by: Geoff Ficke

The Lessons Still to Be Learned from the Great 19^th Century Retail Pioneer Frank Woolworth 

There are many great business icons for us to emulate as we study history and the paths successful entrepreneurs chose as they left their marks on various enterprises. In the world of retailing, the name Sam Walton has become legendary. The Lazarus family created Federated Department stores which included the Bloomingdales, Filene’s, Burdines and Bullock’s groups of stores. JC Penney and Julius Rosenwald (Sears, Roebuck & Co.) built national emporiums that supplied the needs of the middle class. Frank Woolworth is certainly worthy of being included in this pantheon of all-time great retail innovators. 

Almost forgotten today, Frank W. Woolworth not only built the hugely successful 5 & 10 Cent store chain that carried his name, but created a business and sales model that was revolutionary for the 19^th century. Woolworth worked as a clerk in a New York state dry goods store as a young man. At the time, fixed pricing was not the norm, barter was common. The young clerk, anxious to open his own store, noticed that as goods aged they were marked down to 5 cents and placed on a table in bulk. Sales of these items always seemed to surge when they hit the mark down table. 

Utilizing $300 he borrowed, Woolworth opened his first dry goods store where every item was marked at 5 cents. The store was almost an instant failure. The young retail rookie was unfazed. He and his brother Charles studied the dismal performance of their first outlet and quickly seized on several business principals that they had not adequately addressed.

The Woolworth brothers regrouped and opened another store in Lancaster, PA. They began to buy goods directly from manufacturers. They studied real estate and traffic to choose a more visible store front location (one of the earliest implementations of the now common adage, “location, location, location!). A key element of their success was to expand their selection of goods and pricing range to include 10 cent merchandise.

These simple strategic changes made their second store an immediate success. They quickly expanded regionally and then nationally. Virtually any town of any size had one or more Woolworth outlets by the early years of the 20^th century. 

Frank Woolworth was once asked for the secret of his retail success. His response was, “I am the world’s worst salesman, so I must make it easy for people to buy”.

By applying simple, but novel retailing principles, though revolutionary for the time, this merchant created one of the great retail franchises of all-time and became one of the richest men in the United States. 

By the middle of the 20^th century the dime store concept had begun to fade in popularity, supplanted by the growth of large mass merchandise discount chains. The Woolworth name is mostly gone and forgotten, however, the chain lives on today as Foot Locker.  

Frank Woolworth was a great entrepreneur. He devised pricing, merchandising and purchasing models that were innovative. These basic principles of retailing, which seem so ordinary today, are still basic to successful store operations in all sales channels. His example of simplifying and making the purchasing decision much easier for the consumer are excellent examples for aspiring entrepreneurs to follow when developing their business models. Keep it simple!