(7 of 10)
Most other brand-name soft goods enter Korvette's through the back door, if at all. Pantino women's slacks, which retail for $10 to $18, sell in Korvette's for several dollars less—but without the Pantino label. Jantzen and Catalina swimsuits—also stripped of labels—sell for 10% to 15% off regular retail prices, but the choice is limited. For the most part, Ferkauf relies on private-label soft goods put out for him by big-brand manufacturers. Korvette's calls them "compara-bles"; they include such items as Kayser-Roth "Nolde" nylons at $2.55 for three pairs, v. $4.05 for Kayser's better known "Kayser" hose, and Kentshire sheets by Pacific at $2.57 apiece, v. $3.49 for regular Pacific sheets. Though his competitors sneer that some of Ferkauf's "comparables" look more like sacks than Saks, he does offer many a genuine bargain. Samples: Italian hand-knit men's sweaters for $8.99, Dacron and wool men's summer suits for $25.48, French alligator handbags for $50.
The Foot Race. While department stores throughout the land work on an average price markup of 36%, Korvette's prospers at 21%. How does Ferkauf do it? Self-service makes for fewer employees and lower wage costs: each Korvette employee accounts for an average $38,000 in business a year, nearly twice the average for big conventional stores. Employee markdowns are rare, and executive expense accounts (except for Ferkauf's $10,000) are painfully austere. If customers want alterations or home delivery of portable goods, they pay for it. (Credit is free because it more than pays its way by making sales.) Most of all. the discount price itself generates so many sales that Korvette stock turns over seven times a year, twice as fast as in the typical department store.
No old-line store in New York comes close to matching Korvette's Fifth Avenue in annual sales per square foot of selling space. By best accounts, Macy's does $130 to $155 per sq. ft., Brooklyn's Abraham & Straus $175, Saks Fifth Avenue $190—and Korvette's more than $300. At current rates, Korvette's first full-year sales on Fifth Avenue will easily top $30 million.
"Cy, Do Me a Favor." Though the low-markup, high-volume formula seems simple, it requires an artful balance of costs, prices and presentation. Ferkauf believes that "a store is like a theatrical production. The setting is vital in soft goods. We had to learn the hard way." Presiding over the presentation, and pursuing his goals of neatness and taste in a volume operation, Ferkauf spends most of his working days in an endless trek from one store to another, sparking The Boys to do just a little bit better.
He scolds incessantly in Yiddish-spiced Brooklynese. It is almost always done gently and with a smile, but the point gets across. "Cy, please, so why is it so schmootzig [dirty] around the soft-drink machine? I told you that should never happen. Cy, do me a favor. Clean it up.
I mean go get a boy and clean it up right now . . . So Dave. I was downstairs, and there was a line at the cash register and only a part-timer to handle the traffic.