Merchant Prince Stanley Marcus

One of retailing's great impresarios thinks he knows who's to blame for the lost arts of salesmanship and merchandising -- it's the retailers themselves

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The his-and-hers camels offered in the annual Christmas catalog told you everything you needed to know about Dallas's foremost department store -- or at least everything that Stanley Marcus wanted you to know. No matter that only one of the desert beasts was ever shipped. It was by such flashes of marketing genius that The Neiman-Marcus Co. established its reputation among America's department stores as the premier purveyor of extravagance, quality, and style.

Now 10 years retired from the chairmanship of the business that bears his family name, Marcus has watched as the store's new corporate owners try to steer clear of the rut into which most of the big retailing chains have fallen: standardization of product, decline in quality, an overemphasis on numbers and an underemphasis on customer service. Public ownership, he says, is largely to blame. So, too, is an industry that assigns too little prestige to its sales force and too little importance to price stability.

Actually, it was only reluctantly that the young Stanley Marcus went into retailing, abandoning a nascent publishing career on his father's plea for help and a promise not to stifle the young man's freedom of expression. Stanley's liberal politics and irreverent wit have not always sat well with a Dallas establishment that, nonetheless, continued to eat off his imported china and drape its women with his furs. Now a young 82, Marcus is still remarkably free with his opinions -- as the author of three books, as a columnist for The Dallas Morning News, and as a consultant. He shared his thoughts on retailing and its troubles with INC.'s Joseph P. Kahn and Steven Pearlstein.

INC.: You've been in retailing for 50 years now. In what fundamental ways has it changed?

MARCUS: The two biggest factors in retailing today are public ownership and the standardization of goods. And both are related. The reason merchandise is more standardized -- the reason you see the same goods in every store -- is because the buyers are almost exclusively computer oriented, less in touch with suppliers and customers, and much more in touch with the quarterly bottom-line numbers that inspire public-company managers. There are good reasons why public companies behave this way, but they don't have anything to do with serving the customer well -- and that is really where the excitement is in retailing.

INC.: What is it about the quarterly profit orientation of some of the larger outfits that is inconsistent with building an exemplary retail operation?

MARCUS: I suppose I learned this from the Dayton family in Minneapolis. The Daytons had a principle that profit was not the objective of a business. The objective of a business must be providing a service or product that's good enough for people to pay you a profit for providing it. That sounds, perhaps, like semantics until you start applying it, and then it makes a world of difference. I found that when I took care of customers extremely well, and made them a focal point, profit inevitably flowed from that.

INC.: But what is it about public ownership that prevents the head of Allied Stores or Sears Roebuck from realizing that and doing something about it?

MARCUS: Look, I'm not naive enough to think retailing's problems would be eliminated if public ownership suddenly disappeared. But you can't pretend that it hasn't led to a decline in quality -- that these stores are providing the same service to customers that John Wanamaker did when he felt he knew his merchandise so intimately that he sewed his own name into every piece of clothing. Oh, sure, the public companies pay lip service to the idea of satisfying the customer, but most of that is pious nonsense. They'd like to have customers happy and satisfied, but not if it's going to cost them three cents' worth of earnings in the current quarter. Given the choice between customer service and that three cents, customer service goes right down the drain.

INC.: And yet many of these big retail chains are today quite profitable, in spite of the declining quality and service. Do you think the marketplace will eventually catch up with the big chains?

MARCUS: That seems to be the long-range trend. At one end, you have K mart, the stripped-down model providing a limited number of standardized goods to that part of the market that doesn't want fanciness, that doesn't care much about quality or service, that is only concerned about price. And at the other end, there are the retailers -- a few large ones and many more small ones -- providing maximum service and maximum selection. And in the middle fall the department stores that are giving neither the best service nor the best price. So what future do they have?

INC.: Are department stores as we know them threatened with extinction?

MARCUS: Not imminently. And not all of them. There is Nordstrom's in Seattle, a publicly held clothing store with a deep commitment to its customers. And there are a few -- I'm thinking of Macy's, Bloomingdale's -- that realize the problem and are working hard at self-correction. Look at Gimbels, which is the perfect example of what happens to the bland store that tries to mean anything to anybody. When Gimbels buried its New York City store last year, no one came to the funeral. "Sorry you're gone," said the general public. "We thought that you had folded years ago."

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