This Day in Jewish History

2012: The Man Who Figured Out What You Really Want Dies

Sure, a classy store is nice, but Eugene Ferkauf invented the discount experience. And no, E.J.Korvette isn’t short for 'Eight Jewish Korean War Veterans.'

An E.J. Korvette store in the early 1960s.

On June 5, 2012, Eugene Ferkauf, the retailing wizard who founded the E.J. Korvette department-store chain in the boom years following World War II, and in doing so changed the way Americans shopped, died at the age of 91.

He didn’t have a business degree, and the company he started died decades before he did. But Ferkauf deserves credit for recognizing, before almost anyone else, what consumers really want — discounted electrical goods and appliances.

The business model that he intuited into existence — low prices and overhead, high volume — became the prototype for such marketing titans as Sam Walton, who made an early pilgrimage to consult with Ferkauf before opening the first Walmart.

Eugene “Gene” Ferkauf was born on November 13, 1920, on New York’s Lower East Side, and grew up across the river in Brooklyn. His parents were Harry Ferkauf and the former Rose Hecht. Gene graduated from Samuel J. Tilden High School in East Flatbush and went to the City College of New York before enlisting in the U.S. Army in 1942.

Ferkauf served in the Signal Corps in the Philippines and Japan. When he returned home, he began working in his father’s Manhattan luggage store, where two things happened. 1. They argued about discounts: Gene wanted to slash prices, his father didn’t. 2. Gene observed how a competitor named Charles Wolf got around Depression-era federal laws that limited retailers’ ability to sell below the manufacturer’s suggested price, by inviting prized customers to visit his warehouse. There, as members of a “private club,” they could enjoy steep discounts he wasn’t offering at the store.

In 1948, Gene opened his own store in a loft on E. 46th Street, where he began selling suitcases for up to a third off. He soon expanded to appliances, with great success.

If you sell a million refrigerators

As David Halberstam explained in his 1993 book “The Fifties,” Ferkauf’s philosophy was “If he could make a one-dollar profit selling a refrigerator ... he would do it, because he could make a million dollars by selling a million of them.” And he did it in no-frills stores staffed with minimal sales personnel.

Today that’s the norm, but five or six decades ago it was the exception.

Americans of a certain generation know the urban legend that “E.J. Korvette” is short for “Eight Jewish Korean War Veterans.” In fact, Ferkauf, who didn’t serve in the Korean War, took the E. from Eugene and the J. from his friend and partner Joe Zwillenberg, while Korvette was an alternate spelling for Corvette — the warship and sub-destroyer, not the car. Ferkauf thought it “had a euphonious ring,” he wrote in a memoir.

But he did hire many of his old high-school buddies.

‘Member,’ not customer’

Like Charles Wolf, Ferkauf (the name is Yiddish for “sale”!) went through the motions of calling his store a membership organization, by having employees stand outside the store out members’ cards. Other department stores that were hemorrhaging customers to Korvettes sued him frequently, but no court ever accepted their claims.

On December 2, 1953, Korvette opened its first huge suburban store, built in a former potato field in Carle Place, Long Island. By Christmas the branch had racked up over $2 million in sales, a substantial sum for that era.

Ferkauf expanded quickly, and also licensed the firm’s name to other merchants, who sold furniture, carpets, groceries and even soft pretzels with the Korvette name at his locations.

At its peak, in the late 1960s, Korvettes had 58 stores and had spread from the East Coast as far west as St. Louis. That’s when Ferkauf, who in the interim had taken in new partners, was forced to sell his shares in the company — for $20 million.

Over the next decade and a half, Korvettes changed owners, managers and sales strategies frequently, before finally folding. Its last store closed on December 24, 1980.

Eugene Ferkauf spent much of his lengthy retirement giving his money away, much of it to New York’s Yeshiva University, whose school of psychology is named for him.