No Embarrassed Customers

Into the downtown Detroit department store of the J. L. Hudson Co. stomped an outraged customer, demanding to return a suit that he had bought a year before. He had just got around to taking it out of the box in which it was delivered. "Now look at it," he fumed. "It's wrinkled." Where most department stores might have offered a free pressing, Hudson's complaint department without a murmur refunded the full purchase price of the suit.

This attitude, the product of a scrupulously enforced rule that "the customer must never be embarrassed," has helped make the 80-year-old J.L. Hudson Co. a Detroit legend--and one of the nation's most successful retailers. Though little known outside southeastern Michigan, Hudson's is second only to New York's Macy's among U.S. retailers operating in a single metropolitan area. Hudson's gross last year was $220 million (v. Macy's $517.6 million), its net about $5.5 million. Northland, the Hudson-owned shopping center northwest of Detroit, is the world's biggest (11,000 parking spaces, 106 stores); Eastland, another Hudson center northeast of the city, is only slightly smaller.

Battling the Basement. Hudson's was founded in 1881 by Joseph L. Hudson,* a flamboyant bachelor who specialized in fire sales. His relatives still hold virtually all Hudson's stock. (Among them: Mrs. Edsel Ford, whose mother was J. L.'s sister.) The modern Hudson's gets its character from J. L.'s nephews, Richard, Oscar, Joseph and James Webber--a quartet of merchandising geniuses who took over at J. L.'s death in 1912 and turned Hudson's into a quality department store. In April the three surviving Webber brothers--James died last year--turned active management of Hudson's over to old J. L.'s grandnephew, J. L. Hudson Jr., 29.

Young J. L. inherits a well-oiled machine. Hudson's refund policy costs the company about $25 million a year, but pays off in customer loyalty. So high is Hudson's reputation that Detroiters frequently package wedding gifts bought elsewhere in Hudson's boxes. (Rather than disillusion a bride, Hudson's will exchange even these.) Despite its emphasis on service and quality, Hudson's has met the competition of the discount houses by refusing to be undersold, will refund the difference in price on any item that a customer has bought at Hudson's and later sees on sale elsewhere for less.

To make sure they did not miss any segment of the market, the Webbers set up Hudson's Basement Store, first in the basement of the main store, and then in the Northland and Eastland branches. Operating as a separate unit, the Basement Store, with its own lines of lower-priced merchandise, now constitutes the big store's toughest Detroit competition, even has a separate suburban branch of its own.

Moving out. Keenly aware that its giant shopping centers have played a major role in the decline of Detroit's central business district, Hudson's has sought to compensate by getting behind Detroit's extensive urban renewal projects. And to protect its own downtown investment, the company tries to lure suburban shoppers into its main store with art, flower and fashion shows, with import fairs and cooking and sewing clinics. The downtown store still accounts for 50% of Hudson's business.

But the swing to the suburbs that drove Hudson's to Northland and Eastland has prompted the company to plan two twelve-story office buildings, a luxury motel and a vast apartment community on the land it owns adjacent to Northland. Still another Hudson's shopping center--Westland--is in the works, and there are signs that under its young, new boss, Hudson's may move even farther afield. Fortnight ago, J. L. Jr. announced plans to open a budget store outside Pontiac, 30 miles from Detroit. If the customers come, Hudson stores may ultimately spring up all over Michigan.

For all his ambitious plans, young J. L., who graduated from Yale eight years ago, is determined that Hudson's essential character will not change. He seems almost apologetic about his age: "Youth is a wonderful quality only if youth understands the limitations on its experience." Hudson's, he insists, will remain an independent, family business.

*Who was also one of the eight original stockholders in the now defunct Hudson Motor Car Co. His name was given to the company's cars because the other investors liked its sound.

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