Gottschalk’s was founded in 1904 by Emil Gottschalk, a German Jewish immigrant. The store opened in downtown Fresno, California, a city in the great San Joaquin valley rich in agriculture. The store focused on moderate priced dry goods. This strategy was so successful that the company opened a new larger store (100,000 square feet) in downtown Fresno in 1914. About 1960, Irving Levy, the grand nephew of the founder, took control of the company as CEO. He remained Chief Executive Officer until his death in 1980. During his tenure, he opened the first branch store in Merced, California which served an agricultural based population plus those at Castle Air Force Base. He continued expansion in California growing the chain to six. In addition, he launched Bobbie West, a juniors chain, and Village East, a plus-sized women’s chain.
Gottschalk’s found its niche in small markets in the West. In these smaller towns the retailer became the dominant store and was able to operate with lower real estate costs and often lower labor costs than retailers in major markets. The company expanded through acquisition. In 1987, it acquired Malcolm Brock, the privately held chain operating in Bakersfield. A year later, it acquired the Harris Department Stores chain based in San Bernardino. In 2000, the company acquired Seattle based, Lamont’s which operated stores in the Pacific Northwest, including Alaska.
Gottschalk’s became a public company in1986 and was listed on the NYSE.
The downtown Fresno store was closed in 1998.The downtown area had been upgraded with an outdoor mall area, but that was not enough to save the store as customer preferred shopping in suburbs.
Gottschalk’s filed for bankruptcy protection in January, 2009. In March 2009 the company announced that it would be liquidating; the last stores were closed on July 12, 2009.
What happened????…. The small market strategy worked for Gottschalk’s. In many of the markets it was the dominant store allowing the company to flourish. The acquisition of Lamont’s quickly became a problem. Some of the Lamont’s stores were in malls which were not a good competitive format for Gottschalk’s. Those stores were the first to be closed. Competition also got stiffer as Mervyn’s, Kohl’s, Target, Wal-Mart, and a rejuvenated J.C. Penney entered Gottschalk’s markets. The biggest blow came from the Great Recession. It hit California hard. The final blow came when the company could not secure financing to emerge from bankruptcy protection.
When I was a child I did visit the downtown store. I had an aunt and uncle who lived in Fresno. To me it was just a big store, nothing remarkable. When I visited the store later, it was not well-maintained. It was not long afterwards that the store was closed. The suburban stores were the best store in each of their markets. The merchandise mix was moderate, but they were the only store that offered major national brands. That was the clear edge they had over Mervyn’s, Target, and Wal-Mart.
Since the demise of Gottschalk’s is recent, I am sure there are many around who can add their memories of the company to the comments section below.
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