The Journal of Economic History

ARTICLES

Sales and Advertising Expenditure for Interwar American Department Stores

Peter M. Scotta1 and James Walkera2

a1 Professor of International Business History, University of Reading Business School, P.O. Box 218, Whiteknights, Reading, Berkshire RG6 6AA, United Kingdom. E-mail: p.m.scott@henley.reading.ac.uk.

a2 Lecturer, Henley Business School, University of Reading Business School, P.O. Box 218, Whiteknights, Reading, Berkshire RG6 6AA, United Kingdom. E-mail: j.t.walker@henley.reading.ac.uk..

Abstract

Department stores represented one of the most advertising-intensive sectors of American interwar retailing. Yet it has been argued that a competitive spiral of high advertising spending, to match the challenge of other local department stores, contributed to an inflation of operating costs that eroded long-term competitiveness. We test these claims, using both qualitative archival data and establishment-level national data sets. The quantitative analysis confirms that the relationship between advertising expenditure and sales deteriorated markedly over the period, but indicates that the growing negative impact of retaliatory advertising by rival department stores was less important than contemporaries perceived.

We thank Natalie Anderson and Nat Ishino for fastidious RA work, and Lucy Newton, Tom Nicholas, Francisco Requena, Mark Tadajewski, and Stefan Schwarzkopf for comments on the article. Thanks are also due to the Baker Library Archives; Boston Public Library; West Yorkshire Archive Service, Leeds; and Worcester Historical Museum, Worcester, MA. We are also grateful for comments by participants at the Business History Conference, Sacramento (2008), and the Association of Business Historians Conference, Birmingham, UK (2008). This article benefited greatly by the suggestions of two referees and the editor.

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