This multi-billion-dollar retailer revolutionized shopping with its retail/catalog hybrid format. Its logo featuring scaling bold red lettering is as remembered today as its unique artistic architecture and pioneering retail concept.
“BEST”. No, not Best Buy. Simply “BEST,” or its formal name of Best Products Company Incorporated. This multi-billion-dollar retailer revolutionized shopping with its retail/catalog hybrid format. Its logo featuring scaling bold red lettering is as remembered today as its unique artistic architecture and pioneering retail concept.
Unlike Sears, J.C. Penney, or Montgomery Ward, whose retail and catalog divisions were largely independent of each other, Best attempted to merge these. Its retail stores were known as “showrooms.” They mostly served to demonstrate products available for purchase from its catalog. Some merchandise was self-service, including toys, healthcare, and sporting goods. But most items were purchased through an order request, at which point the product was either retrieved by store personnel from the onsite warehouse or shipped through its catalog.
It was novel. And for a time, it was wildly successful.
At its height in the 1980s, Best had annual revenue topping $2 billion across its more than 200 stores in 23 states, making it one of the largest retailers in the nation at the time. But increased competition, bad mergers, and a failure to adapt to evolving trends would shutter the company in 1997.
Early History
Husband-and-wife team Sydney and Frances Lewis founded Best Products in 1957. To put that into some perspective, this was years before Walmart, Kmart, or Target entered the scene. The nation’s first enclosed shopping mall had only opened the year prior. Even supermarkets were a relatively fresh concept. Five-and-dime stores along the likes of F.W. Woolworth were all the rage.
It started with a roughly-assembled catalog and a single store located near the brand-new Willow Lawn Shopping Center in Richmond, Virginia.
Sydney Lewis had some experience with mass publishing and distribution. After law school, he helped his parents run their publishing business, which produced educational materials and encyclopedias. He got the idea of placing inserts into their publications to sell other merchandise, and Best was born.
The Lewises compiled manufacturers’ fliers into a “wholesale buyers book” for its first catalog, which was sent to 5,000 teachers, schools, and businesses. Selling from a catalog wasn’t revolutionary. In fact, Sears had been doing it since 1888 and the concept dated back centuries. What was unique, that Best pioneered, was allowing people to sample the merchandise first-hand before making the purchase. None of the catalog retailers offered such an opportunity – at least not on the same scale. Most of them had shifted to a more traditional department store format with their catalogs supplementing in-store offerings.
In the beginning, only people with “purchase cards” could buy merchandise. The company distributed the cards to schools and businesses to be distributed to their employees, much the same way that warehouse-style stores like Sam’s Club were at their onset.
Best reported an impressive $70,000 in revenue during its first year. Clearly, something resonated with consumers.
Part of Best’s lure was skirting fair trade laws by selling merchandise below the manufacturer’s listed price. Best’s unique format allowed them to get away with it, undercutting traditional stores. But that advantage disappeared in the 1970s when the fair trade laws were repealed, which Best itself oddly advocated for. It did allow Best to expand its offerings to a wider audience, but it evaporated its competitive advantage at the same time.
A retail analyst named Kenneth Gassman Jr noted, in 1997: “(Best) was doomed from the day they struck down the fair trade laws.”
Best introduced its iconic logo featuring bold red letters with scaling heights in 1979. The logo, which took two years to develop, represented a “good, better, best” proposition. The New York firm Chermayeff & Geismar (Cher may eff and Guys more) designed the logo for a reported $250,000. It is said to have been the most expensive logo design in history to that point. The firm designed such other iconic logos as Mobil, Xerox, PanAm, and the simple yet bold gold box of National Geographic, among many others.
Alongside the logo, Best introduced the concept of a “rolling billboard” where it painted landscapes on the sides of its tractor-trailers with the new logo prominently featured.
Clearly Best knew what it was doing when it came to marketing at the time.
From “Best” to Bust
Best reached $1 billion in annual revenue in 1981. Best had become a retail giant – one of the nation’s largest. It had about 100 showrooms, mostly on the east and west coasts, and was about to almost double in size.
In 1982, Best added 95 stores by acquiring competitors Basco and Modern Merchandising, which operated six different brands including LaBelle’s.
Perhaps Best’s biggest mistake was not fully incorporating these acquisitions under the Best umbrella until years later, operating each as separate divisions – including all six distinct brands from Modern Merchandising. It went from a single brand with a singular distinction to eight overnight.
At the same time, Best tried diversifying. It acquired a women’s apparel chain called Ashby’s in 1982 and began opening jewelry-only Best stores in 1983 – peaking to 36 such stores, along with Best Bargains and Best Pharmacy. It opened a chain of computer stores called Data Base too.
Best hit its peak sales in 1984, but the tide was turning. Service Merchandise – a competing showroomer that opened its first store three years after Best – surpassed Best to become the biggest catalog showroomer in 1985. Service was more profitable even before surpassing Best’s store count and sales, though.
Best sales became stagnant – and even declining.
Best lost its strongest competitive advantage – price – when the fair trade laws disappeared. Discount department stores were growing at a rapid rate and so-called category killers were also entering the scene. Stores like Toys “R” Us, fellow Richmond-based Circuit City, and the similarly named Best Buy offered bigger selections with comparable pricing. Not only that, Best’s catalog division was being challenged by the rising popularity of home shopping networks like QVC, a format Best itself considered entering.
Best executives knew they had to evolve their business model, but they couldn’t agree on how, which only cemented stagnation.
“Radical change had to be made, but there were a lot of folk who were afraid to do that.” – Daniel Hough, Direct of Strategic Planning, 1985-1993
Its forward-thinking founders had mostly stepped back because of health concerns, although they did remain on the board until 1994. Their son, Andy, temporarily took the reins but quickly became disillusioned by the board’s hesitancy to evolve and announced his departure in 1987 – the same year that Best announced its first annual profit loss. Best wasn’t alone. Service Merchandise posted an even larger loss, on slightly higher sales.
With the board indecisive of a direction to take the company, Best put itself up for sale in 1988. Service Merchandise attempted to take it over – its founders being friends with Best’s founders – but lost out to a leveraged buyout totaling $1.14 billion. Any follower of retail failings knows that isn’t a good sign. It saddled the company with debt at a time when sales were sliding. In 1993, the new firm sued the Lewises, among others, claiming they “unfairly benefited” from the sale. Hmmm. Sounds like the buyers realized they paid too much for the company and wanted someone else to blame.
1991: First Bankruptcy
Best reported net losses every year except one from 1987 onward. Its sales were consistently hovering around $2 billion every year during the 1980s until posting a 12% decrease in 1990. Even more alarming was that its holiday season sales fell 30%, partly attributed to inventory shortages after Best struggled to pay vendors.
Best reported a staggering net loss of $333 million for the 1990 fiscal year. It filed for its first bankruptcy in January 1991, reporting about $1.5 billion in debt. In addition to its catalog, the company operated 195 showrooms, 35 jewelry stores, and an outlet store called Best Bargains across 27 states at the time, employing about 17,000 people.
While its losses lessened to $85.8 million that year, its sales suffered the company’s biggest decrease – sliding 22% year-over-year to $1.4 billion.
Best plotted a path forward, even opening several stores between 1992-1993 – the first new stores since 1985, although it was transitioning its acquired stores to the Best umbrella during that span. A cash-strapped bankrupt company opening new stores probably wasn’t a wise strategy, in hindsight. Something already wasn’t working with its existing stores. Fix that first, then open stores.
In addition to adding stores, Best did make other attempts to revitalize its dying brand. It introduced a new store format, moving jewelry to the front and focused more on ready-to-assemble furniture. It experimented with other concepts too. One of these concepts was described as a mix between Crate & Barrell and Ikea.
Best emerged from bankruptcy in June 1994 and even posted a surprise profit that year – the first since 1986. But this uplift was temporary. Overall sales were rather consistent since its 1991 plunge, even slightly increasing in 1993 and 1994, but so was its store count those years. Same-store sales – a key indicator for retail stores – fell 7.5% in 1995. It posted a net loss of $95.7 million that year.
It printed its last catalog that year too.
Best became delisted from NASDAQ and filed for its second and final bankruptcy in 1996. It had 169 stores at the time and immediately shuttered 81 of those. This time, there was no recovery. Best shuttered completely in 1997 with its parent company struggling until 1998.
One source – and only one source – says Montgomery Ward acquired Best’s remaining assets for $200 million in January 1997 with hopes to revive it, although I couldn’t validate this. Not one newspaper article from that era mentions this and Wards itself would file for bankruptcy that same year. With less than that in cash reserves and its credit lines frozen this seems dubious. It couldn’t even pay its vendors during that time. A former Wards executive had joined Best as its chairman and CEO just before its closure, however.
As of today, the Best Products trademark sits abandoned and up for grabs. Its last listed owner is non other than Best Products Co of Richmond, VA. So, if anyone wants to revitalize a hybrid catalog/retail concept and call it Best – it’s all yours.
Art and Unconventional Architecture: SITE
The Lewises were avid art collectors, donating thousands of pieces of modern and contemporary art to museums. Strangely enough, when Best first opened, they would trade merchandise for art, which helped build their collection, much of which is today on display at the Virginia Museum of Fine Arts in Richmond, where you can also grab a drink and bite to eat at the Best Café.
The company was known for its expensive, unconventional store designs through a partnership with the Sculpture in the Environment architecture firm (SITE). Only nine stores featured these unique architectures but they became iconic. These weren’t gimmicks. They were a deliberate fusion of art and commerce, blurring the line between gallery and retail space.
The first was the “Peeling Project” in Richmond, 1971. The Houston showroom was next, in 1975, where bricks appear to peel off the wall. The Notch Project followed in 1977 in Sacramento. It was the final Best store to close and, today, is ironically home to a Best Buy store.
Check out Bright Sun Films if you want a detailed look at each. Link in the description. https://www.youtube.com/watch?v=cYS9fXhpQd8
Changing Formats
Best had a format problem – deciding what kind of retailer it wanted to be. It was one-part warehouse, along the likes of Costco, one-part department store, one-part specialty store, and one-part cataloger… but without the independent benefits each format offered on its own. Some competitors could undercut in price, others in in-store selection. Best may have beaten in selection through its catalog but that meant waiting for delivery.
Its product offerings were the biggest challenge. Best mostly offered discretionary big ticket items… electronics, furniture, and jewelry. These are not frequent purchases, usually spanning years between. And it didn’t have much to supplement those gaps. Best Buy, at the time, was flourishing from physical media sales – CDs, DVDs, and video games. While Best had some of this, it didn’t offer much. Stores like Sears and Target offered a wide assortment of clothing and other everyday essentials bringing in repeat traffic.
The warehouse portion of Best stores took up about half the footprint. Besides that, most of its offerings occupied a lot of space – furniture, fitness equipment, console televisions. It didn’t have the room to add more merchandise without reducing its warehouse space, which would inevitably reduce its competitive advantage on the fulfillment end. It’s easy to see why Best executives were indecisive of how to evolve their model.
The Catalog… Problem?
Quote: “The catalog was a help and a hinderance.” – Former Best Executive.
The catalog was both a critical marketing component to Best and a handicap. At the very least, printing and distributing the catalog was expensive… costing about $18 million per issue in the end.
But the biggest challenge was that the catalog quickly became outdated as new products infiltrated the market. And, the novelty that consumers would want to sample a television set before purchasing mostly wore off. Existing electronics, like TV sets, weren’t evolving much from year to year. What was changing was the introduction of new products like VCRs and hifis; personal computers; and popular toy trends like the Cabbage Patch Kids that its annual catalog couldn’t keep up with. It also couldn’t contend with price changes until the next issue.
Best built its entire business on the back of its catalog, even going as far as calling its stores “showrooms.” Leaning off that would make it just like every other former cataloger turned retailer and ask Montgomery Ward and Sears how that worked out for them.
The catalog wasn’t the problem. If anything, it was Best’s only unique attribute because of how it directly merged the catalog with its retail operations. Even though it cost $18 million a year to produce, eliminating that expense wouldn’t have turned a profit; not with losses even higher. Besides, that cost savings would have also resulted in sales decreasing. The catalog was a marketing investment, not a cost to cut.
If Best could only have held out for another 10 years or so that might have positioned them well, assuming they properly adapted ecommerce which was only beginning to take off with its potential still uncertain when Best went out of business.
Not long after Best’s closure, as ecommerce rose in popularity, “showrooming” became a struggle for retailers like Best Buy where consumers would visit the store to sample a product they intended to buy online – often from a competitor like Amazon. Best – and its hybrid format – could have been the best positioned company to merge the desire to sample product and fulfill it. Today, stores like Walmart have embraced a hybrid format – using its stores for both front-facing sales and online order fulfillment. Best was doing that all the way back in 1957.
Personal Reflection
Our Best store opened as a LaBelle’s in 1979, one of the Modern Merchandising brands. It adopted the Best moniker in 1987. Our Best closed during the initial wave of 1996 bankruptcy closings to be taken over by Big Lots!, which of course has since closed, and Office Depot.
I remember Best – and its predecessor LaBelle’s fondly. Other than maybe Sears, it offered the biggest selection of electronics, with a large furniture, jewelry, and sporting goods selection too. It definitely had the biggest toy selection at Christmas, when half its warehouse was converted into a giant toy store. All we had for a dedicated toy store was K-B Toys, which was about the size of a gas station, so as a kid I was in heaven with a toy selection rivaling Toys “R” Us.
Bright Sun Films: https://www.youtube.com/watch?v=cYS9fXhpQd8
