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Sales And Advertising Rivalry In Interwar US Department Stores

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Executive Summary

Department stores represented one of the most advertising-intensive sectors of American inter-war 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 a damaging inflation of costs that eroded long-term competitiveness. The authors test these claims, using both qualitative archival data and establishment-level national data sets. Returns to stores' advertising are shown to have fallen over the period, while own advertising led to retaliatory advertising by rival department stores, which substantially lowered returns on advertising dollars in the 1930s (but not the 1920s).

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