Meier & Frank Co.

views updated

Meier & Frank Co.

621 Southwest 5th Avenue
Portland, Oregon 97204
U.S.A.
(503) 223-0512
Fax: (503) 241-5783
Web site: http://www.maycompany.com/mf_home.html

Wholly Owned Subsidiary of The May Department Stores Company
Incorporated: 1893
Employees: 1,600
Sales: $395 million (1997 est.)
SICs: 5311 Department Stores

One of the oldest retail chains in the Pacific Northwest, Meier & Frank Co. operates eight department stores in four markets, serving customers in the Portland, Oregon-Vancouver, Washington area, and in three other Oregon cities: Eugene, Salem, and Medford. For a century, the company was owned and operated by the Meier and Frank families. In 1966, the company was sold to The May Department Stores Company amid a heated dispute between the two families. Over the course of the next three decades, five new stores were opened, with the greatest concentration of units situated in the greater Portland area. Representing one of eight regional divisions operating under May Department Stores’ corporate umbrella, Meier & Frank was by far the smallest, but its average sales per square foot was the third highest among its sibling chains.

19th-century Origins

In 1855, the founder of Meier & Frank emigrated from Germany to start a new life in the United States. Aaron Meier was 24 years old when he left his Bavarian hometown of Ellerstadt, having earned enough money while working at his uncle’s brickyard to pay for the long trek west. He was not the first member of the Meier family to forego a life in Bavaria for the rumored riches across the Atlantic. His older brothers Julius and Emmanuel had preceded him, immigrating to Downieville, California, where the pair established themselves in the dry goods business. Aaron Meier joined his brothers in Downieville and gained his first experience in the dry goods business, but he was quick to strike out on his own, leaving Downieville two years later for a small town to the north, on the banks of the Willamette River.

When Meier arrived in Portland in 1857, he was one of 1,300 residents who made their home in the fledgling Oregon Territory community, founded 13 years earlier. Although Portland had yet to complete the transition from town to city, the community’s distinction as a major commercial hub along the Pacific Coast would not be long in coming. The area’s population was growing in appreciable bursts, as wave after wave of settlers made their way west via the Oregon Trail. The migration had begun 14 years before Meier’s arrival, and its intensity would pick up in the decades to follow, creating a potentially lucrative environment for an aspiring entrepreneur like Meier who hoped to establish himself as a merchant. Meier had resolved to open his own dry goods store and he wasted little time in doing so. He opened a store the year he arrived in Portland, striking a partnership with a man named Mariholtz, and began selling merchandise that arrived by steamer from San Francisco and in the covered wagons rolling along the Oregon Trail.

For Meier and Mariholtz, business was brisk in burgeoning Portland. The two store owners worked together for eight years and their business flourished. In 1864, Meier had to make a return trip to Ellerstadt when his father died. Meier left Mariholtz to steward the fortunes of their enterprise and traveled to Germany to visit his mother and collect the inheritance from his father’s estate, which amounted to $14,000. During his extended stay in Ellerstadt, Meier married a local woman named Jeanette Hirsch and returned with her to Portland, where a thriving business awaited the newly weds. Meier’s triumphant return, with a new bride at his side, $14,000 in his pocket, and a prosperous dry goods store under his control, turned out to be a slap in the face. The business was gone, and Meier, quite unexpectedly, had nothing to show for his early success.

During Meier’s absence, the dry goods store had collapsed financially, bringing the partnership between Meier and Mariholtz to an ignoble and bitter end. Meier did not dwell on his misfortune long, however, and quickly opened a new store—this time without a partner—on a 1,750-square-foot lot in downtown Portland. Meier succeeded in reestablishing himself as a successful store owner, an achievement that set the foundation for a family dynasty in the retail business. After Aaron Meier, generations of Meiers followed in his wake, as well as the descendants of another family, the Frank family. The link between the two families sprang from the business and personal relationship forged between Aaron Meier and the patriarch of the Frank family, Emil Frank. The two met during one of Meier’s buying trips to San Francisco not long after his ill-fated return from Germany. Frank, a German immigrant as well, joined Meier’s store as a clerk in 1870 and three years later was named a partner in the enterprise, giving birth to the Meier & Frank name. One year before Emil Frank was named partner, his younger brother Sigmund—a recent arrival from Germany—joined the store and along with his brother moved into the Meier home.

Side by side day and night, Meier and the two Frank brothers worked well together as a team. In 1884, Sigmund Frank was made a partner, as work was underway to move the store to a larger location. The new store, a two-story, 20,000-square-foot masonry structure, opened in 1885 on a lot measuring 50 feet by 200 feet. The same year the new store opened, the link connecting the Meiers and the Franks became even closer when Sigmund married Fannie, the Meier’s only daughter. Three years after the marriage, Sigmund’s position within the family and the business was made stronger when his brother chose to leave the company, selling his interest in the store to his brother and Meier. Emil Frank’s decision to divest his interest in Meier & Frank had nothing to do with the performance of the store because business was better than it ever had been before. The new store, completed in 1885, had already proven to be too small by 1889, leading to another expansion that doubled the store’s retail space to 40,000 square feet.

As work was underway for the 1889 expansion, Aaron Meier died, leaving 39-year-old Sigmund Frank to take over as the company’s president. Four years later, Meier & Frank was incorporated, with the Meier, Frank, and Hirsch families controlling all of the company’s stock. The never-ending need to expand as Portland’s population mushroomed led to a series of expansions during Sigmund Frank’s two decades of direction, including the construction of a five-story building in 1898. As had been the case since the company’s inception, however, each bold move to expand proved to be insufficient in retrospect. The company could not build a store large enough to house its flourishing business. Early in the 20th century, Sigmund Frank resolved to build a store that could serve the company for the long-term, and ordered the construction of a store on an unprecedented scale. Completed in 1909, the new Meier & Frank store stood ten stories high, making it the tallest store in the Pacific Northwest and Portland’s lone skyscraper. Sigmund Frank never saw the new store completed, however. His death one year before the new store opened ushered in the leadership of the second generation of Meiers.

Family Dynasty Develops During 20th Century

Aaron Meier’s eldest son, Abe, who had been named vice-president of the company following its 1893 incorporation, assumed control over Meier & Frank after the death of Sigmund Frank. His title as president of the thriving retail enterprise was only ceremonial, however. Abe Meier never had a permanent desk in the company’s corporate office, and spent much of his time as a “greeter” on the sales floor. The responsibility for running the company fell to his younger brother Julius, who had been appointed vice-president and general manager when Sigmund Frank died. Trained as a lawyer, Julius Meier served as the chief decision-maker for Meier & Frank, and in this capacity, faced the same primary issue his predecessors had to contend with, namely, physical expansion. The ten-story store was deemed inadequate by Julius Meier five years after its grand opening, paving the way for the addition of a new. wing in 1915 that gave Meier & Frank a sprawling 11 acres of retail space.

The arrangement of Abe Meier serving as figurehead of Meier & Frank while his brother Julius actually ran the company existed for 22 years. Julius never attempted to usurp his brother’s title in a power struggle. He bided his time, waiting for what always had led to a transfer of control within the Meier & Frank business. Historically, the death of the company’s top leader had led to the promotion of the vice-president to the presidential post, and for Julius Meier that moment arrived in 1930 when his brother Abe passed away. Julius’s tenure at Meier & Frank following his brother’s death was brief, however. Late in 1930, Julius was elected to a much higher position than running Oregon’s premier department store. He was elected governor of Oregon, winning a close election that, for obvious reasons, kept him from superintending the day-to-day affairs of Meier & Frank. Although Julius retained his title as president of the company during his four-year term as governor, the job of actually running Meier & Frank fell to his second in command and heir apparent, Aaron Frank. Julius Meier’s nephew and Sigmund Frank’s youngest son, Aaron Frank, had been named vice-president and general manager in 1930. By the time his uncle had been elected governor, Aaron Frank had achieved effective control over the family business. Described by some as smart, dedicated, shrewd, arrogant, and sometimes vindictive, Aaron Frank held the reins of command for the ensuing 38 years.

Three years after his tenure as governor ended Julius Meier died, vacating the presidential post for Aaron Frank. Under Aaron Frank’s direction, Meier & Frank maintained its lead over other Portland department stores, while its president exerted resolute control over the company’s affairs and considerable influence in Portland’s political scene. The landmark achievements under his reign of command were Meier & Frank’s first steps outside the Portland area. Aaron Frank initiated branch expansion, opening a store in Salem in 1955 that occupied an entire city block. Next, Frank opened a larger store in the Lloyd Center in Portland in 1960. After these two branch store openings, further expansion was put on hold. There were internal problems at Meier & Frank that took center stage, as a family squabble, brewing for years, erupted into a fight for control over the nearly century-old company.

1966: Family Fight Brings New Owners

Family members had disliked Aaron Frank’s style of control for years, characterizing Frank’s rule as imperious. In 1964, the dispute came to a head when Jack Meier, the only son of Julius Meier, staged a concerted revolt along with his mother, the children of Aaron Frank’s brother Lloyd, and other relatives. At the time, Aaron Frank and his immediate family controlled only 20 percent of Meier & Frank’s stock, not enough to ensure his position at the company. Fearful of what would amount to a coup, Aaron Frank sold his family’s 200,000 shares in the company to Broadway-Hale Stores, hoping that if Broadway-Hale could gain a controlling interest in Meier & Frank his continued supremacy would be secure. Meanwhile, the faction led by Jack Meier was trying to negotiate for its own supremacy. They had sold the purchase rights to Meier & Frank to The May Department Stores Company, but their majority interest fell short of the two-thirds majority required to complete the tax-free merger with the St. Louis-based department store operator. They also did not have enough of the company’s stock to oust Aaron Frank and his son Gerry from the company’s board of directors, but they did have the wherewithal to make life miserable for the Franks. They confiscated Aaron Frank’s employee’s discount card, took his free parking space in the store’s garage, and changed the locks on the doors leading to his executive office. As this purposeful program of alienation was taking place, an inconclusive battle to acquire the 20 percent of stock held by the public was waged throughout 1965. The following year, the contentious and frequently petty struggle between the two sides of the family was unexpectedly made moot when Broadway-Hale sold the stock it had acquired from Aaron Frank to May Department Stores. After a century of family ownership, the Meiers and Franks no longer owned their highly successful business.

The turbulent mid-1960s gave way to a decidedly more serene setting at Meier & Frank following the bitter family feud. Aaron Frank died in 1968 and a year later Jack Meier was appointed chairman of the board. Under May Department Stores control, expansion resumed with the establishment of a store in the Eugene area in 1969. During the 1970s, the company completed its most aggressive decade of expansion by opening three new stores. Another Meier & Frank debuted in Portland in 1973, followed by a store opening just outside Portland in Vancouver, Washington, in 1977. A third Portland store opened in 1980, giving the company seven stores and nearly two million square feet of floor space.

In terms of physical growth, the beginning of the 1980s marked the end of aggressive expansion for Meier & Frank. Over the course of the next two decades only one new store was established, a Meier & Frank in Medford, Oregon. Elsewhere within May Department Stores, expansion was robust, as the retail conglomerate developed into a 365-unit operator by the late 1990s. Although May Department Stores did not focus its expansion efforts toward Meier & Frank, Meier & Frank was by no means the forgotten child lost within the May Department Stores empire. Measuring by store units, Meier & Frank was roughly four times smaller than its closest rival within the May Department Stores family, but its average sales per square foot was the third highest, an enviable $225 per square foot during the late 1990s. In 1997, May Department Stores officials announced plans to invest a hefty $3.4 billion in new store openings and renovations, intending to add 100 new stores by 2001. No additional Meier & Frank stores were slated to open during its parent company’s investment program, but the Oregon chain’s future appeared bright, nevertheless. With more than 130 years of experience, Meier & Frank held sway as a steady and reliable performer, its presence entrenched and ingrained in the hearts of Oregon residents.