Montgomery Ward's Demise Comes as No SurpriseIndustry experts said Montgomery Ward, the 128-year-old retailer that recently announced its closing, was its own worst enemy and was unable to compete with other direct marketing giants.
After the company announced the closing of 250 stores and 10 distribution centers Dec. 28, direct marketing experts and analysts said they were not surprised when the end came. Montgomery Ward, which originated catalog shopping, was characterized as having failed to keep up with the changing times. It could not develop a strategy to compete with fresh-faced companies such as Target Corp., Wal-Mart Stores Inc. and other mid-range specialty stores that cut into its business.
"One of Montgomery Ward's core competencies was they had a very high price-value relationship," said Glenda Sasho-Jones, president/CEO of Sasho-Jones Direct, New York. "Now, more than anything else, this is the one attribute that customers demand from everyone. What was special to Montgomery Ward isn't unique because everybody does it."
Retail catalogers such as Spiegel, JCPenney Co. and Sears, Roebuck & Co. -- which produce "big books" just as Monkey Ward, as it was affectionately known, had before it sold its mail-order business in 1996 -- realized they had to change their image and look to niche marketing to stay competitive with the changing industry.
"With the industry moving toward more things such as niche marketing relationships and database marketing, which allows people to do so much in terms of targeting, just being a big company is not going to make it," Sasho-Jones said.
Jack Baker, who worked in the mail-order division at Montgomery Ward during the 1980s and 1990s, said the company attempted to reinvent its mail-order division, but the contractual agreements with smaller catalogers stymied the effort.
"In the end it just wouldn't happen," Baker said. "Many people believe Montgomery Ward started the whole direct mail concept, and had a big book before Sears did. But it was tough for them and in the end it didn't work out."
Montgomery Ward, a unit of GE Capital, began its going-out-of-business sale last week. The inventory to be sold has an estimated retail value of $1.8 billion, the company said.
• Montgomery Ward History:
1872: Aaron Montgomery Ward established the first dry-goods mail-order catalog business. The first catalog was a single-sheet price list of 163 items.
1883: Company's 240-page catalog included 10,000 items.
1928: Opened 244 stores and by 1929 had 531 stores.
1939: Advertising copywriter Robert L. May created "Rudolph the Red-Nosed Reindeer" for a poem to be handed out to children at stores.
1985: Company unveiled specialty store strategy and discontinued catalog operations.
1991: Resumed mail-order catalog business, but sold it in 1996.
1997: Filed Chapter 11 bankruptcy.
1998: In an attempt to revitalize the chain, it introduced new store format with new "Wards" moniker.
2000: Montgomery Ward announced plan to file for Chapter 11 bankruptcy protection.