No Sale Is A Good Sale Unless It's A Good Buy for the Customer

THE OPEN MIND
Host: Richard D. Heffner
Guest: Stanley Marcus
VTR: 5/2/94
Title: ‘No Sale is a Good Sale, Unless it is a Good Buy for the Customer”

I’m Richard Heffner, your host on The Open Mind. And today’s program is one of several we are recording far away from our home base in New York, where I began to produce and moderate this series an incredible 38 years ago this month. We’re recording in Dallas, Texas, in the studios of KERA, one of our nation’s key public television stations. And my guest bears a name that most always comes to mind whenever and wherever Dallas is mentioned, or Texas, for that matter. Surely at whatever time and place the entrepreneurial nature of this nation is under discussion. For to whatever extent it is true that the business of America is business, that the essence of business is retailing, and that in all of it, merchandising, salesmanship is king, to that extent, Neiman-Marcus, the great Dallas emporium must be front and center. And Stanley Marcus, longtime leader and now Chairman Emeritus of this fabled American enterprise, must be our subject, as he is my guest today.

Stanley Marcus was born deep in the heart of Texas here in Dallas almost 90 years ago. He has spent all of his retailing life with quality and taste, both in selecting and selling goods, as his twin criteria. So that it seems perfectly appropriate for me to ask him now how they fare here in the end-of-the-century America, quality and taste. How do they fare, Mr. Marcus?

MARCUS: Well, this is a period of change. And quality and taste have not been immune to the forces of change.

HEFFNER: Which way?

MARCUS: Part of quality, I would say the quality has declined in consumer goods ever since World War II and that period. And it’s been partially due to the growth of mass production, which produces more goods at lower prices, but not necessarily better goods. So I think that basically anything that you buy is not as good as it might have been 50 years ago, with the exception of those things that are technological products, like watches, cameras, of course, radio and TV, which were not available 50 years ago. At least TV wasn’t. Those products are better because they are benefiting by mass production. But clothing, textiles, leathers, things of that character are just not as good as they used to be.

HEFFNER: Do you see that as the inevitable impact or effect of democratic society, of democratic expansionism?

MARCUS: I think it’s the result of that, plus, I blame a lot of the decline in quality on public ownership.

HEFFNER: Tell me what you mean, “Public ownership.”

MARCUS: Well, back early in the century somebody figured out that wouldn’t it be nice to give everybody the opportunity of owning a – pardon the expression – a piece of the rock, by becoming a stockholder in a public company. And I think in the transition from private ownership, which was the major form of capitalism at the beginning of the century, we became a corporate-dominated company, corporate-dominated economy, with the ownership distributed to shareholders owning anywhere from ten to 10,000 shares of stock. And with that went transfer of the objective of the early merchants and the early entrepreneurs, which was basically customer satisfaction, to a theory of profit satisfaction. I’m strongly a believer in profits. But unfortunately, I think that in the transition to, from a single ownership that could express itself in setting standards of quality and taste, because he had only himself to answer to, the change from trying to satisfy 10,000 or 100,000 stockholders who have really basically no interest in the product, they’re interested in the share of stock that they own and what it brings in return in the form of dividends.

HEFFNER: Isn’t that something of a cop-out, though? Isn’t that something of a cop-out offered by those who want to excuse their own failure to maintain the kinds of leadership that you were talking about at the turn of the century, or at least before the Second World War?

MARCUS: When you think about it and review all the kinds of products that are on the market, there are remarkably few that won’t fall under my indictment. I think one of the few might be Haagen-Dazs ice cream, which started out as an individual’s idea who established the standards, and through some sort of miracle Haagen-Dazs ice cream is as good as it was when whoever the founder was started it some 25 years ago.

HEFFNER: Yes, but this matter of public ownership which you refer to, do you feel… You said yourself that you’re a great believer in profit. And certainly, as I said in my introduction, when you discuss the entrepreneurial nature of American life, your name always comes up. Is there really such a close connection between public ownership and a real need to downgrade in terms of taste and quality? Does ownership really make itself known; does the fact that shares of stock are owned by many, many, many, many people necessitate the decline in taste and quality?

MARCUS: Oh, I don’t think that it’s inevitable. But it is very probable. And I think that, as I cited Haagen-Dazs, I’m sure that if we went over this with a tine magnifying glass we’d find other examples where quality has been maintained. But by and large, the focus of management in this part of the century, the last half of the century particularly, has been on price time turnings. By the necessity of a quarterly report to satisfy SEC, which leads, I think, to a lot of poor long-time decisions in favor of what seem to be the short-time decisions that affect the price of salt.

HEFFNER: Now, you talk about SEC-required reports. If there were no such requirement, if you didn’t have to answer the question: “What are you doing for me tonight?” do you think the fate of quality and taste would be different?

MARCUS: I think probably. I think that this constant pressure of earnings has had a just a bad effect on nearly all businesses that have public owners. And I’m not naive enough to believe we’re going to go backwards to a different form. But I think it’s fair to state that public ownership has been a very important factor in the decline of quality.

HEFFNER: Mr. Marcus, if we’re not going to go back, what are we going to do? What is going to happen more and more?

MARCUS: Oh, I think we will learn to be happy with a lesser standard of quality.

HEFFNER: Will you learn to be happy?

MARCUS: Well, I’m not going to be around too long to have to undergo that sort of stress.

HEFFNER: Yes, but your children, and your grandchildren, and, I believe great-grandchildren…

MARCUS: Yes

HEFFNER: . . . they’re going to be around.

MARCUS: They’re going to be around, and they’re not going to know the difference. My children know, but my grandchildren won’t know, and certainly my great-grandchildren won’t know. Now, I think you have to go back and look at some of the things that happened when quality was better. You had very, very low wages. The beautiful things that we refer to as the luxury goods of the Eighteenth Century were essentially handmade. And handmade products were the results of very cheap labor. I certainly can’t justify cheap labor, and if, in order to raise the standard of living of people we have to get rid of quality, then so be it. I think that we oftentimes throw quality out when we don’t have to, simply because we’ve gotten in the habit of trying to cut down to increase profits. In the garment trade, we always referred to the fact that with the development of mass production there was a man somewhere back in the factory who was known as “the takeout man.” After the product was designed, after it was shown in fashion shows to the buyers of the country, the owner of the manufacturing plant would call his takeout man and say, “Well, Joe, what can you take out? This dress doesn’t figure well. The manufacturing costs $32. We’ve got to bring that down to $26.” Well, the takeout man is very conversant with all the alternatives, would say, “Well, there’s another fabric we can substitute for the original. It’s very close. We can squeeze out an eighth of a yard, shrink the pattern, and take out an eighth of a yard. It might not fit as well, but it’s going to look as well.” So they were producing to a look rather than to what was basic quality. Now, there are still a few people who don’t go into that practice, but I’d say that the garment trade as a whole have learned the takeout principle very well. And I think this is true, if it’s true in the garment trade, I would suspect that it’s true in others as well.

HEFFNER: Is there anything in our national life that’s working against what you’ve described here? Working in another direction? Or is that it?

MARCUS: Well, I hate to have to face the fact, but I am pretty well convinced that that’s it. I don’t think we’ll ever see another period of hand labor that produced the beautiful embroideries, the beautiful laces, and the world can live without those luxuries. I think we can do a better job with the machine than we often do if we ran the machines a little more slowly, with better supervision, we’d get better product. Now, maybe in the next century we’ll see a refinement in the use of the machine. And it truly may be then a century of the machine.

HEFFNER: Yes, but the concept of takeout, what you call “the takeout man,” the man who is going to indicate how we can shave a little here and shave a little there, that’s going to be true with machinery too.

MARCUS: Yes, but I think that there will be some enlightened producer, maybe of an automobile or other product, who is going to say, “Well, maybe if you’re going to have a takeout man, he should have a better supervisor, or maybe you better put in a “put-in man” to see what we can do to improve the product. There are a few companies in the country who practice that very assiduously. There’s a company called Lands End, a mail-order company whose sole drive is, “How can we improve the product?” They got to the point they were improving it so much they almost went out of business, because they got, they became noncompetitive on staple merchandise, and they finally had to realize that there might be a limit to product improvement, a limit where extra cost did not show up advantageously or even something that the consumer required. But in general, I think that an attitude of how to improve the product is one that not only American business but world business, because today we a big portion of our product is being made overseas, and the standards that we set for garments that are made in some of the Pacific Rim countries become the standards of the world.

HEFFNER: But you know, when you use the phrase “put-in,” the counterpart of the “takeout man” is the “put-in man,” you talk about enlightened leadership, enlightened entrepreneurial leadership. You say you can go so far as to become noncompetitive, and then you’re almost bankrupt.

MARCUS: That’s right.

HEFFNER: But it seems to me, as I’ve read about you, about your life, about your own attitude, that you have been wise and balanced as a put-in man, and that the question seems to be one of enlightened leadership, not “What are you going to do for me tonight?” Now, is there any indication that there is a developing sense of enlightened leadership in this country, except in one or two rare instances? Is there any place at which you can discern a turnaround, a turnabout? Or are we simply going to pursue this path further, further, further, until the question of quality and the question of taste, that those words may even become lost to our vocabulary?

MARCUS: That is certainly a possibility. I never liked to include the word “never’ in my lexicon. Something can always happen. I don’t see very much encouragement to be able to take out a crystal ball and say that it’s going to happen.

HEFFNER: Then how do you maintain, how does Stanley Marcus maintain his equanimity? It’s very clear as I look at you, you’re a commentator. You don’t seem to be that exorcised about…

MARCUS: You see, I have been retired from the business that I was associated with for 50 years; I’ve been away from that now for about 16 years. So I haven’t had the day-to-day struggle to be in competition and stay ahead of competition. Although I’ve continued to follow the retail business and industry as a whole, I continue to be a very discerning, I think, shopper. I buy, when I see something that is good, that is better, and when I find a salesperson who knows enough about the product to interest me and to try to sell me. I love to be sold. But I don’t like doing business with order-takers who just want my money and give me nothing in return except a piece of merchandise that’s not particularly good. But I still am able to find better things than I think the average person does because I know more. I’ve been in the business for a long time. And I have developed a critical eye which sometimes is the bane of a seller’s experience. But it is fun to see what you can get that’s good.

HEFFNER: You’ve put a lot of emphasis upon this question of salesmanship, upon the ability of someone to feel so strongly about what she or he is doing, that they can sell you.

MARCUS: Yes, I had an experience that was reported in The New York times two or three years ago, when I went to, I wanted to buy my wife a very heavy cashmere sweater. We live in Sante Fe during part of the year, and she was always borrowing my sweaters, so I decided to get her a sweater like mine. And I started off in… I knew I wouldn’t find one of that weight in the Dallas market, so I was in New York, and I started off and went down 57th Street from the corner of Fifth Avenue over to Madison, and I visited nine of the best specialty shops in the city, and during this experience I found that there were a lot of pointers in the store. I’d go into a store and say, “I’m looking for a very heavy, six-ply cashmere sweater.” First of all, they didn’t know what I was talking about when I said “six-ply.” They said, “Well, you may find it over there. Or you may find it there.”

HEFFNER: Those are the pointers.

MARCUS: They pointed me to it, but nobody took me. Finally, in desperation I walked down Park Avenue to a shop that was a very distinguished men’s store shop. And I went in and the first experience I had that day in which a salesperson said, “Why do you want one that heavy?” And I explained to him. Now, I could have been swayed to have bought a leather garment or a tweed garment had anybody taken the time to find out why I wanted it. And he said, “Yes, we have a six-ply cashmere sweater, but they’re men’s sweaters.” And I said, “Oh, well, that won’t do.” He said, “The only difference, of course, is really slight difference in the shape, and a lot of women like the shape better than the shape of a woman’s sweater. And the sweaters button reverse manner. From left to right instead of right to left, whichever it might be.” But he said, “Let me show you.” He sat me down and he showed me and made me touch it, and immediately he had a sale. And when he got through, I said, “Tell me, what did you do before you became a salesman?” He said, “I was a poet.”

HEFFNER: So we need more poetry in salesmanship?

MARCUS: So I think you might come to that conclusion, that we need people, more people in business who not necessarily are poets, but have the soul and propensity of being poets.

HEFFNER: Well, let me ask you this question. You talk about more people who have the soul of the poet, have a creative instinct in salesmanship. Do you find that what you are concerned about negatively in the business community has its counterparts in the rest of our national life, in our politics, in our state craft? We’re not just talking about business in America.

MARCUS: Well, I find the whole political structure of the country so odious that I find great difficulty in having any objectivity about it. I really don’t know anything about political structure. I do know something about distribution and the production of goods and the quality standards that are necessary, and there are places that are in sharp contrast to what I’ve just said. For example, there’s Historical Crate and Barrel, a chain of home-furnishing stores that are moderate in price. But wonderful in their standards of quality and taste. I think it’s one of the shining examples in American retailing today. They have stores from coast to coast. And I happen to know the fellow who founded it. He and his wife started with crates and barrels as fixtures because they couldn’t afford regular fixtures. And their stores are just as exciting today as they were when they started 35, 40 years ago.

HEFFNER: Why do you avoid… We have three minutes left, and so you can continue to avoid it, and there’s nothing I’m going to be able to do. Why do you avoid discussing politics, the political questions.

MARCUS: Well, I don’t completely avoid it. I write a daily, weekly newspaper column, and I very frequently write columns on political subjects when they offend me seriously enough to want to protest, as I feel right at the moment about the recent travesty of revisionist history that we saw this past week, when we glorified a man who is now dead. I know the dead are entitled to peace. But it does not stand that we have to revise history and convert a man who was a scoundrel into a saint.

HEFFNER: You’re talking about Richard Nixon.

MARCUS: The late Richard Nixon.

HEFFNER: Now, what does that do to your status here? And now we have two minutes left. Here deep in the heart of Texas when you speak that way?

MARCUS: Well, it’s not a popular point of view. But I’ve never tried to conduct my life on the basis of popularity. I’ve tried to conduct it on the basis of what my sense of justice, my sense of right and wrong. But I remember that this was a man who was inches away from being impeached because he was a scoundrel. He violated our laws. And now we have sanctified him so that he may be thinking that he’s going to be met with open arms by Saint Peter.

HEFFNER: Now, “Speak only good things about those who have passed. “That doesn’t impact much upon you.

MARCUS: No, I remember the tribulations, the trials of President Nixon when he was finally trapped and decided to resign to avoid impeachment. He surely would have been impeached if he had stayed in the office.

HEFFNER: You know, Mr. Marcus, this question of speaking your mind always, that has had an important impact upon me as I have read about your life. You’re going to continue to do that, I trust, not just in politics, but in salesmanship and merchandising and business too.

MARCUS: I hope so. Life is too precious and is too short to be dealing in things that don’t reflect your honest opinion. Now, you may be wrong, I may be wrong, but at least I think I’m right.

HEFFNER: Stanley Marcus, thank you so much for joining me today on The Open Mind.

And thanks too, to you in the audience. I hope you join us again next time. And if you’d like to share your thoughts about our program today, our intriguing guest, please write: The Open Mind, P.O. Box 7977, FDR Station, New York, NY 10150. For transcripts, send $2 in check or money order.

Meanwhile, as an old friend used to say, “Good night, and good luck.”

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