DIME STORES, also known as five-and-ten-cent stores and variety stores, began in the late nineteenth century and developed into a major sector of U.S. retailing. However, changes in shopping patterns and new forms of retailing in the 1970s and 1980s caused the virtual demise of dime stores by the early 1990s. The dime store format also provided the impetus for some of the first chain stores and became an important outlet for American mass-manufactured merchandise.
Frank Winfield Woolworth, the father of dime stores, learned the concept while running a five-cent booth in the store of William Moore in Watertown, New York. In 1879, Woolworth opened his first store in Utica, New York. That store failed, but his second store, in Lancaster, Pennsylvania, succeeded, and by 1899 he owned fifty-four stores. Woolworth eliminated the wholesaler and also entered into a buying arrangement with other store operators across the country. After a merger with these chains in 1911, the F. W. Woolworth Company became the dominant variety store chain in the United States and Great Britain.
The five-and-ten-cent stores copied the department store concept of a wide variety of merchandise. The dime stores lowered prices for housewares and other products, so European immigrants and rural Americans, who had moved to the cities, could afford to buy merchandise in incredible volumes. The stores' major merchandise classifications in the early days included toys, notions (sewing supplies), china, glassware, stationery, shoes, and Christmas ornaments. In time, candy and toiletries also became big sellers. The burgeoning U.S. manufacturing industry provided low-price merchandise, and the major variety store chains also sent buyers to scout Europe for distinctive and inexpensive merchandise.
The stores also featured lunch counters that became popular, making Woolworth's the largest seller of restaurant food in the world. The Woolworth lunch counter in Greensboro, North Carolina, became world famous in 1960, when blacks staged a sit-in there to demand service. A part of that counter is in the Smithsonian Museum of American History.
Other early dime store operators included Samuel H. Kress, who opened his first variety store in Memphis in 1896 and in a few years had twelve stores. When Kress died in 1955, his chain had 262 stores with $168 million in sales. Sebastian S. Kresge and J. G. McCrory teamed together to buy a dime store in Memphis in 1897. After the pair opened a second store in Detroit, they parted ways. By 1917, Kresge had over 150 stores, and his operation was second to Woolworth's in size. After experimenting with dollar stores, mail-order, and department stores, the Kresge Company branched into self-service discount stores called Kmart, converting old dime stores into the new format. Fifteen years after the first store opened, Kmart became the second largest retailer in the world. Only Sears, Roebuck and Company had greater sales.
Other major variety store chains included W. T. Grant, H. L. Green, McLellan Stores, G. C. Murphy, Neisner's, and J. J. Newberry. Most chains owned all of their stores. However, Ben Franklin Stores operated as a franchise. Sam Walton started his retail business with a Ben Franklin store in Newport, Arkansas. When he was unable to convince the Ben Franklin management to open discount stores, he opened his own Wal-Mart stores.
The dime stores traded up to higher price points and continued to grow until the early 1970s. Chain store operators controlled over 80 percent of the $8.2 million in sales garnered by 21,582 stores in 1973.
Soon the variety stores' business declined because they lost their advantage in all of the major merchandise classifications they once dominated. Other forms of retailing took away their hegemony as the dime stores failed to compete effectively. They lost the stationery business to the new home office stores. Growing shoe chains, such as Payless, Thom McAn, and Kinney Shoes (owned by Woolworth), grabbed the low-price shoe business. Drug stores, particularly deep-discount drug stores, captured the toiletries business. Discount stores and toy chains, such as Toys 'R' Us and KB Toys, captured the toy business. Grocery stores and drug stores took over the candy business. The notions business went to fabric stores and became a victim of cultural changes.
Woolworth closed its last dime store in 1997. By the early twentieth century, the McCrory Corporation, under the ownership of Meshulam Riklis, owned many of the famous names but operated only 160 stores.
The growth of malls and discount stores and the demise of downtown shopping centers took away the foot traffic that dime stores needed to survive. Inflation took away the five-and-ten-cent prices. The variety stores left to others the concept of dollar stores, which prospered in free-standing, neighborhood locations, while downtown shopping and dime stores faded away. In 2001, Dollar General had 2,734 stores, and Dollar Tree had 1,732 stores. These dollar stores could be considered the dime stores of the twenty-first century, adjusted by inflation to contemporary price levels.
Lebhar, Godfrey M. Chain Stores in America, 1859–1962. New York: Chain Store Publishing, 1963.
Winkler, John K. Five and Ten: The Fabulous Life of F. W. Woolworth. New York: R. M. McBride, 1940.