Special thanks to the former Caldor employees who helped make this article…
For a while, Americans have lived in a country with three dominant discounters: Walmart, Target, and Kmart. However, the industry was once much more diverse than The Big Three. One such retailer, serving in the Northeast, outlived most of their competition as a chain with many revolutionary principles…
Carl and Dorothy Bennett
After World War II, the post-war boom gave birth to countless new companies and industries. As a discount pioneer, Caldor predates The Big Three we see today by over a decade, being founded in 1951 – and the first Kmart opened in 1962. Husband and wife, Carl and Dorothy Bennett brainstormed the concept of a discount department store that focused primarily on high-quality, name-brand products – with their market being middle to the upper class. As for the name, it came from the merging of their names, Carl and Dorothy – “Caldor.” The Bennett’s would pool their life savings to open the first store that year, in Port Chester, New York. Carl’s brother Harry would take charge of real estate and would continue to do so into the mid-’80s.
This small, 9,500 sq. ft. store would see steady growing business and would be replaced by a bigger location two years later. In 1958, a second location was opened in Connecticut with a square-footage of 70,000. Carl grew up working in his father’s small grocery store, where he learned many of the guiding principles that he and his wife would instill in Caldor’s ethics.
The Rise to Star Status
In 1961, with six locations, Caldor, Inc went public. Carl would serve as President, Director, and Chairman – with Harry as VP and Dorothy, Treasurer and Director. Two years later, the company’s stock began being traded on the American Stock Exchange. Even though Caldor was an early member of the discount retail industry, they had hard competition from established companies, like Sears – which was touted as the largest company in the world at the time and operated a store directly across from Caldor #2. A fire would burn this Caldor location to the ground, along with all its merchandise, destroying over half a year’s worth of inventory. But they would quickly bounce back and reported sales of nearly 50% above the previous year. With this success, they could substantially expand their savings and offer even more competitive prices.
Other discounters wouldn’t see such luck, as many of their competitors would go out of business. Including W.T Grant, going out in the mid-’70s, leaving several profitable locations shuttered. Caldor would take over and reopen a handful of these stores after the fact and would see immediate success with them. Along with The Big Three, they would quickly chip away the specialty stores that had become commonplace, which all fit in with the shopping mall craze, seeing these smaller stores die-off as these massive chains ate up all the market share. Slowly killing the mom-and-pop tradition of retail that came before, which was slowly fading from American town squares.
Luke Kirby, Jr, who joined the company when they were just one location, had a natural knack for sales and had come to manage the company’s mix of product lines and would eventually become Vice President. Throughout the economic booms and busts of the next decade, Caldor remained extremely profitable and expansion didn’t slow despite recessions and slumps. This can be credited to the Bennett’s tweaking every aspect of the company in the favor of customer satisfaction – from hiring practices to floor-plans: with the stores reorganizing the layouts for holiday seasons, to managerial hierarchy. Having several employees in respective areas of their store to be well-rounded enough to help customers more efficiently, with several Department Managers to keep daily store operations smooth.
By the Early-80’s, the Bennett team oversaw a 63-store operation with revenue approaching $700 million, yearly. When consumers stopped spending as much as they had in previous years, consolidation was commonplace in retail. Yet, Caldor remained a strong entity in this changing landscape.
ADG and The Billion Dollar Merger
In 1981, Caldor, Inc would be purchased by Associated Dry Goods for $313 million. At this time, ADG operated 162 department stores nationwide, including the well-known Lord & Taylor brand, as well as Stix, Baer & Fuller, and L.S. Ayres (which had spun off its own discount chain, Ayr-Way Stores.) However, the growth potential of Caldor gave the conglomerate a great pillar in discount retail. At this time, the chain’s predecessor and role model E.J. Korvette would declare bankruptcy, joining the list of companies Caldor had outlived.
Carl was given a three-year contract with ADG, and when his time was up, they attempted to keep him on-board – seeing the importance of keeping the “Cal” in Caldor. He would ultimately reap the benefits of a well-earned retirement, marking the first time Caldor was out of the Bennett family’s hands. At this time, Caldor had 100 stores and sales of $1 billion. Without the Bennett’s, ADG didn’t really have any plan. Up to the middle of the decade, company sales nearly doubled since the acquisition. Its prior growth and history were impressive but wouldn’t be the do-nothing acquisition ADG had expected and, without guidance, the company’s performance after this period was disappointing, to say the least, as growth slowed to a crawl. They became very unorganized and fell behind their rivals, with their mix of products and in-store tech becoming outdated. So, ADG rolled out plans for an ambitious expansion over the next ten years, expecting revenue to pass $2 billion and the store count to reach 200, by 1990.
Five years later, in ‘86, ADG would be acquired by their Midwest-based competitor – known for Famous-Barr, Filene’s, and the equally successful Venture Stores discount chain – The May Company. In this $2.2 billion merger, Caldor would join Venture Stores in their discount division. Where ADG had focused on a healthy expansion plan, May wanted to strengthen the financial side of things.
They would retool nearly every aspect of the stores to fit what they saw as a more profitable modern concept of discount. They’d cut payroll and would see them downsize the effectiveness of having several Department Managers, creating “Area Managers.” They slimmed down the high demand display areas for smaller, more compact units that would fit an incredibly diminished amount of merchandise, in comparison. Forcing the downsized, underpaid employees to restock constantly just to keep up with customers’ daily demands, which would only rise. Most stores would switch from an hourly basis of operations to dividing up money for each individual department, while also over hiring and overpaying new management, brought in from Venture and competitors – with May’s appointed CEO, Don Clarke, and President, Marc Balmuth also coming from Venture. As management pay went up, more staff cuts had to be made, and soon employees had to move from focusing on their own areas and were covering 2 to 3 departments at a time. By the end of this, Caldor barely resembled the customer satisfaction machine The Bennett’s had engineered as May attempted to operate Caldor like a New England version of Venture, which was a starkly different discounter.
Odyssey Partners and The Fall of a Giant
Clarke and Balmuth wanted to focus on soft goods, like clothing, and loosening their grip on hard goods, giving a more balanced mix of products, as they would plan to renovate many Caldor locations, computer systems, and rework store protocol. This got the company back on track, but Kmart and Wal-Mart would begin eating up share in their prime markets and Caldor would struggle to keep up with their ludicrously low prices.
In 1989, May would exit discount completely, focusing on their department stores, and would jettison the two discounters; Venture into their own private company, and would sell off Caldor to the Odyssey Partners investment group in a debt-ridden $537 million leveraged buyout, privatizing it. Clarke and Balmuth stayed on-board with the company and would expand soft-lines and increased the size of the average Caldor outlet, and would revamp branding. They would go public again in 1991, reducing Odyssey’s debt and giving a window for expansion. They would buy up market share in New York, building a new distribution center. By the mid-’90s, Caldor was the 4th biggest department store in the United States. The company’s stock more than doubled and, by the end of 1994, more than 80 percent of their fleet were renovated or newly constructed – with the plan of adding 100 new stores by 1999. However, sales would diminish, and the company wouldn’t see this plan realized. Their suppliers got nervous and shares would fall as the national growth of The Big Three had given them a decent foothold in the Northeast, and it seemed Caldor just couldn’t compete with their deep, deep discounts and carnivorous advertising – it’s also worth mentioning that many of their new stores were being opened in unprofitable areas, many of such areas lead to theft. The company would file for Chapter 11 bankruptcy protection in 1995 when they had 166 stores, $2.75 billion in sales, and 24,000 employees. The bankruptcy would hurt more than just their customers; it also idled several construction projects in Caldor’s prominent areas like Queens and the Bronx.
The 1990 Recession couldn’t have helped either, with the dollar now worth less than ever before. The rapid decline of the company surprised many, as their former rival Bradlees would go bankrupt the same year and even Kmart would see diminished sales (they would declare bankruptcy in 2002.) Caldor would find themselves in a bind with creditors, and they would cut off deliveries as the company owed them more, and more money. Leading the stores to struggle filling high demand products, creating a rain check culture that a former employee described as getting so frequent that, quote, “You could wallpaper a room with all the rain checks you would receive.” So, this became the company image. Their liberal return policy gave dangerously bendable allowance on what could be returned, leading some customers to take big-ticket items directly off the shelves and walk to the front desk to return them, without having spent any money (and most of the time, they got a refund for their nonexistent purchases.) Shortage initiatives simply weren’t sophisticated enough to deal with this new exodus of merchandise.
By the end of ’97, they operated 157 stores in 10 states. Wal-Mart alone had 3,000 stores and $96.3 billion in sales, compared to Caldor’s $2.75 billion. Rumors of another bankruptcy were looming, and Caldor shares began dropping again. The company showed the worst deficit in its history and closed about a dozen stores. Their former sister chain Venture would go bankrupt the next year, after a similar chain of events. Caldor would hold out until 1999, but its slow financial progress would lead them to enter Chapter 7 bankruptcy: under which, the chain was forced to liquidate all operations. By April that year, Caldor had sold off all their merchandise and would close their last store, ironically, in May. Many of their employees stayed on with the bankruptcy, but ultimately, the over 20,000 people lost their jobs – leaving with any lingering merger rumors being crushed.
The Caldor Conclusion
Their stores were split between The Big Three, and many of their New York locations were taken over by Kohls. Like we saw with Venture, rapid expansion out of May’s umbrella was dangerous, and didn’t help their case, but either way there just wasn’t enough room for a #4. The frequent management changes hurt their public image when it came to policy and growth strategy. When ADG bought them out, discount was a very different industry than it had become by the ’90s. Through the May acquisition and later being spun off with Odyssey, they left a market with old competitors and were thrown at the feet of the giants that were Walmart, Target, and Kmart. They got big and beat them up. All the warmth that employees had become accustomed to from middle and upper management had gone cold when May reorganized them. It became all about mergers and expansion: many stores being opened very close together, frequently stealing each other’s traffic.
When Carl retired, and Caldor ceased to be a family ran company, their demise was inevitable. Corporate spending, reorganization, and consistent buyouts destroyed whatever they had against competitors, and they became just like every other could-have-been.
Special thanks to the fantastic ex-employees of Caldor, Inc and their families. You made Caldor “Where Shopping WAS Always a Pleasure…”
 Madmedic (2018, March 31) What happened to Caldor? What even is a Caldor?. Retrieved from Medium: https://medium.com/@madmedic11671/what-happened-to-caldor-what-even-is-a-caldor-b07e896f475d
 (n.d.) Caldor Inc. History. Retrieved from Funding Universe: http://www.fundinguniverse.com/company-histories/caldor-inc-history/