in October 1873. More than 500 employees worked in the new store.
Nearly concurrent with this latest reopening, the United States entered a severe depression (the "panic of 1873") that endured for six years. Field, Leiter & Co. nevertheless flourished during this period, averaging nearly $1 million in annual profits--despite the further calamity of another fire, this one burning the new State Street store to the ground in November 1877. The store was temporarily moved to two locations before finally--and permanently--returning to the corner of State and Washington in April 1879. Singer had built a six-story French Renaissance building topped by another mansard-style roof as well as eight cupolas. Among the notable features inside were the store's first lavatories as well as electrical lighting fixtures. In addition, after lengthy and contentious negotiations, Field and Leiter bought the building from Singer for $700,000 and leased it themselves to Field, Leiter & Co.
By 1880 Field, Leiter & Co. was able to post profits of $1.8 million on revenues of $23.7 million; retail sales contributed $3.6 million of the total. This was the best year yet for the Field-Leiter partnership, but it would also be the last. The relationship between the two became increasingly strained, in part because Leiter never cared much for the retail side of the business, whereas Field felt that retail was the engine driving the firm's success, despite the larger profits and sales generated by the wholesale division. Field also believed that Leiter's brusque personality was losing them customers. Gaining the support of the firm's junior partners, Field essentially forced Leiter to accept a buyout of about $2.7 million. As a result, in early 1881 Field owned most of the company (with the junior partners owning a small percentage). He renamed the firm Marshall Field & Company.
The Field, Shedd, and Selfridge Era: 1881-1906
Aside from Marshall Field himself, two other figures came to prominence at the company in the late 19th century. John G. Shedd had joined the company in 1872, having followed Field to Chicago from the East. Shedd started out as a stock boy on the wholesale side, making $10 per week, before progressing rapidly to salesman and then to general merchandise manager of the wholesale division in 1885. His scientific approach to planning inventories and making seasonal purchases helped the division achieve steadily increasing sales. The wholesale operation grew so large that in 1887 it moved into a new 500,000-square-foot building that covered the entire block bounded by Adams, Quincy, Wells, and Franklin Streets in North Chicago. Shedd was promoted to head of the wholesale division in 1890 (when annual wholesale revenues had reached $26 million) and three years later was made a junior partner of Marshall Field & Co.
On the retail side, it was Harry Selfridge who made a lasting mark. Selfridge hailed from Jackson, Michigan, and started at the company in 1879 at age 21, in the same job and with the same salary that Shedd had begun with. He shifted to the retail division four years later and just four years after that was its 29-year-old general manager. Selfridge, nicknamed "Mile-a-Minute Harry," was full of ideas, many of which he implemented with Field's approval. Early moves included the installation of more electric lighting to better illuminate the merchandise, the use of modern displays of piece goods arrayed on tables to give customers easy access to them, and the institution of annual sales in order to clear the shelves and tables for new goods. In 1885 he transformed the store's cellar into a widely copied "bargain basement" that was eventually dubbed the Budget Floor. By 1900 sales in the basement reached $3 million, or nearly one-quarter of the total retail revenues. Selfridge also is given credit for transforming the retail division from a dry goods store into a modern full-line department store. Among the departments added were ones stocking children's clothing, "fine shoes," furniture, Japanese bric-a-brac, cut glass, and stationery. The number of departments grew steadily from 42 in 1884 to 74 in 1898 to more than 100 by 1902. In addition, after several years of cajoling, Selfridge finally, in 1890, persuaded Field to allow him to open up a formal restaurant in the store, the elegant Tea Room. It quickly became famous for its food, service, and decor and was serving more than 1,200 people per day just two years after opening. In 1895 Selfridge and his staff began creating lavish displays in the store's windows as lures to potential customers. As these changes were made over the years, the store maintained its emphasis on superior customer service, centered around its mainly female clientele; the store's reputation in this regard was forever enshrined through the motto, "Give the Lady What She Wants," which was said to have been coined by Marshall Field himself in 1890.
Selfridge's innovations helped the retail side grow rapidly--and at a much faster clip than the wholesale. By 1900--the same year that Selfridge was made a Marshall Field & Co. junior partner--the retail division generated 27 percent of overall sales, up from just 16 percent in 1883. Retail sales surged from $4.4 million to $12.5 million during this period. This rapid growth created a need for more space, so in 1893 construction was completed on a new nine-story building at the corner of Washington and Wabash. In 1897 Field ordered the installation of a large clock, visible for blocks, mounted above the corner entrance at State and Washington. It quickly became a famous Chicago landmark and a popular meeting place (and was immortalized via a Norman Rockwell drawing that appeared on the cover of the November 3, 1945, Saturday Evening Post).
By the early 1900s, the Marshall Field store was firmly established as the premier department store in Chicago. Its reputation for high quality, status, and fashion particularly grew out of the company's buying decisions--most notably, the goods imported from overseas. By 1900 the business had established a string of buying offices in Britain, Germany, Belgium, France, and Japan. Marshall Field bought $6 million in foreign goods abroad in 1906, making it the largest importer in the United States. As a further way to supply high-quality goods to its ever-growing retail division, the company in the last two decades of the 19th century created a fairly extensive network of manufacturing operations consisting of large workshops and offsite factories. Most of these goods were produced solely for the store and were marked with the company name, an increasingly famous brand.
In 1901 the company was incorporated as Marshall Field & Company, Inc. During the early years of the new century, Field began giving Shedd more responsibility for running the company. Selfridge grew increasingly unhappy, eventually becoming determined to run his own business. (One legend had it that Selfridge wanted the company to be renamed Field, Selfridge & Company.) In 1904 he sold his shares in the company for $1 million. Five years later he landed in London, where he brought American-style department store retailing to the British, establishing the famed Selfridge's emporium.
In 1906, just two years after Selfridge's departure, Marshall Field died as the wealthiest person in Chicago, leaving behind an estate totaling $118 million ($2.1 billion in 2002 money). His lasting mark on the city of Chicago went well beyond his namesake company, whose sales would reach a record $72.6 million in 1906. His philanthropic pursuits helped create the Art Institute of Chicago and the original campus of the University of Chicago. He also donated millions of dollars for the construction of a natural history museum for the 1893 Columbian Exposition world's fair. This became the core of the eponymous Field Museum of Natural History. His company would later give $3 million to build the John G. Shedd Aquarium, located adjacent to the Field Museum.
Steady Expansion of the Retail Side: 1906-29
Shedd took over as president of Marshall Field & Co., with the principal owner now being a complex family trust. In 1917, however, the trustees sold 90 percent of their shares in the company to its officers and managers. The company went public in 1930, with the Field family retaining their 10 percent interest.
Meantime, between 1893 and 1914 Field or his estate acquired the entire block bounded by State, Wabash, Washington, and Randolph. New buildings were added gradually during this period, until in 1914 the Marshall Field store occupied the entire block. A 1902 expansion made it the largest retail store in the world, with more than half a million square feet spread over three buildings. A six-day "grand opening" that year attracted more than half a million people. A workforce of 7,000 was needed to man the mammoth store. Another major expansion occurred in 1907, when the 1878-built structure at State and Washington was replaced with a more modern building. The most noteworthy feature of this building was the Tiffany Dome, designed by acclaimed artist Louis Comfort Tiffany. It is the largest glass mosaic of its kind, containing about 1.6 million pieces, and was the first dome ever built in iridescent glass. Another highlight of the 1907 building was the inclusion of the Walnut Room, an elegant restaurant that quickly became a Chicago restaurant landmark. The installation of a giant Christmas tree in the atrium of the Walnut Room during that year's holiday season started an annual tradition.
The company's Store for Men opened on Washington Street across from the main store in 1913. One year later, the main store added a book department and began featuring in-store book signings by authors. That same year, it began publishing its own quarterly magazine called "Fashions of the Hours," which continued to be produced until 1978. By the mid-1920s sales at the retail store exceeded those of every other single department store in the world.
During Shedd's tenure, the company significantly enlarged its manufacturing operations, eventually owning around 30 mills, most of which concentrated on producing or converting textiles. The output from these mills was primarily sold to the firm's wholesale operation, which marketed sheets, towels, bedspreads, and blankets under the Fieldcrest label. The textile mills, located in North Carolina and Virginia, were operated through a Marshall Field & Co. subsidiary called the Thread Mills Co. This subsidiary also launched the highly successful Karastan line of oriental rugs in 1928.
In addition to overseeing the vast expansion of the company's main retail store, Shedd also engineered the 1923 purchase of the A.M. Rothschild department store on South State Street for $9 million. This was renamed the Davis Store and headed by Arthur Davis, a department head in the wholesale division. It was positioned as a low-price store, the impetus for its creation being company officials' increasing concern about losing customers to lower-priced competitors.
Shedd retired from active management in 1923, though he served as chairman for three more years. Taking over as president and CEO was James Simpson, who had started as an office boy and later became Marshall Field's personal secretary. The company expanded its retailing side further under the new leader, opening up three small department store branches in suburban Chicago in the late 1920s, in Evanston, Oak Park, and Lake Forest. In 1929 Marshall Field & Co. gained its first retail presence outside of the Chicago area when it purchased Frederick & Nelson in Seattle, Washington, the leading department store in the Pacific Northwest, for $6 million. Frederick & Nelson had been established in 1890 by D.E. Frederick and Nels Nelson, who modeled their store on that of Marshall Field & Co. Sales for the Seattle store reached $12 million by 1929, compared with the $179.7 million achieved by Marshall Field that year.
There was one important Frederick & Nelson product that was quickly imported to Chicago: Frango chocolates and mints, which were probably first made in Seattle in the late 1910s. Soon after the purchase of the Seattle department store, the candy kitchen at the flagship Marshall Field store on State Street began producing their own line of Frango chocolates with the help of the store's new candy-making colleagues. It was hoped that the new line could help revive sales, which were slumping because of the Great Depression--and would amount to only $150.7 million for all of 1930.
Divestment of Wholesaling and Manufacturing Operations: 1930-53
While the retail side was expanding, the firm's wholesale operations had entered a period of precipitous decline in the early 1920s. There were numerous reasons for the general fall of the great wholesale houses, most notably the rapid growth of chain stores and the increasing number of merchants and retailers who were buying directly from manufacturers. To stem the mounting wholesale losses, Simpson launched the construction of the mammoth Merchandise Mart, believing that this huge new building could do for the wholesale operations what State Street had done for the retail side. Construction began in August 1928, while the 1920s boom was still progressing, but was not finished until 1930, when the Great Depression had taken firm hold of the country. Marshall Field & Co. spent $35 million constructing the Mart, which at five million square feet was the largest building in the world at that time. The company's wholesale division and the sales headquarters of its manufacturing operations took about half of the space, and Simpson had envisioned other jobbers and manufacturers' representatives taking the remainder.
John McKinlay, yet another executive who had worked his way up through the ranks, took over as president in the inopportune year of 1930. The depression and the poorly timed construction of the Mart sent the wholesale and manufacturing operations into the red, where they would stay for eight straight years. The collapsed economy even forced the retail side into a $900,000 loss in 1932, a year in which Marshall Field & Co. posted a total net loss of $8 million and paid no dividends for the first time since its incorporation some three decades earlier. McKinlay tried to turn the tide by cutting the wholesale departments that were showing the largest losses, but the red ink continued to flow.
Board member Marshall Field III, grandson of the first Marshall Field (who would later found the Chicago Sun newspaper--which evolved into the Chicago Sun-Times), forced the board to hire an outside management consultant, James O. McKinsey, in 1935 to make recommendations on turning the firm around. After three months of study, McKinsey (the founder of the McKinsey & Company consulting firm) advocated the rapid liquidation of the wholesale operations, and the board of directors gave him the responsibility to carry out this plan as the new chairman and CEO. This marked the first time in the company's history that an outsider had been placed in charge.
McKinsey directed the liquidation of the wholesale division in late 1935. He also disposed of some of the mills, with the remainder reorganized as part of Marshall Field's manufacturing division, whose headquarters was shifted to New York City. The loss-making Davis Store also was sold. McKinsey, however, clashed with many of the top managers, including McKinlay, who quit in June 1936. Frederick D. Corley was named president, having previously served as vice-president of retail merchandising. When McKinsey died suddenly in late 1937, Corley became CEO. That year Marshall Field & Co. achieved overall net profits of $3.5 million, a huge improvement over the previous year's loss of $1.6 million.
Corley's reign proved rather short, but it produced two important developments. In 1939 the company purchased the land on which its downtown Chicago department store rested, having previously bought the buildings themselves in 1924. The seller in both cases was the Field estate. In 1941, a month before Pearl Harbor, the downtown store opened the 28 Shop, an upscale fashion store-within-the-store and one of the first exclusive women's salons to be created within a U.S. department store. It was hoped that the shop--named for the store's private elevator entrance at 28 East Washington and for its 28 dressing rooms--could return Field's to its position as the home of feminine elegance. By 1944 sales at the 28 Shop reached $1.2 million. Other special shops soon were added, including a bridal salon called the Brides' Room.
The 28 Shop was the brainchild of Hughston M. McBain, who was in charge of all retail operations in the early 1940s. In 1943 he took over management of Marshall Field & Co. upon Corley's retirement. During the war years, the company's factories produced large quantities of war goods, such as parachute cloth, camouflage netting, wool blankets, and uniforms. The firm's increasing prosperity was evident in 1944, when it earned profits before taxes of $20 million on total revenues of $152 million. The balance sheet improved immensely the following year when the Merchandise Mart was sold to Joseph P. Kennedy for $12.9 million. (The subsequent profits earned by the Kennedy family from operating the Mart helped finance John F. Kennedy's successful 1960 presidential campaign.) Selling the Mart aided Marshall Field & Co. in the retirement of its long-term debt, which had totaled $25 million at the beginning of 1943.
In the years immediately following the end of World War II, Marshall Field & Co. spent millions of dollars improving and modernizing its flagship store in Chicago as well as the Frederick & Nelson store in Seattle. The latter was enlarged from six stories to ten stories in 1952. In 1946 a second, smaller Frederick & Nelson store was opened east of Seattle, in Bellevue. It was replaced by a much larger store ten years later. The Marshall Field stores in Chicago made a concerted push into selling hard goods such as refrigerators and other major appliances in the postwar period.
Meantime, the manufacturing division, which had generated about $30 million of the 1944 revenues, had been reduced to only ten mills. To enhance brand identity, the mills began operating under the name Fieldcrest Mills in 1947. McBain was named chairman and CEO in 1949, and James L. Palmer--no relation to the company founder--was promoted from head of retailing to president. McBain and Palmer directed the final transformation of Marshall Field & Co. into a pure retailer by divesting the last of the manufacturing operations. Funds from the sale of the mills were slated to be used to fund store expansion, particularly in the emerging suburban landscape of the postwar era. The final chapter of the company's manufacturing side came in 1953 when Fieldcrest Mills was sold to Amoskeag Company, a Boston Investment trust. Fieldcrest Mills would later evolve into the powerful Fieldcrest Cannon, Inc., which was acquired by Pillowtex Corporation in 1997. The latter firm, however, went bankrupt in the early 2000s, another victim of the decline in U.S. manufacturing.
Postwar Decline and the End of Independence
By 1951 the company's revenues had grown to a record $225 million. The retail environment in the United States was changing, however, as shopping centers started popping up in the burgeoning suburbs and consumers began a shift in their shopping habits from downtown to the suburbs. Marshall Field & Co. followed this trend. In 1955 a new Marshall Field's store was opened in Park Forest, south of Chicago. The following year a larger store opened northwest of downtown Chicago in a new shopping center in Skokie. Marshall Field & Co. took a lead role in developing the entire center, which was called Old Orchard. In 1959 the firm entered the Milwaukee market by opening a store in the new Mayfair shopping center in Wauwatosa. Another new shopping center, Oakbrook Center, opened in the western suburbs of Chicago in 1962 with a Marshall Field's outlet as one of the anchors. In 1959, in the midst of this expansion spree, McBain retired and Palmer assumed the CEO position.
During the 1960s the company acquired the small Crescent department store chain, which operated in Spokane, Washington. Following the death of Marshall Field IV in 1965, the Field family sold its last remaining holdings in Marshall Field & Co., thus breaking the bonds between the family and the company 100 years after the first Marshall Field had bought into the enterprise that Potter Palmer had founded.
The fortunes of Marshall Field & Co. were on the decline in the 1960s and into the 1970s. As it expanded into suburban malls, Marshall Field lost much that had distinguished it when most of its revenues came from its flagship store in downtown Chicago. The company's share of the Chicago metro area market fell as competitors moved in, such as Lord & Taylor, owned by Associated Dry Goods Corporation, and Neiman-Marcus, owned by Carter Hawley Hale Stores, Inc. Specialty stores began outdoing Marshall Field in key areas, such as fashions for young women. In general the company gradually gained a reputation as a dowdy retailer--not keeping up with changing tastes and lifestyles, and failing to appeal to younger consumers. At the same time, acquisitive large companies such as Federated Department Stores, Inc. and the May Department Stores Company were creating nationwide entities operating several different chains.
Outside of Chicago, the company had been very conservative about expansion over the decades; its only Marshall Field's store outside its core market remained the one in Milwaukee, and its only acquisitions had been those of Frederick & Nelson and the Crescent. In 1970, however, the company completed an acquisition as a defensive measure. Fearing a possible takeover by Associated Dry Goods, whose holdings included stores in Cleveland, Ohio, and Erie, Pennsylvania, Marshall Field purchased the Cleveland-based Halle's department store chain, which had nine stores in Ohio and Pennsylvania. The move succeeded in thwarting any takeover attempt by Associated, because it now faced antitrust obstacles. The deal also unfortunately saddled Marshall Field with an operation that consistently lost money throughout the 1970s, mainly because of the poor performance of the 600,000-square-foot Halle's store located in economically depressed downtown Cleveland.
In 1974 Joseph A. Burnham became president of Marshall Field, having worked up through the ranks, joining the firm as a staff assistant in 1948. Burnham oversaw the completion of Water Tower Place, which was half-owned by the firm's real estate subsidiary. Located on North Michigan Avenue, known in Chicago as "The Magnificent Mile," Water Tower Place was a 74-story complex that included a shopping center, offices, condominiums, and an elegant Ritz-Carlton hotel. Completed in early 1976, it included a new Marshall Field's store that was only one-twelfth the size of the State Street store but was easily as opulent--a store that quickly became immensely successful. The company was now operating a total of 15 Marshall Field's stores.
Revenues for Marshall Field & Co. were increasing steadily but moderately during this period, reaching $611 million by 1976, when it ranked as the largest of the remaining U.S. independent department store operators. Earnings, however, had been stagnant for nearly a decade, amounting to about $18 million in 1976.
The following year, Angelo R. Arena was hired as president of Marshall Field, lured away from his position as head of Carter Hawley Hale's Dallas-based Neiman-Marcus. The board selected an outsider because it wanted a leader who could build the company into more of a national firm. Plans began to be laid for the expansion of the Marshall Field chain into Texas. Chairman and CEO Burnham, however, died suddenly of a heart attack that October, thrusting Arena into the CEO post. Seeing an opening with the change at the top, Carter Hawley Hale almost immediately contacted Marshall Field, offering to take over the company--an ambition it had had for more than a decade. In December 1977 Carter Hawley Hale made a $36 per share, or $325 million, bid. Although this represented a significant premium over what the company's stock had been trading at, the Marshall Field board unanimously rejected the offer. They wanted to keep the company independent and also contended that the deal could not pass antitrust muster given the two firms' overlapping markets of operation. Arena pushed ahead with expansion plans in early 1978. He reached an agreement to acquire two Liberty House stores in Tacoma, Washington, and three in Portland, Oregon, all of which were subsequently converted into Frederick & Nelson outlets. In addition, he formally announced plans to open five new Marshall Field's stores in the faster-growing South, attending the groundbreaking for the first one, to be located in Houston's Galleria shopping center. Although Carter Hawley Hale bumped its price up to $42 per share, the offer was withdrawn in February 1978 when it was clear that Marshall Field would continue to fight the takeover and after the Federal Trade Commission began investigating the deal's antitrust implications. Shareholders subsequently filed class-action lawsuits against Marshall Field claiming that the board had not acted in the interest of the shareholders, but these suits were quickly dismissed.
Its independence at least temporarily secured, Marshall Field proceeded with its expansion. In 1978 and 1979 it acquired John Breuner Company, operator of 14 home furnishings stores and 11 furniture rental outlets in California, Arizona, and Nevada. Six Lipmans stores in Oregon were acquired from Dayton Hudson Corp. and melded into the Frederick & Nelson unit. A deal to buy Hess's Inc., a Pennsylvania-based department store chain, fell through in early 1979, the same year that a new Marshall Field's opened in Joliet, Illinois. The huge new Marshall Field store in Houston opened for business that year as well. One year later, Marshall Field bought J.B. Ivey & Co., a department store chain specializing in women's fashions, for $30 million in stock. Ivey operated 12 stores in North Carolina, one in South Carolina, and ten in northern Florida. Marshall Field attempted to revive its ailing Halle's chain by buying six Union Stores in Columbus, Ohio. This latter endeavor proved short-lived, however, as the company pulled the plug on the loss-making Halle's, selling it in late 1981 to Schottenstein Bros. (which early in 1982 announced it was shutting the Ohio chain down). Also in 1982, the second new Marshall Field's store in Texas opened in the upscale Galleria shopping center in Dallas.
The BATUS Era: 1982-90
By early 1981 Arena had tripled the number of stores owned by the company to 93--only 19 of which were Marshall Field's outlets. Revenues just topped $1 billion for the fiscal year ending in January 1981, though the profits of $20.7 million were below the peak of $21.5 million in 1972, when revenues were less than half that of 1981. Marshall Field's inconsistent earnings and low stock price meant that it continued to be vulnerable to a takeover. Corporate raider Carl Icahn stepped into the picture in early 1982, gradually buying large chunks of the company's stock, eventually gaining a nearly 30 percent stake, and apparently determined to take the firm over. Resigned that its days as an independent were numbered, but not wanting to be bought by Icahn, Marshall Field began casting about for a friendlier acquirer. Talks were held with May Department Stores, Dayton Hudson, and even the previously spurned Carter Hawley Hale, but it was BATUS Inc. that emerged with a successful white knight offer. In June 1982 BATUS bought Marshall Field & Co. for about $367.6 million in cash, or $30 per share. BATUS was the U.S. division of B.A.T. Industries PLC, a U.K. tobacco firm that had diversified into retailing. Among BATUS's holdings were the Gimbels and Saks Fifth Avenue department store chains.
Almost immediately after the BATUS takeover, the Marshall Field company was dismantled, with the various chains going their separate ways. Frederick & Nelson subsequently went into a steady decline, going through three more ownership changes before closing for good in 1992. (The founding store in downtown Seattle was later remodeled and turned into the flagship store of Seattle-based Nordstrom, Inc.) The Crescent too was sold off and eventually went out of business. At Marshall Field's, George P. Kelly initially served as CEO, having previously headed the company's Chicago division. Kelly resigned in mid-1993, however, and Philip B. Miller was brought onboard as the new chief executive. Miller had been president of Neiman-Marcus.
Under Miller's leadership, Marshall Field's attempted to recapture some of its lost glory. Miller wanted to target a more youthful but still upscale, fashion-conscious customer. The merchandise mix was overhauled and began featuring more contemporary, upscale merchandise. The stores began offering a larger selection of special products that could be found only at Marshall Field's. Many of these products were featured in newly launched in-store boutiques. These included Angela Cummings fine jewelry boutiques and several designer accessories boutiques featuring such brands as Bottega Veneta, Louis Vuitton, Fendi, Gucci, and Chanel. More space also was given to quality apparel, cosmetics, and gourmet and specialty foods. Tens of millions of dollars were spent on store remodeling, and Miller also moved quickly to improve customer service. The new management also instituted stringent expense controls to improve the retailer's profitability. Initial results were encouraging: For 1984, revenues increased 8 percent to about $750 million, and pretax profits jumped 12 percent to approximately $52 million.
Of the 1984 revenue total, 10 percent was generated in Texas, where there were now three stores following the opening of a second store in Houston in 1983. A fourth Texas store opened in 1986 in San Antonio. That same year, Marshall Field's expanded in Wisconsin, acquiring five stores from sister company Gimbels (which BATUS was in the process of divesting in a piecemeal fashion). Three of the stores were located in Milwaukee, including a 601,000-square-foot unit located downtown on Grand Avenue; the other two were in Madison and Appleton. Further changes to the mix of stores occurred in the late 1990s. Two of the older stores in Chicago--the Oak Park and Evanston units--were closed down in 1987; the company also had planned to shut down the Park Forest store, but reversed course after residents objected. In 1989 two underperforming stores in Milwaukee were sold off; only the downtown and the Mayfair locales remained in that city. That August, Marshall Field's returned to Ohio, opening a 200,000-square-foot Marshall Field's store in Columbus. The firm thus ended the decade with 24 stores, 15 in Illinois, four in Wisconsin, four in Texas, and one in Ohio. For the fiscal year ending in January 1989, Marshall Field's posted strong results--pretax profits of $90.7 million on sales of $1.09 billion--that indicated that Miller's efforts were paying off.
Late in 1987, Miller announced a massive $115 million, five-year renovation of the flagship State Street store, a revamp billed as the largest such undertaking in U.S. history. The centerpiece of the ambitious makeover was the installation of an 11-story, glass-covered atrium and an elaborate indoor fountain in the center of the store. The new design made the huge store much more accessible as the Wabash Avenue and State Street sides of the first floor--previously separated by an alley--were united by the atrium. Escalators also were installed, and nearly 6 percent more selling space was added. The lower level was changed from the "bargain basement" to a sort of late 19th-century Chicago streetscape with a food court and boutiques. As this renovation progressed, ownership of Marshall Field's changed hands once again.
The Dayton Hudson/Target Era: 1990-2004
This latest turn of events started with another hostile takeover bid. In July 1989 an investor group led by maverick Anglo-French financier James Goldsmith launched a $21.7 billion leveraged buyout of B.A.T. Industries. For Marshall Field's, the proposal contained a real twist. One of the investors in the proposed takeover was Frederick "Ted" Field, son of Marshall Field IV and great-great-grandson of the first Marshall Field, and a man better known for racing cars and producing Hollywood movies. But the return of a Field to even partial ownership of the namesake company was not to be. B.A.T. Industries rejected the bid led by "Sir James," and in September the firm launched a major restructuring in order to preserve its independence. B.A.T. placed up for sale its entire U.S. retailing operation, including Marshall Field's, Saks, J.B. Ivey, and John Breuner. All four were sold in 1990. Saks was bought by an investment group and later taken public before being acquired in 1998 by department store consolidator Proffitt's, Inc., which later changed its name to Saks Incorporated. Dillard Department Stores, Inc. bought the Ivey's stores, which were converted to Dillard's stores. John Breuner would eventually become part of the privately held, Lancaster, Pennsylvania-based Breuners Home Furnishings Corporation.
Marshall Field's ended up in the hands of Dayton Hudson Corporation, named for its Dayton's department stores in Minneapolis and its Hudson's stores in Detroit but increasingly better known for its fast-growing discount chain, Target. Dayton Hudson, which also ran the Mervyn's moderately priced department store chain, bought Marshall Field's for $1.04 billion in June 1990, besting offers from May Department Stores and Dillard, as well as a bid from management that was led by Miller. The Miller era came to an immediate end with his resignation upon completion of the deal. (Ironically, Miller would later become CEO of Saks, Marshall Field's former sister company.) Finally, in a blow to the city that had nurtured Marshall Field's and that had been influenced in so many ways by the company, Dayton Hudson made Marshall Field's part of its Department Store division, which was managed out of Minneapolis. Some 850 Chicago-based staff, including buying, sales promotion, accounting, and public relations personnel--and the staff of the in-house advertising agency--lost their jobs via this centralization. Gary Witkin was named Marshall Field's president after the takeover. But in December 1991 he took over management of all three of Dayton Hudson's department stores, and Daniel J. Skoda became the president of Marshall Field's. Skoda was a former senior vice-president at Neiman-Marcus.
Marshall Field's was taken down market in the early 1990s as part of an efficiency drive that saw the three Dayton Hudson department store chains become more alike (Marshall Field's had always been more upscale than the Dayton's and Hudson's chains). The product mix was shifted to emphasize moderately priced products. A heavy emphasis on promotions also was instituted. Critics complained that what had once been a very distinctive group of stores was becoming indistinguishable from numerous other chains. Many longtime customers, particularly those in Chicago, reacted negatively to the changes, which also included the replacement of Marshall Field's signature green shopping bag with "environmentally friendly" beige packaging. In 1995 the company reversed course, cutting down on promotions, taking the merchandise back upscale, hiring more local buyers, improving customer service, and bringing back the green shopping bags. Sales were aided by new advertising campaigns launched in the late 1990s featuring the tag line, "Where else? Marshall Field's," as well as some of the cheekiness for which Target's ads were known.
On the store openings and closings front, a 280,000-square-foot Marshall Field's store was opened at Northbrook Court in the North Shore suburbs of Chicago in September 1995. Shortly thereafter, a second Marshall Field's store in Columbus, Ohio, opened. The company moved into Indiana for the first time in 1997 when three Hudson's stores located in South Bend and Fort Wayne, Indiana, and Toledo, Ohio, were converted to Marshall Field's stores. Citing the inefficiencies of running such a far-flung operation, and seeking to reallocate resources in its core Midwest market, Marshall Field's sold off its four stores in Texas late in 1996. Several other Marshall Field's stores were closed during this period, including the last two remaining stores in Milwaukee and the Park Forest store in Chicago.
Although Marshall Field's prospects were on the upswing thanks to the mid-1990s strategic reversal, the decade ended on a sour note. In March 1999 Dayton Hudson announced that it would close the Frango candy kitchen at its State Street store after nearly 70 years of operation and begin outsourcing production of the mints and chocolates to a confectioner in Dunmore, Pennsylvania, Gertrude Hawk Chocolates, Inc. This caused an uproar in Chicago among citizens and politicians alike, incensed with this break with tradition and with the further blow to civic pride. Despite the negative publicity and intense pressure from local officials, including Mayor Richard M. Daley, who urged the company to shift Frango production to a local candymaker, Dayton Hudson stood its ground and proceeded with its plan as announced. Coincidentally or not, shortly after this fiasco, Skoda resigned from his role as Marshall Field's president--a position that was promptly eliminated. Marshall Field's regional directors assumed Skoda's duties and began reporting directly to Ertugrul Tuzcu, executive vice-president of the Department Stores division.
In another break with tradition Dayton Hudson changed its name to Target Corporation in January 2000, adopting the name of its largest and fastest growing division. By this time, the Target Stores division was generating nearly 80 percent of the parent company's revenues, whereas the department stores were contributing only about 10 percent. Speculation that the corporation would divest either the department stores or Mervyn's or both, already rife for some time, began heating up. The performance of Marshall Field's was becoming increasingly incidental to the overall results of its parent company.
Marshall Field's gained a larger profile exactly one year later when Target Corporation announced that it would change the names of its Dayton's and Hudson's department stores to Marshall Field's. Marshall Field's was chosen for several reasons: It was the most widely known of the three names; its base of Chicago was bigger than both Minneapolis and Detroit and was a major travel hub; and it was the largest chain, with 24 stores, compared with 19 Dayton's and 21 Hudson's. In addition, Target was planning to launch an online gift registry for its department stores during 2001 and wanted to do so under a unified name. There were now 64 Marshall Field's stores in eight states, and the well-known name now appeared for the first time in four of the states: Michigan, Minnesota, North Dakota, and South Dakota. Marshall Field's also secured significant shares of three major Upper Midwest cities: Chicago, Detroit, and Minneapolis. Linda L. Ahlers, who had served as president of the Department Stores division since 1996, became president of Marshall Field's.
Marshall Field's and the entire department store sector struggled during the early 2000s under the weight of intense competition and the poor economy. Revenues for the newly enlarged operation fell from $2.97 billion in the fiscal year ending in January 2001 to $2.78 billion the following year and to $2.69 billion one year after that. Pretax profits slumped from $190 million to $135 million during this same period. During early 2003 two underperforming Marshall Field's stores in Columbus, Ohio, were sold to May Department Stores, reducing the store count to 62.
Marshall Field's celebrated its 150th anniversary in 2002, having served more than two billion customers at its flagship State Street store in Chicago alone. It was fitting, therefore, that the company in 2002 and 2003 was busy with another major renovation of its State Street store, where it hoped to recapture its lost glory. Marshall Field's launched a plan to lease out about 10 percent of the store's 800,000 square feet to outside vendor partners, who were able to set up their own boutiques stocked with merchandise of their own choosing. (In a historic twist, this concept was adopted from Selfridge's, the U.K. department store that Harry Selfridge established after leaving Marshall Field & Co.) The first of these was an upscale Thomas Pink menswear boutique, which was set up in the second half of 2002. By October 2003 the store had introduced 30 such boutiques, including Mimi Maternity, Creative Kidstuff, Australian Homemade Ice Cream, Levenger upscale writing supplies, and Wrigleyville Sports. Many of these boutiques could be found nowhere else in the Midwest, which provided the store with a way to differentiate itself from the competition. The plan was to use the State Street store as a sort of lab to test out these boutiques for possible rollout to other Marshall Field's stores. The new stores-within-a-store concept was backed by an ad campaign featuring the flexible slogan, "Marshall Field's &" (which also played off the department store's original name: Marshall Field & Co.). Most of the ads were very simple, such as one that showed a stack of baseball caps along with this copy: "Marshall Field's & Wrigleyville Sports." In addition, Marshall Field's aimed to emulate the great success that the Target chain had achieved through its red bull's-eye branding campaign. Marshall Field's began talking about "owning" the color green, and the retailer began using bar code-style green stripes in its advertising, on its shopping bags, and on its Sunday circulars.
It was unclear whether this latest attempt to rejuvenate the fortunes of the "grande dame" of Chicago retailing would succeed, but the possibility of another change in ownership was becoming ever more certain. Sales at stores open more than a year fell 2.6 percent in the fiscal year ending in January 2004, though they grew in both January and February 2004, signaling a possible turnaround. In addition, the ongoing rapid growth of the Target chain meant that Marshall Field's revenues of $2.58 billion in fiscal 2003 comprised only 5.4 percent of the $48.16 billion total for the parent company. As pressure from Target Corporation shareholders unhappy with the performance of Marshall Field's and Mervyn's mounted, Target announced in March 2004 that it had hired Goldman Sachs Group, Inc. to review "strategic alternatives" for the two divisions, including possible sales. Analysts believed that the two most likely buyers of Marshall Field's were Federated Department Stores and May Department Stores, and they speculated that a sale of the venerable department store retailer could fetch more than $1.8 billion.
Principal Competitors: Federated Department Stores, Inc.; The May Department Stores Company; Carson Pirie Scott & Company; Dillard Department Stores, Inc.; Nordstrom, Inc.; Saks Incorporated; Neiman-Marcus Co.; J.C. Penney Corporation, Inc.; Sears, Roebuck and Co.
- Key Dates:
- 1852: Potter Palmer opens a retail dry goods store called P. Palmer & Company on Lake Street in Chicago, soon finding success creating an upscale emporium catering to women.
- 1865: Marshall Field and Levi Z. Leiter buy into Palmer's enterprise, which is renamed Field, Palmer & Leiter.
- 1867: Field and Leiter buy out Palmer, renaming the firm Field, Leiter & Company.
- 1868: Field and Leiter move their store to State and Washington Streets.
- 1871: The store is destroyed in the Great Chicago Fire; three weeks later, it reopens at a temporary site.
- 1873: The retail store reopens in a new building at State and Washington.
- 1877: Another fire burns the store to the ground, forcing another temporary relocation.
- 1879: Field, Leiter & Company returns once again to State and Washington.
- 1881: Field buys out Leiter and renames the firm Marshall Field & Company.
- 1885: Field's retail store opens its bargain basement area.
- 1901: The company is incorporated as Marshall Field & Company, Inc.
- 1906: Marshall Field dies, leaving ownership of his company to a complex family trust; John G. Shedd takes over as president.
- 1917: Field family trustees sell 90 percent of their company shares to the firm's officers and managers.
- 1929: The Frederick & Nelson department store in Seattle, Washington, is acquired.
- 1930: The company finishes construction of the mammoth $35 million Merchandise Mart, new home of the wholesale and manufacturing divisions; Marshall Field & Co. offers shares to the public for the first time; the Field family retains a 10 percent stake.
- 1932: At the height of the depression, Marshall Field & Co. posts a net loss of $8 million.
- 1935: James O. McKinsey is brought in from the outside as chairman and CEO to direct the liquidation of the wholesale division.
- 1945: The Merchandise Mart is sold to Joseph P. Kennedy for $12.9 million.
- 1953: Marshall Field completes the divestment of its manufacturing operations, selling Fieldcrest Mills.
- 1956: The company leads the development of Old Orchard, a new shopping center in Skokie, Illinois, featuring a Marshall Field's store.
- 1965: The Field family sells its last remaining holdings in Marshall Field & Co.
- 1976: Water Tower Place, half-owned by the company, is completed on Chicago's North Michigan Avenue and includes a new Marshall Field's store.
- 1977: Carter Hawley Hale Stores, Inc. launches a takeover bid that is rejected by Marshall Field's board.
- 1979: The first Marshall Field store outside the Midwest opens in Houston, Texas.
- 1982: To fend off a takeover bid led by Carl Icahn, Marshall Field sells itself to BATUS Inc., a division of B.A.T. Industries PLC, for $367.6 million.
- 1987: A $110 million, five-year renovation of the flagship State Street store is launched.
- 1989: To fend off a hostile takeover led by James Goldsmith, B.A.T. Industries announces that it will sell off its U.S. retailing operations.
- 1990: Dayton Hudson Corporation acquires Marshall Field's for $1.04 billion.
- 1996: Marshall Field's exits from the Texas market, selling its four stores there.
- 2000: Dayton Hudson changes its name to Target Corporation.
- 2001: Target rebrands its Dayton's and Hudson's department stores under the Marshall Field's banner.
- 2004: Target announces that it will explore a possible sale of Marshall Field's.
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