Korvette’s: A Pioneer in Retail

E. J. Korvette, also known as known as Korvette’s, emerged as a pioneering American chain of discount department stores, originating in 1948 within the bustling streets of New York City. Spearheaded by Eugene Ferkauf, a veteran of World War II, and his compatriot, Joe Zwillenberg, Korvette’s boldly challenged the established retail norms, notably the suggested retail price provisions of anti-discounting statutes. In doing so, it redefined the concept of a department store, paving the way for future discount retailers like Walmart and warehouse clubs such as Costco.

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Eugene Ferkauf, the founder of E.J. Korvette’s, launched his discount retailing venture in a modest 400-square-foot loft in midtown Manhattan. Initially offering renowned brands of luggage, household appliances, and select jewelry, the store boasted discounts of one-third off regular prices, achieving remarkable sales of over $2,500 per square foot. Ferkauf retired in 1968.

Strategies

Despite legal constraints on discounting, Korvette’s employed innovative retail strategies, including a pioneering membership program inspired by consumers’ cooperatives. Breaking from tradition, it expanded into suburban locations, diverging from the urban-centric model of most department stores of the era.

The record and audio division emerged as a lucrative arm of Korvette’s business, with record sales soaring to $20,000,000 by 1964. Led by David Rothfeld, the merchandise manager, and supported by dynamic leadership from President Jack Schwadron, this division became instrumental in driving the company’s profits.

In the 1950s, E.J. Korvette’s rapidly expanded by strategically locating stores in strip malls along major roads, targeting the growing suburban population.

Modern Stores

By 1954, modern-style stores were introduced, exemplified by the 90,000-square-foot location in Carle Place, Long Island. This marked the incorporation of apparel and initiated a trajectory of expansion, with 12 stores by 1958 and a peak of 58.

Korvette’s innovative retail format featured decentralized cashiers, supermarkets, pharmacies, pet stores, and tire centers within its stores.

Korvette’s Flagship Store

In 1967, the company opened its flagship 45th store on Herald Square, NYC, after a significant $1.5 million renovation.

Throughout the 1960s, Korvette’s expanded into key metropolitan areas, overcoming legal hurdles such as Sunday closing ordinances, which paved the way for broader retail operations.

Decline and Failure

In 1966, Korvette’s faced a decline and opted to merge with Spartan Industries, a soft goods retailer. This transition led to the removal of Eugene Ferkauf from company leadership, with Spartan managers taking the helm in an attempt to rejuvenate the brand.

From 1971 to 1979, Korvette’s came under the ownership of Arlen Realty and Development Corporation, a land development firm that utilized the chain’s 50 stores for cash flow. During this period, Korvette’s stores in the New York area heavily advertised on local television, featuring game show host Bill Cullen as their spokesperson.

Bankruptcy in 1980

In 1979, Korvette’s was acquired by the Agache-Willot Group of France, which initially closed the least profitable stores and began liquidating merchandise, fixtures, equipment, and real estate assets. The company ultimately filed for bankruptcy in 1980, closing all remaining 17 stores on December 24th of that year.

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