When a new Wal-Mart store opens, it’s usually to fanfare. But often, protests from local retailers and community members accompany new superstores, too. And if it weren’t for a retail impresario named Frank Winfield Woolworth—not Sam Walton—the mega retailer wouldn’t be here to begin with.
Born in 1852, Woolworth revolutionized the way Americans shop. A sickly child and a dreamy young man, he hated life on his father’s New York farm. Though he was expected to continue in the family tradition of farming, he convinced his parents to let him enter business instead. In 1873, he began an unpaid apprenticeship at Augsbury and Moore, a dry goods store in nearby Watertown, New York.
At the time, chain stores were unheard of and general stores were often the only stores in town. Since farmers produced most food themselves, the stores focused on “dry” goods like cloth, tea and sugar, and often served as a community gathering place and post office. Itinerant salesmen known as “yankee peddlers” also sold their wares in rural communities. Early department stores did exist, but only in large cities like New York and Chicago.
The store where Woolworth worked was nothing like modern-day shop. Goods were stored behind large counters and stashed away in drawers. Shoppers couldn’t browse—rather, they relied on a clerk to help them navigate the items inside. And prices weren’t fixed or even marked on items: Haggling and even bartering were the norm.
Though Woolworth enjoyed working in retail, he didn’t exactly thrive in this environment. He struggled to find and show items to customers, and they were unimpressed by his fumbling demeanor. Four years into his retail career, he was what one journalist called “a fourth-rate salesman in a fifth-rate country town”—and his salary was even cut when the store experienced a downturn.
But when Woolworth heard about a new retail trend called the “five-cent counter craze,” it sparked his interest. It’s not certain where he first heard about counters covered with goods for a single price, but the counters were reportedly so successful that people would travel to different towns just to try them out. Woolworth began to wonder if the concept could be expanded.
First, he tried the concept at his dry goods store, decorating a counter laden with items that usually didn’t sell well—merchandise like thimbles and baby bibs—and pricing everything at five cents. It was a success. “Day after day and week after week I saw the tide grow,” Woolworth recalled. “And it fired me with the desire to get into the game myself.” If five-cent counters so successful, why not open an entire five-cent store?
In 1879, “The Great 5¢ Store” opened in Utica, New York. Inside was just $321 worth of merchandise. But the store was a flop. Later that year, Woolworth tried again—this time in Lancaster, Pennsylvania. Soon, he added a ten-cent counter in an attempt to increase his profit margin. This time, it worked—perhaps because of more receptive customers in Lancaster, or perhaps because of its new, more valuable-seeming ten-cent counter.
Soon, Woolworth had multiple locations and was buying inventory in bulk, pushing profit margins even higher. But though customers flocked to his five-and-dime stores, not everyone loved the model. As historian Alan R. Raucher notes, they quickly became known as “the poor person’s department stores”—and were both mocked and criticized by small retailers that complained they were monopolies that drove local shops out of business.
”Woolworth was 100 years ago what Wal-Mart is today,” Robert Sobel, a professor of business history at Hofstra University,” told the New York Times in 1997.
The critics had a point. Woolworth loved the idea of chain stores that took business to customers instead of waiting for them to show up. As his chain grew, he insisted on more and more control, pushing suppliers to give him lower prices and even insisting that they become more efficient to increase production. And when Woolworth edged a competitor out of business, he often bought their store and made it into a five-and-dime.
As Woolworth’s kingdom grew, so did his ambition. By 1911, he had become a retail icon—and he became even more notorious when he built the tallest building of its day in the middle of New York. He paid for the lavish skyscraper in cash—a commentary, perhaps, on the empire he’d built on nickels and dimes. By the time he died in 1919, he was one of America’s most famous entrepreneurs.
After his death, Woolworth’s expanded even further, going international and even creating a popular discount department store concept. But ironically, the very features that made Woolworth’s stores successful eventually caused their failure. Though Woolworth’s stores flourished internationally for decades, his five-and-dime model was unable to withstand competition from other businesses that wouldn’t have been feasible without the template he created.
As shoppers moved to the suburbs after World War II, they became less interested in stores that offered bargains and flocked to retailers that stocked all kinds of items instead. Unlike larger, more inclusive stores like Target or Wal-Mart, five-and-dimes sold a mixed bag of discount items that disappointed shoppers in search of a certain brand or item. And their bargain-basement reputation didn’t sit well with many shoppers, who would rather buy cheap items in a store without a cheap reputation.
Meanwhile, Woolworth’s Woolco discount stores faced stiff competition in urban areas. After closing most of its Woolco stores in the U.S., Woolworth’s sold the remainder of its Canadian Woolcos to Wal-Mart in 1994.
Superstores like Wal-Mart—which learned lessons from Frank Woolworth’s insistence on controlling every facet of the manufacturing and sales process—eventually drove five-and-dimes out of business. The last remaining Woolworth’s five-and-dime store closed in 1997.