With "get big or get out" came the need to manage big as small disappeared. Schools begin to take over the ubiquitous "business school" focussed on start-ups and offer degrees in business focussed on being the next General Motors, General Foods, General Electric, General Mills, General Insurance, and so on, named at a time when people commonly referred to the federal government as the general government (and congressional documents to this day.) Big business and big government being one got its start in USA with the Civil War, and took time, but fascism is now firmly rooted.
Change takes time, and part of this was changing finance. We went big time in 1898 when we took over the Spanish Empire (Cuba, Philippines, etc) and by 1913 we created a funding mechanism by the income tax and the FED. These were all huge changes with profound results. Big shifts at high levels.
What I saw starting in the 1960s was the mop-up operations, when the last of the small were still viable.
As late as the 1960s in department stores people would shop and sign their bill, which would be sent by a vacuum (sometimes you see these at bank drive through tellers today) to the billing office that would apply it to a bill (meaning a list) of purchases.
As department stores grew, they developed the charge card which was kept in the store, which made the imprinting customer data faster and easier. Then came the innovation of letting the customers carry their own cards. And this led to the idea of a universal card, diners club, and then the credit card (usury) as opposed to a charge card (no usury).
The store would deliver the goods to the person's house, and the shopper would continue on. Before UPS trucks, there were department store trucks. Life was small and stable enough that stores knew their customers. People who "worked in bridal" did so for a career. The work was professional, not temp.
Stand-alone stores were also competitive. A neighbor supported a family of twelve as an appliance salesman.
As we began to fragment, customers were unknown, but cash was always king. But in time, credit cards crowded out cash. With credit cards came anonymity and with a lack of relationship, the ability to charge interest on the balance Notice to this day you are still given a "free" thirty days to pay.
This is when stores large and small could operate along side each other, as on Amazon.com today. But the credit card caused people to buy more. With larger volumes the Big could slowly squeeze out the small, by offering credit card charges at interest yet slightly lower prices. The small stores were at a disadvantage, as credit cards need volume to work. For a short while the department stores has every bit as good product at lower prices, but made it up on the revenue from interest (usury).
By the 1970s, the interest was where the stores got their profits. Service dropped, quality dropped, and WalMart became the new model and grew as a largely cash discounter, best quality at lower prices in a mega store. In time it too accepted credit cards, and are now opening their own banks.
Kenneth Stone, Professor of Economics at Iowa State University, in a paper published in Farm Foundation in 1997, found that some small towns can lose almost half of their retail trade within ten years of a Wal-Mart store opening.[37] He compared the changes to previous competitors small town shops have faced in the past – from the development of the railroads and the Sears Roebuck catalog to shopping malls. He concludes that small towns are more affected by "discount mass merchandiser stores" than larger towns and that shop owners who adapt to the ever changing retail market can "co-exist and even thrive in this type of environment."[37]
How to adapt? Go up market, specialty. Walmart leaves more money in people's pockets, which they first spend on better food and then better goods and services: clothes, guns, tools, etc. But net ne, there are fewer small businesses.
As the small retailer could not compete with the big department store, the department store is getting crushed by WalMart. Here is how:
Walmart and Macy's buys the same $8 pair of blue jeans from the same factory. Walmart prices at $19.99 every day. Macy's prices at $49.95 and puts on sale at $36 regularly, sometimes more. If you sign up for a credit card at Macy's, they'll give you another 10% off on the spot.
Now you'd think the department store still has the better deal, but the problem is the department store is located in expensive real estate and has temporary workers, whereas WalMart is in the best cost/benefit purpose built places with a far more stable (and able to work the work/welfare combine) employee base. Along with sheer volumes, Walmart turns a profit on a cash sale, Macy's will lose money if not for the credit card. And next, Walmart's rates are low, Macy's very high. Macy's customers are not savvy shoppers since they are willing to pay more for the same and at a higher interest rate.
So in a downturn, the Macy's customers are first to default, and bigger defaulters... the department stores were in trouble, WalMart did just fine in 2008.
In retrospect, in less than a decade the department store was ruined by usury, after taking out the small business sector, and in turn the department stores began to fall like flies... on Union Square in San Francisco, I Magnin, Liberty House, the White House, Joseph Magnin, we well as JCPenney and Sears all had to fold or withdraw in the 1980 - 90s.
WalMart has the winning combination, Costco is better managed, but neither is sustainable without state preferences and credit. Their necessarily targeting specific demographics, and neither can supply specialty and new. That is still wide open.
It was the introduction of interest (usury) that brought down the system that offered more and better to a wider group of people. The pendulum is swinging back, and people are beginning to patronize the small business again. All along the distribution channel the credit card has installed itself. protect your investment, do not accept the credit card. Cash, debit or extend time to people you know and trust. Work this way with suppliers as well. The company will be organically stronger and will withstand the next round of damage by usury.
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