Gimbels — Macy’s Eternal Rival, Closed When Nobody Could Say Why

Summary

Gimbels was, for the better part of a century, the most famous second-best department store in America, and in 1987 its owner closed it. The Gimbel family had been merchants since Adam Gimbel opened a general store in Vincennes, Indiana in 1842, but the chain proper dates from 1887, when the family established its first true department store in Milwaukee. From there it spread to Philadelphia in 1894 and, fatefully, to New York's Herald Square in 1910 — a block from Macy's, the rival that would define it. By 1930 Gimbel Brothers ran 20 stores and booked $123 million in sales, which made it, by that measure, the largest department-store corporation in the world.

What it is remembered for, though, is the rivalry. "Does Macy's tell Gimbels?" entered the language as a way of declining to share a secret, and the two stores, a block apart and forever undercutting each other's prices, became a shorthand for competition itself — immortalized in Miracle on 34th Street, where the rival Santas declare a truce. The irony of the case file is that the slogan outlived the store by decades. By the 1980s, shoppers and analysts alike struggled to articulate what Gimbels was actually for: it was not the cheapest, not the most fashionable, not the most upscale. It was the place that had once been famous for being famous.

The death itself was mundane. In 1973 the Gimbel family sold the company to Brown & Williamson, the American arm of British American Tobacco, which folded it into a retail holding group called BATUS. The tobacco conglomerate ran several chains — Marshall Field's, Saks Fifth Avenue, Kohl's — and by 1986 it had concluded that Gimbels was the marginal one: a middling performer with little path to higher profit. So BATUS did the unsentimental thing. It cherry-picked the best store sites for buyers, handed the prized Milwaukee flagship to its own Marshall Field's division, and in 1987 simply shut the remaining 35 stores. The most famous rivalry in American retail ended not with a fight but with a portfolio decision.

Timeline

The Block That Made a Legend

Gimbels' great asset was geography, and its great misfortune was the same. When it opened at Herald Square in 1910, it planted itself a single block from Macy's, then the dominant New York retailer, and the two stores spent the next seventy years in a public, theatrical, price-cutting war. The competition was real — both ran daily ads, matched each other's markdowns, and competed for the same Manhattan shopper — but it was also marketing, and Gimbels understood the marketing better than almost anyone. "Does Macy's tell Gimbels?" became a national idiom. The store launched the country's first department-store Thanksgiving parade in Philadelphia in 1920, four years before Macy's borrowed the idea in New York. When Hollywood needed a symbol of cutthroat-yet-affectionate rivalry, it reached for Macy's and Gimbels.

For a while the rivalry rested on genuine strength. Through the 1920s and 1930s Gimbel Brothers was an empire: the Milwaukee store, the Philadelphia store, the New York flagship, and, after 1923, the upscale Saks Fifth Avenue name, which Gimbels owned and ran as its luxury arm. The 1930 peak — largest department-store corporation in the world — was not a boast but an accounting fact. Gimbels had done what every chain dreams of: it had become a verb, a punchline, a fixture. The trouble with becoming a fixture is that fixtures stop being examined, including by the people who own them.

A Store Famous for Being Famous

By the 1960s and 1970s the ground beneath the great urban department stores was shifting, and Gimbels read the shift slowly. The customer was moving to the suburbs and the enclosed mall; the discounters — Korvette, Kmart, the early Walmart — were taking the price-conscious shopper that Gimbels had courted with its markdowns; and the specialty chains were taking the fashion shopper. A department store survives that squeeze only by being clearly something — the cheapest, the most fashionable, the most service-rich, the most aspirational. Gimbels, having spent decades defining itself by reference to Macy's, found it had defined itself into a corner. It was the middle of a market that was hollowing out from the middle.

The famous diagnosis came from the rivalry's own home turf. By 1980, observers noted that shoppers could no longer say what made Gimbels distinctive — a devastating thing to be true of a store whose entire identity had been distinctiveness. The Saks Fifth Avenue arm still knew exactly what it was (and would survive, sold off separately). The Gimbels nameplate did not. It had a recognizable name, a beloved place in the civic memory of Milwaukee, Philadelphia, and New York, and a real-estate portfolio of large, well-located buildings. What it did not have was a reason for a 1980s shopper to choose it over the mall, the discounter, or Macy's across the block. Affection, once again, was being mistaken for a business. The brand was a household name attached to a question no one in the company could answer: who, exactly, shops here, and why.

The Five Factors

Aftermath

The closure put thousands of Gimbels employees out of work across five states in 1987, the kind of mid-tier retail job loss that rarely makes a national headline but reshapes a downtown. The buildings, by and large, found other lives: rival department stores took the best of them, the Milwaukee flagship soldiered on under Marshall Field's until 1997, and the great New York Herald Square store was redeveloped into the manhattan mall and office space. The Saks Fifth Avenue luxury arm, which Gimbels had owned since 1923, was sold off to other owners and survives to this day — the healthy organ transplanted out of the dying body.

What lingers is the phrase. "Does Macy's tell Gimbels?" is still spoken by people who have no idea Gimbels was ever a store, which is a peculiar kind of immortality: the rivalry survived the rival. For retail historians, Gimbels is the clean case of a chain that died not from a single dramatic blow — no fraud, no crushing leveraged buyout, no overnight disruption — but from the slow failure to answer the most basic question a store must answer. It is the cautionary tale of the beloved name that forgot to be a reason, and of the conglomerate owner who, handed a legend, looked at the numbers and chose the building.

Lessons

References

• Gimbels Wikipedia
• History of New York's Gimbels Department Store Classic New York History
• Gimbel Brothers Department Stores: Dust to Dust American Business History Center
• The Gilded Mall of Market Street: Gimbels Had It Hidden City Philadelphia