Sunday, April 01, 2001

Final chapter written on storybook retailer

He gave birth to Paul Harris, and watched it die

By Dana Knight INDIANAPOLIS - Gerald Paul keeps an office cluttered with photos of women's clothing and old pictures of design labels from the heyday of Paul Harris.
Gannett News Service INDIANAPOLIS - Gerald Paul keeps an office cluttered with photos of women's clothing and old pictures of design labels from the heyday of Paul Harris.

        He's 76 and retired, and sits relaxed in black-checked pants, a purple shirt and navy blue sports coat — an eccentric-looking ensemble, but somehow he pulls it off with style.

        Ask him about Paul Harris, and he will talk for hours.

        Earl Harris won't.

        He lives in Florida and is firmly detached from the women's clothing pioneer he and Mr. Paul started almost a half-century ago — when the two young pals concocted the novel retail concept.

        Mr. Paul and Mr. Harris are two very different men — partners who rarely saw eye-to-eye but managed to work together for 30 years building a retail empire.

        Neither was involved when Paul Harris last month said it would sell its remaining 166 stores, liquidate the merchandise and close its doors.

        But now that the end of Paul Harris has come, the two men who started the company are dealing with it in different ways.

        Mr. Harris, who left the company in 1985, refuses to talk about the retail concept he helped create. “I'm interested in today and tomorrow,” he said. “I'm not interested in yesterday.”

        His daughter, Cheri Yonts, said the closure was heartbreaking for her father and he has asked her not to talk about it.

        “I respect his wishes,” she said. “He is very emotional about the closing, almost like losing a child.”

The story begins
               So Mr. Paul is left to tell the story of Paul Harris.

        He smiles when he recalls the beginning, the splendor when Paul Harris opened as one department store in 1954. He becomes animated as he enthusiastically remembers the company's heyday, and his trips around the world to catch the latest designs.

        But he grimaces when he explains the massive expansion in the 1980s that led to 377 stores operating in 37 states — and the chain's first financial troubles.

        And he saddens to the point of tears when reflecting, in the end, on the demise of the company he built.

        Mr. Paul is a first-generation immigrant, born and raised in Witten, Germany, in the heart of a 100,000-population industrial area. In 1938, his family fled to Indianapolis — where there were cousins — to escape the growing threat of the Nazis.

        He went to his first day of American school at 13 without knowing a word of English. But he had no trouble academically and graduated from high school two years later. At 15, he enrolled part time at Butler University and took accounting classes at Indiana University's extension.

        He took a part-time job drying hose at the Real Silk Hosiery Mills, shifting wet stockings in and out of the drying machine.

        Later, he became a salesman at Real Silk's employee store, an outlet that sold irregular and leftover products to workers.

        “That's when I really realized I liked retail,” he said.

        Mr. Paul was then in his early 20s. He wasn't shy about offering new ideas to management, which included a scheme to expand the employee-store concept outside Indiana — into Georgia and Mississippi. Managers took him up on the idea.

        Mr. Paul managed the stores, and it was about that time he hooked up with Mr. Harris, who sold Real Silk hosiery door-to-door.

        The two concocted a scheme to sell prepackaged clothes in supermarkets in 1952. They bought clothing from manufacturers, wrapped them with the label Packaged Apparel and put them in bins in grocery stores.

"Little bit of everything'
               The business lasted less than two years. Then Mr. Paul and Mr. Harris opened a department-type store in a strip mall in rural Plainfield, Ind., and called it Paul Harris, which rolled off the tongue more easily than Harris Paul.

        But it didn't start out as a women's clothing retailer.

        “It was a little bit of everything: men's clothes, women's clothes, shoelaces and diapers,” Mr. Paul said.

        Three things really set the retailer apart, though: It had air conditioning, free parking and stayed open until 9 p.m. “The people loved it,” he said.

        Six months into the business, Mr. Paul made his first move to expand. He bought another 3,000 square feet of space when the furniture store next door moved out.

        “At the time, Harris thought I was off my rocker,” Mr. Paul said. “But we didn't see a lot of things alike. We had very different personalities.”

        This time, Mr. Paul was right.

        The expansion worked and, less than one year later, Paul Harris opened its second store — jump-starting a rising retailer.

        As Paul Harris expanded, it became obvious the merchants needed a sharper focus.

        “First the men's clothing went, then the diapers and shoelaces,” Mr. Paul said.

        The line eventually was whittled down to mostly women's clothing, and as the focus narrowed, Paul Harris grew to dozens of shops in Indiana and had expanded to adjacent states.

        Mr. Paul was ready for the next big step: taking Paul Harris beyond strip shopping centers and inside an enclosed mall.

        “We fought a lot about that,” Mr. Paul said of Mr. Harris.

        But in 1960, Paul Harris set up shop in its first mall in Miamisburg, Ohio, a suburb of Dayton.

        That transition — and its subsequent expansion to other enclosed malls — was fueled by funds raised earlier that year when Paul Harris' stock went public.

        By the 1970s, Paul Harris had clearly narrowed its focus even further to women's career wear. That took Mr. Paul on frequent trips to exotic overseas markets, including a trek to Uruguay to check out a line of wool suits.

Grew fast — too fast
               Paul Harris became hot, a shopping destination for young working women. About 20 stores opened each year.

        That was too much normalcy for Mr. Paul, so in 1985 he decided it was time to change again. He created Pasta, a branch of Paul Harris that carried “fun clothes” to parallel the career-dominated apparel.

        “It was something different,” Mr. Paul said. “I had my heart and soul in it.”

        As Mr. Paul was creating a new vision for his company, Mr. Harris was calling it quits. He had given up his job as partner to Mr. Paul in 1980 but served on the board until resigning in 1985.

        Mr. Paul was left to lead the company on his own.

        An aggressive venture in 1986 brought the first inkling of trouble. The company opened 68 stores that year, bringing its total to 270.

        “We started expanding too fast,” he said. “We thought we had all the answers.”

        By 1990, Paul Harris had 377 stores in 37 states with a sales volume of $240 million. But in December of that year, Christmas sales were dismal.

        Two months later, Paul Harris filed for Chapter 11 bankruptcy protection. Mr. Paul stuck with the company. He closed 175 stores and cut almost 3,000 jobs.

        He spent sleepless nights reorganizing and readjusting, digging the company out of debt. By 1995, after rebuilding the retail chain he had created 42 years before, he decided to call it quits.

        “I'd been in it a long time, and it was time for me to get out,” he said.

        In 1999, earnings sank more than 60 percent. In October 2000, Paul Harris filed for Chapter 11 bankruptcy a second time. It never revived.

        In the end, ironically, a lack of change led Paul Harris to its doom, says Kurt Barnard, with Barnard's Retail Trend Report.

        The merchandise became stagnant. There was sameness, nothing new to entice customers, he said.

        “They ceased to even be a factor in retailing. They failed to stay in touch with the consumer's lifestyle.”

        Mr. Paul moved on long ago from the reality of corporate life at Paul Harris, even giving up his stock holdings when he resigned in 1995.

        But he watched the company like a father would his child, to see how things went.

        Now that the Paul Harris story is finished, he said he won't spend much time thinking about it.

        “I won't talk about Paul Harris anymore,” he said, with a tear in his eye.

        In the end, he finds himself agreeing with Mr. Harris. Now that he's told the story, he said, it's time to move on.
       The Indianapolis Star/KELLY WILKINSON
       “I won't talk about Paul Harris anymore,” says Gerald Paul, one-half of the retailer's founding duo. Paul Harris filed for bankruptcy in October.


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