The British ‘failure’ that never was? The Anglo‐American ‘productivity gap’ in large‐scale interwar retailing—evidence from the department store sector1

Interwar British retailing has been characterized as having lower productivity, less developed managerial hierarchies and methods, and weaker scale economies than its US counterpart. This article examines comparative productivity for one major segment of large‐scale retailing in both countries—the department store sector. Drawing on exceptionally detailed contemporary survey data, we show that British department stores in fact achieved superior performance in terms of operating costs, margins, profits, and stock‐turn. While smaller British stores had lower labour productivity than US stores of equivalent size, TFP was generally higher for British stores, which also enjoyed stronger scale economies. We also examine the reasons behind Britain's surprisingly strong relative performance, using surviving original returns from the British surveys. Contrary to arguments that British retailers faced major barriers to the development of large‐scale enterprises, that could reap economies of scale and scope and invest in machinery and marketing to support the growth of their primary sales functions, we find that British department stores enthusiastically embraced the retail ‘managerial revolution’—and reaped substantial benefits from this investment.     

Advertising,promotion, and the competitive advantage of interwar British department stores

Promotional activity proved key to the success of department stores in fending off competition from the expanding chain stores, by drawing in customers to their large, central premises. This article uses a combination of quantitative and qualitative archival data to examine the promotional methods of interwar British department stores, variations in the promotional mix between types of store, and returns to promotional activities. A number of distinct regional promotional strategies are identified, shaped by variations in the types of consumer markets served. We also find considerable policy convergence among stores towards using promotional activity primarily as a means of imprinting a strong institutional brand image in the minds of the consuming public.     

REPLY TO LOOMIS, WALSH, AND McKEAN

In commenting on my article "… The Opportunity Cost of the Redwood National Park" (Walker 1984), Loomis, Walsh, and McKean (1984) argue that I gave inadequate consideration to concepts of option, existence, and bequest values for wilderness areas. I am familiar with these concepts, and I believe I gave them the attention they deserve.