Montgomery Ward shut down 13 years ago today, and that may have been a turning point for America

Montgomery Ward, which operated from 1872, shuttered itself on December 28, 2000 — 13 years ago today. This probably doesn’t seem like a very big deal, as in the intervening 13 years, we’ve been able to shop perfectly fine, both in large stores and online, but in the broader scheme of things, it ’twas a big deal. Their Catalog House, built in 1908, is now a national landmark. In 1904, they were making more than $10 million a year and shipping three million catalogs annually; their primary rival was Sears, also a Chicago-based company (and another company that has fallen from its perch). Montgomery Ward was Amazon before Amazon — much like Amazon has “fulfillment centers,” Ward had huge regional distribution centers in Baltimore, Fort Worth, Kansas City, St. Paul and other locations. The Baltimore location is also now a national historic place.

If you want to understand the beginnings of Montgomery Ward’s downfall, this paragraph from the Wikipedia will probably help you the most:

Meanwhile, throughout the 1950s, the company was slow to respond to the general movement of the American middle class to suburbia. While its former rivals SearsJCPenneyMacy’sGimbels, and Dillard’s established new anchor outlets in the growing number of suburban shopping malls, Avery and succeeding top executives had been reluctant to pursue such expansion. They stuck to their downtown and main street stores until the company had lost too much market share to compete with its rivals. Its catalog business had begun to slip by the 1960s. In 1968, it merged with Container Corporation of America to become Marcor Inc.

Ultimately, brands like Target — high-quality but lower-price — stripped its customer base and it closed in 2000 (it had shut down the catalog business 15 years prior to that). Overall, it’s pretty much a classic MBA case study: company comes to dominate in one area, and when the world shifts, they don’t adapt. You always see this with Blockbuster, Kodak, etc. Montgomery Ward (and Sears) are just pre-eminent retail examples of not adjusting to the times.

The most notable element that still resonates from Montgomery Ward is probably Rudolph the Red-Nose Reindeer, which first appeared in 1939 in the department store’s own children’s book. Although you can argue that the Gene Autry song really made Rudolph famous, the first true appearance was via Montgomery Ward (the ad man that wrote the story was named Robert L. May).

Now check this out: at the same time that Montgomery Ward was shuttering, Google was introducing its first Doodle, the initial Google Toolbar, and was about to hire Eric Schmidt. 2000 was also the year Amazon started offering its e-commerce platform to individual sellers and other retailers. Around the same time in Silicon Valley, you saw the development of Pandora, Salesforce, Rhapsody, PayPal and the rise of Oracle. You can define the 1900s in a lot of different ways — obviously on the U.S. side, we fought in four major wars, including two world wars — but if you want to look at it from a business standpoint, the closing of Montgomery Ward kinda put a bow on the 1900s, in some ways. When the century begun, the focal points for business were the east coast and Chicago; when it ended, big companies were now coming out of the Bay Area, Seattle, and New York. The idea of simply brick-and-mortar retail, with catalogs, was already fading (some still struggle with that today). So there it was: a few days after Christmas 13 years ago, a company that had been on the ropes for a while finally shut its doors (laying off 37K people in the process). And when that happened, it might have been the official representative turning point for the “new, knowledge-based economy.” Within months of that closing, there were 417 public companies out of the Bay Area, and several dozen people under 40 were now millionaires (and this is after the bubble burst). Montgomery Ward: a bellwether for our society? Perhaps it’s a little melodramatic, but the timing of the idea makes sense.

Ted Bauer