Customers and Employees First

Imagine a store that not only provides a variety of quality products and efficient service but also offers employees a bank, a school, a library, a gymnasium, medical care–and a weekly prayer meeting.

Is this a modern business experimenting with new ideas to retain employees? No, it was a late nineteenth- to early twentieth-century business that was far ahead of its time. (In fact, at least the prayer meeting part would be considered politically incorrect today and possibly even lead to law suits!) These innovations were the brainchildren of John, the young businessman whom I introduced in the previous blog post (“A Revolutionary Retailer”).

People conducted business differently in John’s early days than they do today. Retail stores usually specialized in only one or two types of products and had no set business hours. Clerks received no formal training. Clerks and customers haggled over the price of everything. Identical items might have several different prices. People expected merchants to try to cheat them. Merchants always made customers feel inferior; shopping was seldom pleasurable. A dissatisfied customer could not return a product for refund or exchange. The business motto of the day was caveat emptor, “Let the buyer beware.”

But John changed all that–and more. He instituted set hours and stayed until the last customer was served. He hired only the best staff and then trained them extensively in customer service. He marked prices clearly, and identical items had one price, eliminating haggling. He made customers feel important, and shopping became enjoyable. “Courtesy is the one coin you can never have too much of or be stingy with,” he instructed his employees. If a customer was dissatisfied for any reason and could show his receipt, John guaranteed a cash refund.

Moreover, John’s store was the first to have electricity, telephones, elevators, and telegraph service. He pioneered home delivery and telephone ordering. He introduced the use of pneumatic tubes whereby clerks in the various departments could send cash and receive change quickly. He offered the best products; when he couldn’t do so, he hired craftsmen or built factories to make them himself. He conducted special sales. He even built a restaurant inside his store.

John informed his customers through continuous and aggressive advertising. He once admitted, “half the money I spend on advertising is wasted; the trouble is, I don’t know which half.” He read the papers daily, looking for good writers and artists whose work he liked, then he hired them to produce effective ads for him.

He introduced numerous benefits for his employees and their families, including vacations, pensions, bonuses, health care, life insurance, paid training, and extra pay for additional education. He scheduled public concerts, authors’ lectures, art and historical exhibits, and other forms of entertainment and education–all conducted inside his tore during store hours. He had the world’s largest organ built and installed in his store.

In short, John made work rewarding for his employees and shopping pleasurable for his customers. “When a customer enters my store,” John said, “forget me. He is king.” In return, they made him a success. But that success was a mere by-product of an even greater purpose that drove his revolutionary business.

In the next post, I will share more of this great exemplar’s legacy, which extended far beyond his retail operations, and let you in on what he considered the secrets of his success.

[Copyright (c) 2017, Dennis L. Peterson]

A Revolutionary Retailer

John, the first of six children in his family, was a sickly child. Although he enjoyed reading and learning and going to school, he dropped out of school at fourteen to work for $1.25 a week as an errand boy for a Philadelphia publisher. He soon quit that job to become a stock boy in a clothing store–for $2.50 a week. During that time, he not only learned a lot about selling clothing but also wrote, edited, published, and distributed a little newspaper called Everybody’s Journal. It was designed for “young men who wish to rise in the world,” which was exactly what he intended to do.

When John was eighteen, he became a salesman for Joseph Bennett, a pioneer in ready-to-wear clothing. John impressed Bennett and advanced quickly. The two of them often talked about business and John’s future. Bennett recalled John’s saying that he planned to become a great merchant. But one day John asked his boss for a substantial raise, and Bennett refused. John calmly told him that he would quit and open his own store nearby.

Like all other businessmen, John wanted to make money, but that wasn’t the most important thing to him. A deeply religious man, John saw “every day [as] an opportunity to obey his religious convictions” and thereby please his Maker. He also wanted to “be of value to others besides himself.” He once said that his mission in life was “to do a full day’s work every day int he year, and to use its product for the uplifting and bettering of my fellow-men.”

John got this philosophy from his parents, who gave him his religious instruction. His father, who worked in a brickyard, set an example of hard work and frugality. His mother was a godly woman who taught her children to love God and read His Word. John especially recalled her teaching him “diligence, without which no man need ever hope to succeed in business or any other legitimate profession.”

Shortly after quitting his employment with Bennett, John was walking down the street when he heard music coming from a church as he passed it. He went in, listened to the choir, and gave his heart to Christ. From that day, he served a higher purpose.

In 1861, when John was twenty-three, he and his brother-in-law, Nathan Brown, opened a store on the corner of Sixth and Market Streets in Philadelphia. Through vision, determination, and hard work, they brought about a revolution in retail sales. John had an uncanny ability to foresee trends. Many people thought he was crazy to do some of the things he did with his business, but they worked, and soon other business were following his example. He realized that to be in the forefront of the industry, he needed to see the “fundamental needs of the people before the people themselves were consciously aware of these needs.” Based on this uncanny ability and his willingness to take on risks, he introduced new products, and customers rewarded his intuition by buying them. He also introduced new ways to care for and reward his employees, and they, in turn, worked hard for him and helped him earn great profits. By 1872, his store was the largest in the nation.

John’s story is so impressive that it can’t be told or even summarized in one short blog post. Stay tuned for subsequent posts in which I will share more about this amazing entrepreneur’s successes and example.

[Copyright (c) 2017, Dennis L. Peterson]