Mises Daily – March 24, 2011

March 24, 2011

Mises Daily

Over to You, H. Parker Willis by James Grant Of Muses and Mises: A Prelude to Natural Philosophy by Daniel James Sanchez What Is Your Plan for the Day After Tomorrow? by Theodore Phalan

The Pioneer of Marketing
by Orison Swett Marden on March 24, 2011

In a plain two-story dwelling, on the outskirts of Philadelphia, the future merchant prince was born on July 11, 1837. His parents were Americans in humble station; his mother being of that sturdy Pennsylvania Dutch stock that has no parallel except the Scotch for ruggedness. His father, a hardworking man, owned a brickyard in the close vicinity of the family residence.

Little John earned his first money, seven big copper cents, by assisting his father. He was too small to do much but turned the bricks every morning as they lay drying in the summer sun. As he grew older and stronger, the boy was given harder tasks around the brickyard.

He went to school a little — not much — and he assisted his mother in the house a great deal. His father died when John was 14, and this changed the whole course of his life. He abandoned the brickyard and secured a place in a bookstore owned by Barclay Lippincott, on Market Street, Philadelphia, at a salary of $1.25 a week.

It was a four-mile walk from his home to his place of business. Cheerfully he trudged this distance morning and night; purchasing an apple or a roll each noon for luncheon, and giving his mother all the money that he saved.

He used to deny himself every comfort, and the only other money that he ever spent was on books for his mother. This seems to have been the boy’s chief source of pleasure at that period. Even today, he says of his mother: “Her smile was a bit of heaven, and it never faded out of her face till her dying day.” Mrs. Wanamaker lived to see her son famous and wealthy.

John Wanamaker, the boy, had no single thing in all his surroundings to give him an advantage over any one of hundreds of other boys in the city of Philadelphia. Indeed, there were hundreds and hundreds of other boys of his own age for whom anyone would have felt safe in prophesying a more notable career. His capital was not in money. Very few boys in all that great city had less money than John Wanamaker, and comparatively few families of average position were not better off in the way of worldly goods.

John Wanamaker’s capital, which stood him in such good stead in after life, comprised good health, good habits, a clean mind, thrift in money matters, and tireless devotion to whatever he thought to be duty. People who were well acquainted with John Wanamaker when he was a book publisher’s boy say that he was exceptionally promising as a boy; that he was studious as well as attentive to business. He did not take kindly to rough play or do much playing of any kind. He was earnest in his work, unusually earnest for a boy. And he was saving his money.

When, a little later, he went to a Market Street clothing house and asked for a place, he had no difficulty in getting it, nor had he any trouble in holding it, and here he could earn 25 cents a week more in wages.

Men who worked with him in the Tower Hall Clothing Store say that he was always bright, willing, accommodating, and very seldom out of temper. His effort was to be first at the store in the morning, and he was very likely to be one of the last, if not the last, at the store in the evening. If there was an errand, he was always prompt and glad to do it.

And so the store people liked him, and the proprietor liked him, and, when he began to sell clothing, the customers liked him. He was considerate of their interests. He did not try to force undesirable goods upon them. He treated them so that when they came again they would be apt to ask, “Where is John?”

Colonel Bennett, the proprietor of Tower Hall, said of him at this time,

John was certainly the most ambitious boy I ever saw. I used to take him to lunch with me, and he used to tell me how he was going to be a great merchant.

He was very much interested in the temperance cause; and had not been with me long before he persuaded most of the employees in the store to join the temperance society to which he belonged. He was always organizing something. He seemed to be a natural-born organizer. This faculty is largely accountable for his great success in after life.

Young Wanamaker’s religious principles were always at the forefront in whatever he did. His interest in Sunday-school work and his skill as an organizer became well-known. And so earnestly did he engage in the work of the Young Men’s Christian Association that he was appointed the first salaried secretary of the Philadelphia branch, at $1,000 a year. Never since has a secretary enrolled so many members in the same space of time. He passed seven years in this arduous work.

He saved his money; and, at 24, he formed a partnership with his brother-in-law Nathan Brown and opened Oak Hall Clothing store in April 1861. Their united capital was only $3,500, yet Wanamaker’s capital of popular goodwill was very great. He was already a great power in the city.

I can never forget the impression made upon my mind, after he had been in business but a few months, when I visited his Bethany Sunday School, established in one of the most unpromising sections of the city, which had become already a factor for good, with one of the largest enrollments in the world. And he was foremost in every form of philanthropic work.

It was because of his great capacity to do business that Wanamaker had been able to “boom” the Young Men’s Christian Association work. He knew how to do it. And he could “boom” a Sunday school or anything else that he took hold of. He had a head built for business, whatever the business might be. And as for Oak Hall, he knew just what to do with it.

The first thing he did was to multiply his working capital by getting the best help obtainable for running the store.

At the very outset, John Wanamaker did what almost any other businessman would have stood aghast at. He chose the best man he knew as a salesman in the clothing business in Philadelphia, the man of the most winning personality who could attract trade, and agreed to pay him $1,350 for a year — one-third of the entire capital of the new concern.

It has been a prime principle with this merchant prince not only to deal fairly with his employees, but to make it an object for them to earn money for him and to stand by him. Capacity has been the first demand. He engaged the very best men to be had. There are today dozens of men in his employ who receive larger salaries than are paid to cabinet ministers. All the employees of the 13th Street store, which he occupied in 1877, participate in a yearly division of profits. Their share at the end of the first year amounted to $109,439.68.

A considerable portion of the trade of the new store came from people in the country districts. Mr. Wanamaker had a way of getting close to them and gaining their good will. He understood human nature. He put his customer at ease. He showed interest in the things that interested the farmer. An old employee of the firm says,

John used to put a lot of chestnuts in his pocket along in the fall and winter, and, when he had one of these countrymen in tow, he’d slip a few of the nuts into the visitor’s hand and both would go munching about the store.

Wanamaker was the first to introduce the “one-price system” into the clothing trade. It was the universal rule in those days, in the clothing trade, not to mark the prices plainly on the goods that were for sale. Within rather liberal bounds, the salesman got what he could from the customer. Mr. Wanamaker, after a time, instituted at Oak Hall the plan of “but one price and that plainly marked.” In doing this he followed the cue of Stewart, who was the first merchant in the country to introduce it into the dry-goods business.

The great Wanamaker store of 1877 went much further: he announced that those who bought goods of him were to be satisfied with what they bought, or have their money back. To the old mercantile houses of the city, this seemed like committing business suicide.

It was, also, unheard of that special effort should be made to add to the comfort of visitors; to make them welcome whether they cared to buy or not; to induce them to look upon the store as a meeting place, a rendezvous, a resting place — a sort of city home almost.

The merchant’s organizing faculty was so great that General Grant once remarked to George W. Childs that Wanamaker would have been a great general if his lot had been that of army service.

Wanamaker used to buy goods from Stewart, and the New York merchant remarked to a friend: “If young Wanamaker lives, he will be a greater merchant than I ever was.”

Sometime in recent years, since Wanamaker bought the Stewart store, he said to Frank G. Carpenter,

A.T. Stewart was a genius. I have been surprised again and again as I have gone through the Broadway and Tenth Street building, to find what a knowledge he had of the needs of a mercantile establishment. Mr. Stewart put up a building which is today, I believe, better arranged than any of the modern structures. He seemed to know just what was needed.

I met him often when I was a young man. I have reason to think that he took a liking to me. One day, I remember, I was in his woolen department buying some stuffs for my store here, when he came up to me and asked if I would be in the store for 15 minutes longer. I replied that I would. At the end of 15 minutes he returned and handed me a slip of paper, saying, “Young man, I understand that you have a mission school in Philadelphia; use that for it.”

Before I could reply he had left. I looked down at the slip of paper. It was a check for $1,000.

Wanamaker early showed himself the peer of the greatest merchants. He created the combination or department store. He lifted the retail clothing business to a higher plane than it had ever before reached. In ten years from the time he began to do business for himself, he had absorbed the space of 45 other tenants and become the leading merchant of his native city. Four years later, he had purchased, for $450,000, the freight depot of the Pennsylvania Railroad, covering the entire square where his present great store is located.

The firm name became simply John Wanamaker. His lieutenants and business partners therein are his son, Thomas B. Wanamaker, and Robert C. Ogden. Their two Philadelphia establishments alone do a business of between $30 million and $40 million annually. Mr. Wanamaker’s private fortune is one of the most substantial in America.

Yet in all these years he has been early and late at the store, as he was when a boy. He has always seen to it that customers have prompt and careful attention. He early made the rule that if a sale was missed, a written reason must be rendered by the salesman. There was no haphazard business in that store — nothing of the happy-go-lucky style. Each man must be alert, wide awake, attentive, or there was no place for him at Oak Hall.

The most rigid economy has been always a part of the system. It is told of him that, in the earlier days of Oak Hall, he used to gather up the short pieces of string that came in on parcels, make them into a bunch, and see that they were used when bundles were to be tied. He also had a habit of smoothing out old newspapers, and seeing that they were used as wrappers for such things as did not require a better grade of paper.

The story has been often related of the first day’s business at the original store in 1861, when Wanamaker delivered the sales by wheeling a pushcart. The first day’s business made a cash profit of $38, and the whole sum was invested in one advertisement in the next day’s Inquirer. His advertising methods were unique; he paid for the best talent he could get in this line.

Philadelphia woke one morning to find “W.&B.” in the form of six-inch square posters stuck up all over the town. There was not another letter, no hint, just “W.&B.” Such things are common enough now, but then the whole city was soon talking and wondering what this sign meant. After a few days, a second poster modestly stated that Wanamaker & Brown had begun to sell clothing at Oak Hall.

Before long there were great signs, each 100 feet in length, painted on special fences built in a dozen places about the city, particularly near the railroad stations. These told of the new firm and were the first of a class that is now seen all over the country.

Afterward balloons more than 20 feet high were sent up, and a suit of clothes was given to each person who brought one of them back. Whole counties were stirred up by the balloons. It was grand advertising, imitated since by all sorts of people.

When the balloon idea struck the Oak Hall management it was quickly found that the only way to get these airships was to make them, and so, on the roof of the store, the cotton cloth was cut and oiled and put together. Being well built, and tied very tightly at the neck, they made long flights and some of them were used over and over again.

In one instance, a balloon remained for more than six months in a cranberry swamp, and when the great bag was discovered, slowly swaying in the breeze, among the bushes, the frightened Jerseymen thought they had come upon an elephant, or, maybe, a survivor of the mastodons. This made more advertising of the very best kind for the clothing store — the kind that excites interested, complimentary talk.

Genius consists in taking advantage of opportunities quite as much as in making them. Here was a young man doing things in an advertising way regardless of the custom of the business world, and with a wonderful knowledge of human nature. He took common-sense advantage of opportunities that were open to everybody.

Soon after the balloon experience, tally-ho coaching[1] began to be a Philadelphia fad of the very exclusives. Immediately afterward a crack coach was secured, and six large and spirited horses were used instead of four, and Oak Hall employees, dressed in the style of the most ultra coaching set, traversed the country in every direction, scattering advertising matter to the music of the horn. Sometimes they would be a week on a trip. No wonder Oak Hall flourished. It was kept in the very front of the procession all the time.

A little later, in the yachting season, the whole town was attracted and amused by processions and scatterings of men, each wearing a wire body frame that supported a thin staff from which waved a wooden burgee, or pointed flag, reminding them of Oak Hall. Nearly 200 of these prototypes of the “Sandwich man”[2] were often out at one time.

But it was not only in the quick catching of a novel advertising thought that the new house was making history; in newspaper advertising, it was even further in advance. The statements of store news were crisp and unhackneyed, and the first artistic illustrations ever put into advertisements were used there. So high was the grade of this picture work that art schools regularly clipped the illustrations as models; and the world-famous Shakespearian scholar, Dr. Horace Howard Furness, treasured the original sketches of The Seven Ages as among the most interesting in his unique collection.

“The chief reason,” said Mr. Wanamaker upon one occasion, “that everybody is not successful is the fact that they have not enough persistency. I always advise young men who write me on the subject to do one thing well, throwing all their energies into it.”

To his employees he once said: “We are very foolish people if we shut our ears and eyes to what other people are doing. I often pick up things from strangers. As you go along, pick up suggestions here and there, jot them down and send them along. Even writing them down helps to concentrate your mind on that part of the work. You need not be afraid of overstepping the mark. The more we push each other, the better.”

“To what, Mr. Wanamaker, do you attribute your great success?”

In reply to this question when asked, he replied, “To thinking, toiling, trying, and trusting in God.”

A serene confidence in a guiding power has always been one of the Wanamaker characteristics. He is always calm. Under the greatest stress he never loses his head.

In one physical particular, Mr. Wanamaker is very remarkable. He can work continually for a long time without sleep and without evidence of strain, and make up for it by a good rest afterward.

When upon one occasion he was asked to name the essentials of success, he replied, curtly, “I might write a volume trying to tell you how to succeed. One way is to not be above taking a hint from a master. I don’t care to tell why I succeeded; because I object to talking about myself — it isn’t modest.”

A feature of his makeup that has contributed largely to his success is his ability to concentrate his thoughts. No matter how trivial the subject brought before him, he takes it up with the appearance of one who has nothing else on his mind.

When asked whether the small tradesman has any “show” today against the great department stores, he said:

All of the great stores were small at one time. Small stores will keep on developing into big ones. You wouldn’t expect a man to put an iron band about his business in order to prevent expansion, would you? There are, according to statistics, a greater number of prosperous small stores in the city than ever before. What better proof do you want?

The department store is a natural product, evolved from conditions that exist as a result of fixed trade laws. Executive capacity, combined with command of capital, finds opportunity in these conditions, which are harmonious with the irresistible determination of the producer to meet the consumer directly, and of merchandise to find distribution along the lines of least resistance. Reduced prices stimulate consumption, and increase employment; and it is sound opinion that the increased employment created by the department stores goes to women without curtailing that of men.

In general it may be stated that large retail stores have shortened the hours of labor; and by systematic discipline have made it lighter. The small store is harder upon the salesperson and clerk. The effects upon the character and capacity of the employees are good. A well-ordered, modern retail store is the means of education in spelling, writing, English language, system and method. Thus it becomes to the ambitious and serious employees, in a small way, a university, in which character is broadened by intelligent instruction practically applied.

When asked if a man with means but no experience would be safe in embarking in a mercantile business, he replied quickly: “A man can’t drive a horse who has never seen one. No, a man must have training, must know how to buy and sell. Only experience teaches that.”

I have heard people marvel at the unbroken upward course of Mr. Wanamaker’s career, and lament that they so often make mistakes. But hear him: “Who does not make mistakes? Why, if I were to think only of the mistakes I have made, I should be miserable indeed.”

I have heard it said a hundred times that Mr. Wanamaker started when success was easy. Here is what he himself says about it:

$20 $18

I think I could succeed as well now as in the past. It seems to me that the conditions of today are even more favorable to success than when I was a boy. There are better facilities for doing business, and more business to be done. Information in the shape of books and newspapers is now in the reach of all, and the young man has two opportunities where he formerly had one.

We are much more afraid of combinations of capital than we have any reason for being. Competition regulates everything of that kind. No organization can make immense profits for any length of time without its field soon swarming with competitors. It requires brain and muscle to manage any kind of business, and the same elements which have produced business success in the past will produce it now, and will always produce it.