E. J. Korvette - Decline and Closure

Decline and Closure

Korvette's decline and closure are variously attributed to inconsistent management, failure to focus on merchandise it knew (such as appliances), and ultimately attempting to compete directly with the department stores in areas such as fashion (when it had neither the expertise nor the right store atmosphere).

Of note was E. J. Korvette's venture into the home entertainment business. The retailer established a rather out of context series of high-end audio salons within selected stores. Korvettes went so far as to market its own "XAM" brand of stereo receivers, amplifiers (some manufactured by Roland Electronics of Japan), television sets, and speakers. At a number of the retail locations the audio department was, on dollar per square foot basis, one of the more profitable departments in the store.

In late 1965, Korvette's formed its own Home Furnishings Division and ceased subcontracting furniture and carpet sales. A complex warehousing and distribution network was established. A central distribution warehouse was established in Danville, Virginia. This location received furniture, purchased by its buyers located in East Paterson, New Jersey, and in turn reshipped individual customer orders based on promised delivery dates. The sold merchandise was then shipped to delivery warehouses in East Paterson and Pennsauken, New Jersey, and Jessup, Maryland for final prep and delivery. This well-managed furniture distribution group was active until it closed at the end of 1977.

By 1966, Korvette's had begun to decline and chose to merge with Spartan Industries, a soft goods retailer. Eugene Ferkauf was eased out of the company leadership, and Spartan managers attempted to revive the company.

From 1971 to 1979, Korvette's was owned by Arlen Realty, a land development company that used Korvette's 50 stores as a source of cash flow. Under Arlen's ownership, Korvette's stores deteriorated and lost market share relative to other retailers to the point that the company was worth more for its real estate assets (such as its ownership or leasehold interests in valuable locations) than its retail sales. During this period, New York area Korvette's stores advertised heavily on local television, using popular game show host Bill Cullen as a spokesman.

In 1979, Korvette's was purchased by the Agache-Willot Group of France, which initially closed Korvette's least profitable stores and began selling off merchandise, fixtures, equipment, and real estate. In 1980, they declared bankruptcy and on December 24, 1980, they closed all of their remaining 15 stores.