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economy moves basically on three legs: capital spending. Government spending and consumer spending. But the economy has not been progressing very fast lately because its legs are moving at different speeds. Businessmen's capital spending is disappointing this year. Government spending has begun to level off. Consumer spending, though it shows some danger signals, is the best performer of the lot.
The storekeeper used to get more of it.
In 1955, 60% of the average consumer's disposable income went into retail sales; now only 54% does. Much of the money that the shopkeeper used to get is now being spent on services such as entertainment and travel. Merchants point out that U.S. manufacturers have not devised any really irresistible new product since television. Where the manufacturers have failed, the merchandisers hope to succeed.
From Concrete to Carpets. To tempt the consumer in an economy that is becoming increasingly sophisticated, Gene Ferkauf has decided that the discounter's low prices are not enough and must be accompanied by at least a minimum of atmosphere and service. By so doing, he, more than any other discounter, has brought respectability to a business in which the clerks all too often seem to be taking 10% off for rudeness. At Korvette's, the discounter's original pipe racks and cold concrete floors have given way to piped-in music and wall-to-wall carpeting. But Korvette's prices still range 10% to 40% below "list" (list price itself is getting to be more of a fiction).
Six weeks ago, Ferkauf brought discounting to the royal row of American retailing. On Manhattan's Fifth Avenue he opened a seven-story, crystal-chandeliered store in the quarters formerly occupied by W. & J. Sloane, Manhattan's best-known carriage trade furniture store.
The opening-day armies of bargain hunters gathered so rapidly that the police were obliged to throw up barricades to keep traffic moving, and fire marshals let latecomers into the store only as other shoppers left. Since this smashing debut, Korvette's Fifth Avenue has become one of Manhattan's foremost tourist attractions—and the name of publicity-shunning Eugene Ferkauf is beginning to be nationally known.
"Eugene Ferkauf is one of the great merchandisers of our time," says Acting Dean George W. Robbins of the U.C.L.A.
School of Business. Even higher tribute comes from Malcolm McNair, professor of retailing at the Harvard Business School, who rates Ferkauf as one of the six greatest merchants in U.S. history.
(The other five on McNair's list: Frank W. Woolworth, John Wanamaker, J. C.
Penney, General Robert E. Wood of Sears, Roebuck, and Michael Cullen, the first supermarketeer.) From Bags to Riches. The man whom McNair hails as the greatest of contemporary U.S. merchants is by turn profane and philosophical, charming and fiercely combative. Eugene Ferkauf is a boy from Brooklyn, and he does not pretend otherwise. Brooklyn is only a 15¢ subway ride and half a world away from Fifth Avenue.
Ferkauf made the trip unselfconsciously.
But success, though it has not spoiled him, has wrought some changes. He no longer shows up for a meeting with his investment bankers dressed in sports shirt and rumpled slacks.