Abstract: The "Managerial Revolution" in Department Store Retailing: An Anglo-American Comparison

James Walker and Peter Scott

Abstract

British retailing has often been characterized as having lower productivity, less developed managerial hierarchies and methods, and weaker economies of scale and scope than its U.S. counterpart during the early twentieth century. This has, in turn, been linked to the slower diffusion of a variety of managerial and accounting innovations, collectively termed the "managerial revolution" in department store retailing. However, such comparisons are generally made using crude and indirect proxies for British retailing efficiency. This paper draws on much better data for U.S. and U.K. department stores—major annual surveys conducted by the Harvard Bureau of Business Research and the London School of Economics. The paper seeks to examine the reasons behind Britain's surprisingly strong performance, drawing on both the published surveys and a database of surviving returns from the UK survey covering some 115 stores. We conclude that America's poorer productivity performance stemmed not from differences in managerial methods per se, but from a high advertising and promotion cost, high services cost, high premises cost, competitive equilibrium, which U.S. department stores had become locked into during the 1920s (and from which they could not extricate themselves in the aftermath of the Depression).