The Welcome War

A shopper pushed her way into Macy's department store in Manhattan one day last week, panted out orders to her children: "Bobby, you go to the Mixmasters; Helen, you take the escalator and line up at the Hopalong Cassidys, and I'll get in line to buy papa a suit." Like thousands of others, the mother & children were cashing in on the biggest price war in the history of New York retailing.

The rush into the store was so great that customers tried to push through the "In" and "Out" side of a Macy's revolving door at the same time; the door fell flat. In the store, jammed tight with frantic bargain-hunters, Toastmasters were slashed from $23 to $14.72; Sunbeam Mixmasters were cut from $46.50 to $26.59, and hundreds of other items were cut from 6% to 40%. Down the street, Macy's big rival posted its famed slogan: "Nobody but nobody undersells Gimbels," matched Macy's cuts. Across the East River, in Brooklyn's Abraham & Straus, prices went down just as fast.

Knife Sharp. The war was declared last week when Macy's trimmed 6% from 5,978 fair-traded items, following a U.S. Supreme Court decision which knocked a key prop from under fair-trade laws (TIME, June 4). Warned Macy's Richard Weil Jr.: if competitors matched the cuts, Macy's would slash prices another 6% "quicker than you can say 'knife.'" But Gimbels had its own knife ready. To keep tabs on Macy's, Gimbels set up a GHQ to direct its comparison shoppers, added 287 assistant buyers and its training squad of 43 college students to its staff of a dozen shoppers. From its own GHQ, Macy's spied just as closely.

In a few days, the war spread to Bloomingdale's, Saks-34th and, to a limited extent, to dozens of other New York City stores. Customers lined up before big charts, where changes in prices were scrawled, as breathlessly as stock brokers watching a ticker tape in a collapsing market. Such items as Haspel summer suits opened at $32.50, started sliding a few dollars at a time, closed at $19.24 at week's end. James Jones's bestselling From Here to Eternity fell from $4.50 to $1.94; Waterman fountain pens were cut from $3.95 to $2.09; copper pans from $1.39 to 45-c-; 5-h.p. outboard motors from $203.95 to $157.00; Palm Beach suits from $29.95 to $16.94.

Sales soared to fantastic heights. Macy's pushed 400 Mixmasters over the counter in 45 minutes v. the usual ten daily. Gimbels sold 5,100 Palm Beach suits in three days, v. normal volume of 150 a day.

The buying craze spread to items whose prices were not cut; housewives felt they had "saved" so much on loss leaders they spent freely on everything. Sales of women's shoes and muslin sheets were 200% above normal at Macy's. Storewide volume in Gimbels and Abraham & Straus jumped 40%" and 50%.

Cutoff. As the supply of goods wore thin, so did tempers. Gimbels lashed out at Macy's advertised policy of selling all goods 6% cheaper for cash. "A misleading claim," snapped Executive Vice President Louis Broido. "Nobody can continuously undersell everybody else on everything by 6% or 60% while rendering equivalent services . . . Every thinking person knows [this] just isn't true." But Gimbels didn't quit the price marathon. "Waltz us around again Willie," sang its ads. "If somebody plays the tune, we'll dance and dance . . ." Macy's didn't get tired, either, kept cutting prices.

This week the battle of 34th Street began to spread out into a nationwide war.

San Francisco's Weinstein's department store started cutting prices, and the rival Emporium followed suit, declared: "We didn't become the biggest store in San Francisco by selling at higher prices." In Omaha, the Smith Drug chain signed up for the duration of the price war; prices of fair-traded items began to tumble in Memphis and other cities.

Some prices had been bound to come down anyway because of bulging inventories. Many retailers were stocked with double the number of household appliances they had last year, and sales had been running only 4% better. Sears, Roebuck & Co. listed hundreds of price cuts this week in its midsummer catalogue, which went to press weeks ago. All this had one important effect in Washington. The price-cutting was bound to give plenty of ammunition to those who opposed the Administration's campaign for tighter controls on credit and prices.

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