Retailing: Store with Its Heart in Its Work

Hungarian Immigrant Morris Rich was a naturalized optimist. Who else would have opened a dry goods store in devastated Atlanta, Ga., in the grim postwar year of 1867. Yet even Rich would be amazed to see how far his "M. Rich Dry Goods Store" has come. Last week, presiding over its centennial-year annual meeting, Grandson Richard H. Rich, 65, the present chairman and chief executive, ticked off statistics. Rich's last year rang up sales of $148 million for a 12.9% gain over the previous year (v. 3% for U.S. retailers in general) and showed earnings of $14,450,000. Return on equity was a solid 13.6%. And with operations outgrowing its main store and five branches, Rich's is about to undertake a ten-year $115 million building program, in which it will enlarge three branches, build four more and open for business in Macon and Augusta.

With the new stores, Rich's within the next decade expects to double sales that have already doubled in the past ten years or so. Rich's now outsells any department store south of New York City and east of St. Louis. "We do a big high-fashion business and a big bargain-basement business," says Dick Rich, "and we try to catch everything in between as well." "In between" represents about 60% of the purchases made by the 75,000 customers who crowd into Rich's stores on an average day. Although most are Atlantans, Rich's considers nine Southeastern states as its secondary market; it is not unusual for housewives from Tennessee or North Carolina to fly in for a day's shopping.

Despair of Others. Rich's forte, and the despair of other merchants, is the lavish credit and exchange policy that has made it as much an Atlanta institution as Scarlett O'Hara. "The customer is never wrong," is a Rich's policy, and on that friendly basis the store goes to the improbable length of accepting any merchandise returns—even if they were bought at another store. Once, for example, Rich's exchanged hundreds of pairs of defective nylons of a brand it did not stock. A clerk at a rival store, according to a popular Atlanta story, was arrested for buying merchandise on an employee discount and exchanging it at Rich's at full price. A bride's mother who complained that a Rich's wedding cake came with yellow layers instead of the white she had ordered got another cake, even though her guests had already consumed the first. Not surprisingly, Rich's return rate is 14% of sales, the highest in the country.

Similarly, Rich's seldom duns its 450,000 charge customers for payment. "Our theory," explains Rich, "is that 95% of the people are honest, and we're not going to discommode 95 people to root out the other five." Established in the days when Southerners paid their bills once a year when the cotton "came in," Rich's credit department patiently lets people pay when they can, never tacks on service charges. In 1951, when Georgia's peach crop was ruined by cold weather, the store ran a full-page ad in the Atlanta Constitution. It showed an empty peach basket and noted: "Rich's understands. Rich's can wait."