E. J. Korvette

E. J. Korvette
Company type	Private
Industry	Retail (discount department stores)
Founded	1948; 78 years ago in New York City, United States
Founder	Eugene Ferkauf, Joe Zwillenberg
Defunct	December 24, 1980
Fate	Bankruptcy and closure
Headquarters	New York City, United States
Area served	United States (including New York, Philadelphia, Chicago, Northern Virginia, Detroit, Baltimore, St. Louis)
Key people	Eugene Ferkauf (founder), Joe Zwillenberg (co-founder), Jack Schwadron (president), David Rothfeld (merchandise manager)
Products	Discount department store merchandise including luggage, home appliances, jewelry, apparel, records and audio equipment, home furnishings
Owner	Arlen Realty and Development Corporation (1971–1979), Agache-Willot Group (1979–1980)
Parent	Spartan Industries (from 1966)

E. J. Korvette, commonly referred to as Korvette’s, was a pioneering American discount department store chain established in 1948 in New York City by WWII veteran Eugene Ferkauf alongside Joe Zwillenberg. It was one of the earliest retailers to confront anti-discount legislation, introducing the discount department store model that eventually replaced traditional five-and-dime shops and set the stage for later giants like Walmart and warehouse clubs such as Costco. Despite initial achievements, ineffective management ultimately led to its bankruptcy and shutdown in 1980.

Innovations

Korvette’s began when Eugene Ferkauf opened a modest loft in midtown Manhattan, initially selling popular brands of luggage, home appliances, and jewelry at roughly two-thirds off standard retail prices, achieving sales surpassing $2,500 per square foot. Ferkauf retired from the company in 1968.

The firm’s retail approach incorporated groundbreaking tactics including assertive discount pricing despite legal opposition and the creation of a membership system inspired by consumer cooperatives—an uncommon strategy for department stores at the time. Furthermore, Korvette’s was an early entrant into suburban markets, outpacing competitors who remained concentrated in downtown areas.

A significant factor in Korvette’s financial success was its record and audio merchandise division, which had reached $20 million in revenue by 1964. This growth was largely attributed to strategic leadership from merchandise manager David Rothfeld and then-president Jack Schwadron.

Discounting and membership program

Korvette's approach combined low prices with minimal service, reminiscent of traditional five-and-dime stores like Woolworth's and McCrory's, but innovated by sidestepping the Robinson-Patman Act to offer substantial discounts on high-ticket items such as appliances and luxury pens.

The retailer distributed "membership cards" broadly among customers and local businesses, positioning itself as a consumer cooperative. This tactic allowed Korvette's to negotiate significant supplier discounts that were inaccessible to rivals like Macy's and Gimbels, who unsuccessfully pursued fair trade lawsuits against Korvette's for undercutting prices. Eugene Ferkauf credited luggage wholesaler Chas. W. Wolf with inspiring the membership card idea, which Korvette's vigorously promoted through its staff.

Strip malls and the suburbs

During the 1950s, Korvette’s rapidly expanded by targeting suburban growth areas, placing many outlets in strip malls along major roads outside urban cores. The chain’s first contemporary-style store opened in 1954 in Carle Place on Long Island, where apparel was added to its offerings. By 1956, Korvette's operated six locations including stores in Philadelphia and Harrisburg; this number grew to 12 by 1958 and ultimately peaked at 58 stores.

Stores were designed with decentralized cashier stations located within departments instead of centralized checkout counters. Larger outlets often included supermarkets, pharmacies, pet shops, and tire service centers.

In November 1967, Korvette's unveiled its flagship 45th store after investing $1.5 million to renovate the former Saks-34th Street building on Herald Square.

Throughout the 1960s, Korvette’s broadened its footprint into markets such as Chicago, Northern Virginia, Detroit, Baltimore, and St. Louis. Following an internal financial analysis conducted in 1976, the company successfully contested state and local Sunday closing laws, enabling Sunday retail operations that later became common practice among other retailers.

Decline and closure

Korvette's downfall is largely credited to erratic leadership, neglecting its primary product lines such as appliances, and an ineffective effort to rival department stores in fashion without possessing the appropriate expertise or retail environment.

In February 1961, Eugene Ferkauf brought in Jack Schwadron from Alexander's Department Stores to serve as general merchandise manager for ready-to-wear apparel. Schwadron advanced to vice president and subsequently president of Korvette's by 1964. Upon assuming leadership, he prioritized establishing a profitable national foundation despite the pressures of swift expansion.

The company also explored the home entertainment market by introducing upscale audio salons and promoting its proprietary "XAM" line of stereo receivers, amplifiers (some produced by Harman Kardon and Roland), televisions, and speakers.

Schwadron stepped down in June 1965 due to conflicts over merchandising and advertising policies. Later that year, Korvette's created a dedicated home furnishings division, supported by an extensive warehousing and distribution system based in Danville, Virginia, which operated until the division’s closure in 1977.

By 1966, Korvette’s decline led to a merger with Spartan Industries, a retailer specializing in soft goods. Spartan executives gradually replaced Eugene Ferkauf as they aimed to revitalize the struggling company.

Between 1971 and 1979, ownership transferred to Arlen Realty and Development Corporation, a land development company that utilized Korvette’s network of fifty stores primarily for cash flow purposes. During this era, stores in the New York metropolitan area heavily promoted their brand on local television with game show host Bill Cullen serving as spokesperson.

In 1979, the French Agache-Willot Group took control of Korvette’s, implementing store closures for underperforming locations and liquidating merchandise, fixtures, equipment, and real estate assets. Following bankruptcy proceedings in 1980, Korvette’s permanently closed its last seventeen stores on December 24 of that year.

Name origins

Eugene Ferkauf, who co-founded Korvette’s, clarified that the name "E. J. Korvette" is derived from the initials of the founders (Eugene and Joe) combined with a modified spelling of the naval vessel type corvette, known for its agility. Established in 1948, this explanation dispels the myth that the name represented "Eight (or Eleven) Jewish Korean War Veterans." Both founders, Ferkauf and Zwillenberg, were Jewish.

Korvette name in Canada

A separate entity unrelated to the American retailer is the Quebec-based discount chain "Korvette Stores Limited" (currently "Les Magasins Korvette Ltée"), which began operations in 1958. As of May 2015, it maintains a significant footprint with 71 locations across Canada’s discount retail sector.