Lehman Brothers Collection - Contemporary Business Archives

Harvard Business School Baker Library Historical Collections

Lehman Brothers Collection

Twentieth-Century Business Archives

R. H. Macy & Co., Inc. - Lehman Brothers Collection

R. H. Macy & Co., Inc.

List of Deals

R. H. Macy & Co. was founded by Rowland H. Macy in Manhattan in 1858. During its first year of business, the store sold approximately $85,000 worth of merchandise. Macy instituted a cash-only policy for customers, and no inventory was purchased with credit. This was unusual in a time when most stores routinely sold on credit.

By 1870, when sales broke $1 million, the store carried not only dry goods, but items like men's hosiery and ties, linens and towels, fancy imported goods, costume jewelry, silver, and clocks. When R. H. Macy died in 1877, his nephew, Robert M. Valentine, and a store salesman, Abiel T. LaForge, were promoted to the company's leadership. Valentine later bought LaForge's share and brought in Charles Webster to join him at the company's helm. After Valentine's death, Webster approached the Straus family, who for thirteen years had leased space in Macy's to operate a chinaware department, the store's most profitable section. The Strauses accepted Webster's offer and joined him as partners. The Straus brothers introduced their odd-price policy, now used virtually everywhere in U.S. retailing. Charging $4.98 instead of $5.00, the store motivated customers to buy in quantity in order to accumulate substantial savings. The Strauses also brought in line after line of new merchandise: Oriental rugs, ornate furniture, lavish stationary, new-style bicycles, and pianos. They also instituted the store's depositor's accounts, in which shoppers could make deposits with the store and then charge purchases against them. This plan was a forerunner of installment buying and layaway plans.

In 1902 the store relocated to its Herald Square location at 34th Street and Broadway. The new store was equipped with newly designed escalators, pneumatic tubes to move cash or messages, and an air exhaust system that provided the store with a constant supply of fresh air. Macy's spacious building had ample fitting rooms, accommodation desks, an information counter, and comfortable rest rooms. Within a year of the move, sales reached $11 million.

As it did with most of its products, Macy's sold books at substantially below their wholesale price—25 percent below. In 1909 a book publishers' association sued Macy's, charging that the price-cutting hurt their copyright value. The Strauses countersued, claiming that the group constituted an illegal trust under the Sherman Antitrust Act. The publishers responded by cutting Macy's off completely. The Strauses, however, obtained stock through other channels. The U.S. Supreme Court decided in Macy's favor in 1913, but the controversy made it even more difficult for the store to acquire well-known brands in any product line, prompting Macy's to develop its own private labels.

Sales were up to $36 million when World War I ended in 1918. The company began its expansion into other cities, acquiring substantial interests in LaSalles & Koch Co. in Toledo, Ohio, in 1923 and Davison-Paxon-Stokes Co. in Atlanta, Georgia, in 1925. In the 1920s Macy's began the tradition of sponsoring New York City's Thanksgiving Day parade. Two major television networks began to cover the parade in 1952.

Harvard Business School Harvard Business School Baker Library Histrorical Collections