Mediocre Fred's Mediocre Blog (Ret.)

Mourning a Titan

Today's Musical Selection: "Bright Future in Sales" by Fountains of Wayne

Hi, everybody. Today I want to take some time and a few column inches to note the passing of Herbert Haft. Those of you outside the Fedroplex probably have no idea who I'm talking about. Those of you in the Fedroplex probably can't forget him. But I want to make the world aware of Haft, because he's a notable figure, a true giant (though he only stood five feet tall). Herb Haft is a symbol of a Washington not long gone, but irretrievably so. And though it may not be well-known, Haft was the godfather of the modern retail industry. He reaped the benefits for a while, but in the end he was swallowed up by his own creation, as well as the ugly family feud he sparked. Herb Haft was one of a kind, and we'll never see his like again. I'll miss him.

So who was Haft? He was a tough urban kid, born in Baltimore and raised in Washington, who graduated witha pharmacy from George Washington University but claimed that none of his classes taught him as much as the bridge game in the student union. In 1955, he and his wife Gloria, who was working as an Avon lady, opened up a drugstore in Adams Morgan. They called it Dart Drug. Working on the primciple of underselling the competition, Herb and Gloria turned Dart Drug from that one store into a chain of 100 stores from Baltimore to Richmond. And anyone who grew up or lived in Washington in the '70s and '80s knows all about Dart Drug. Dart was where the Fedroplex went to get basic stuff for cheap.

Like a lot of families, mine went to Dart from time to time. They ran circulars in the Sunday paper about their latest deep discounts, and every so often Mom would see something she liked and off we'd go. Dart had a low-class reputation, and deserveredly so; competitors grumbled that Dart stores were dirty and the shelves were always empty, and they were right. Even as a little kid, I remember noticing that Dart was grubbier than other stores, and that they were far more likely to be out of things than other stores. But I didn't care, because to me, Dart was Hot Wheels central.

As a kid, I was a car nut. I had car sheets, car curtains, car posters on the wall, and toy cars all over the floor. I had a subscription to Motor Trend at the age of 4. Every year, I'd beg and wheedle my parents to take me to the auto show downtown. Since it tended to fall right around my birthday, they usually said okay. I'd come home with bags and bags of information, pictures of wild concept cars and brochures on current models, which I read with religious fervor.

Given my obsession, it's little surprise that I tended to spend my weekly allowance on toy cars. And Dart was a prime place for a 7-year-old on a budget. Why? Because everywhere else, cars cost a dollar each. Didn't matter where you went, everywhere it was a dollar. But at Dart, they were 79 cents apiece. For a kid pulling down a dollar a week, this was a significant savings. It meant approximately one extra car per month. Sure, Dart's selection was pretty weak, and they only carried Hot Wheels and not the better-constructed Matchbox cars, but 79 cents is 79 cents. I knew a deal when I saw one.

But Dart Drug was only the beginning of the Haft empire. When Herb's son Robert graduated college, he joined the family business and founded Crown Books, the Dart Drug of bookstores. Actually, Crown was generally cleaner and better-stocked than Dart, but the principle was the same. The literati sniffed that Crown was a plebian store, stocking the best-sellers and ignoring classic works, and again the critics were right. But the Hafts didn't care, and neither did most of their customers. Crown did a booming business, eventually growing to over 250 stores. But what I, and no doubt many others, remember best are the commercials.

Dart didn't do TV commercials, but Crown did. And the Crown commercials were all roughly the same: They featured Robert Haft standing against a plain white background, and complaining in his high-pitched voice, "Books cost too much!" He then went on to extol Crown's latest bargain, and then wrapped the whole thing up with the tagline, "If you paid full price, you didn't buy it at Crown Books." And my family shopped at Crown, too. I was still young enough not to have developed my taste for literary works, so Crown's bestseller-oriented stocking philosophy didn't bother me.

And a couple years after founding Crown, the Hafts came up with their next innovation: Trak Auto. Ironically for a man accused of running a dirty drugstore, Herb realized that many existing auto-parts stores seemed grimy and forbidding to the typical consumer. So he designed an auto-parts store that catered to the typical motorist, rather than the professional mechanic. Predictably, it worked like a charm. Trak expanded to nearly 300 stores at its height, and the Hafts had another hit on their hands.

And in between these successful business ventures, the Hafts made even more money through a bold if ethically iffy tactic. They attempted hostile takeovers of retail giants like Safeway, Stop and Shop and Eckerd Drugs. In no case did they succeed, but they made a handsome profit for trying. (A brief primer for non-economics types who are wondering how this works: Hostile takeover bids begin with someone buying up a chunk of a company's stock. The takeover attempt increases the value of the company and drives up the price of the stock. If the bid fails, the company has to buy the stock back at the inflated price from the person who bought it, leaving the failed bidder with a tidy profit.) Retailers grumbled that the Hafts' practices amounted to piracy, and left the companies they tried to take over saddled with debt. But it was good business for them.

So what happened to Haft's empire? Why are Dart, Crown and Trak all gone? Well, there are a lot of reasons, particularly well-heeled and more nimble competitors like Wal-Mart, Target, Barnes and Noble and Borders. But one major reason is the blowup that Washingtonian will never forget, when Herb Haft tried to fire his family.

The year was 1993. The Haft empire was starting to slip, but it was still a major player in Washington. Herb had ceded control of day-to-day operations for the most part, but he was still the primary stockholder. And he evidently decided he wanted to get back in the game. So he kicked his wife off the board of directors and fired his son as president of Crown. This set off a chain of lawsuits and ugly accusations that kept the notoriously media-shy Herb and his family on the front pages for the better part of a decade.

By the time it was done, Herb and Gloria's 45-year marriage was over, Herb was out of the company with a $50 million buyout, and the company was crippled by the massive bills from the legal wrangle and never recovered.

Very little remains of Herb Haft's empire. The last retail enterprise he founded, Total Beverage, still survives. His real-estate company still holds two shopping centers in Fairfax. And Shoppers Food Warehouse, a grocery chain not founded by Haft but very much in line with his principles and which he bought out in the '90s, is thriving. But the man who once dominated the Washington retail scene left behind little more than memories.

That's one reason I'll miss Herb. A lot of the Washington of my childhood had his stamp on it somewhere. I'll always remember the Crown commercials, Trak's radio spots and the Dart circulars. Plus, he was such a character, with his ruthless ways, his wonderful white pompadour, and his bickering family. He's a legend of the Fedroplex scene, the last true Washington retail giant. We'll never see his like again, not with the chain-choked nationalized state of the retail industry.

Although it's not well-remembered, Haft's legacy extends beyond his own businesses. The giants that eventually ran Haft's companies out of the game owe a great deal to him, whether they realize it or not. It was Haft that made the Wal-Marts and Targets possible.

How is that? Well, way back in the '50s, when Haft was getting started in Adams Morgan, he knew that he'd have a hard time beating the local drugstore titans of the era, like Peoples and Drug Fair (also gone, now). His strategy was to undercut his competitor's pricing, getting good deals from wholesalers and shrinking his own profit margins. Unsurprisingly, this worked.

Problem was, at the time, it was illegal. At the time, fair-trade laws actually prohibited retailers from selling goods below the manufacturer's retail price. Haft's competitors complained to the suppliers, and his suppliers refused to sell to him unless he raised his prices. Haft was repeatedly sued for his practices. At least until the government got involved.

In 1958, Senator Estes Kefauver held hearings on drug prices, and invited Haft to testify. After that, Kefauver got Haft in touch with the Justice Department, and in 1960 the government sued drug maker Parke, Davis for price-fixing. The case went all the way to the Supreme Court, and the government (and Haft) ultimately won, paving the way for discount retailers everywhere.

Haft was, in a way, a champion of the common man. Robert said his father viewed discount retailing as a social good as well as good business, and he was right. After all, Dart Drug (and Haft's lawsuit against Parke, Davis) was based on the idea that retail price-fixing was bad for the customer. And Crown Books was a bookstore for the average man; they didn't carry Proust, but a lot of people would rather save money on the latest Grisham potboiler than pay extra for a store that also carries Proust. And Trak was designed for the do-it-yourself motorist, who wanted to do basic car fixes himself but was intimidated by other auto-parts stores. Haft's retail empire was built on serving the needs of the working-class customers, something that drugstores, bookstores and auto-parts stores didn't do before his. So Haft not only made discount retailing legal, he pioneered its ethos.

Wal-Mart and Target owe a great debt to Haft. And in Target's case, I'm not even talking about the logo, which looks remarkably like Dart Drug's. As with many innovators, those who followed in Haft's footsteps ultimately reaped much more than he did. But at the least, we can honor Haft's memory. And I hope that I've done my part in that regard. Farewell, Herb. Washington is a poorer city for your loss.

That's all for today. See you later!

Posted by Fred at September 4, 2004 04:15 PM