Someone else who gave back instead of keeping it all for himself

In Tuesday night's speech, Obama gave a shoutout to banker Leonard Abess, who took the proceeds from cashing out of the bank he ran and sent a bonus to everyone who worked, or had ever worked, for him. Here's another businessman whose heart is in the right place. I don't know if these stories about Jewish businessmen are coming out as a kind of counter to Bernie Madoff, but given people's tendency to take one story, or even two or three, and paint an entire group with that brush, it's certainly welcome.

The way Martin Samowitz sees it, he had 94 very good reasons to stay out of the shoe business and one good reason to get back in.

The 94 reasons are the number of years since he was born in Queens. The one reason to return is the chance to give some of his former employees their jobs back.

Samowitz founded the Marty's Shoes discount shoe chain, opening the first Marty's in Little Ferry in 1974. The chain, which was bought by a private equity firm in 2006, filed for bankruptcy in September. Samowitz is working with former Marty's chief executive officer John Adams to resurrect Marty's Shoes.

Samowitz's first shoe chain, Perry's, died after an ill-advised merger with a conglomerate that went bankrupt. By 1997, Marty's had grown to 70 stores, with sales of more than $70 million, and had made Samowitz a millionaire many times over. Samowitz, then 82, had no children and no heirs and "gifted" the chain by canceling a $5 million debt the company owed him. He then invited 11 managers to become stockholders in the company, and turned the day-to-day operations over to Adams.

In 2006, the stockholders and Samowitz decided to sell the majority stake to private-equity firm J.P. Capital. Part of the payout was withheld in the form of three-year notes, but before those notes could be paid off, Marty's — loaded with debt and facing a slowing economy — went under, liquidating the 47 remaining stores.

[snip]

Q. Why are you going back in business?

We don't have to – I have enough aggravation in Florida with golf and running around. But it's an absolute crime, what happened to the people that were with Marty's Shoes for 20, 25 and 30 years. Now John [Adams] personally tried to hold up the other company, but he was not the boss, he was not the owner, he was not giving directions. He put his own money in, which is lost. He put his own money in because he was trying to save the company for the employees. That was the principal reason.

John came out of the sale with enough money that he could retire, except he was a little too young to retire.

The new company – I was very impressed with them. They were Ivy League graduates. But they were from California. I should have known. When I said to them, "You're moving to New York or New Jersey, right?" he said, "No." I said, "Why not? Who's going to run the company?" He said, "You don't understand, Marty. We do it from the computer." I said to myself, Well, maybe I'm old-fashioned. I'm used to going into a store and patting a stock boy on the back and saying, "Hello. How are you? Good to see you again." But they thought that was totally unnecessary.

Oh, and by the way? Samowitz is 94. What's going to happen to this country when retailers like him; the guys who cut their teeth on retail in the days of personal service, die off and we're left with nothing but the equity companies?

I was a Marty's customer, and losing the chain was a "Where the hell am I going to buy shoes?" moment. I'm not one of these Evita-types who has to have 20 pair of fabulous spike-heeled Jimmy Choos. I'm the kind who will buy a dozen pair of the same kind of loafers simply because they fit and they're comfortable. For me, the return of Marty's is cause for celebration for that reason. But for the people who worked there who will undoubtedly be first in line for the new jobs, it could very well be a new lease on life.

Maybe it's because people have less money to spend?

You'd think Federated Department Stores paid for this story:

Since the inception of the Web, online commerce has enjoyed hypergrowth, with annual sales increasing more than 25 percent over all, and far more rapidly in many categories. But in the last year, growth has slowed sharply in major sectors like books, tickets and office supplies.

Growth in online sales has also dropped dramatically in diverse categories like health and beauty products, computer peripherals and pet supplies. Analysts say it is a turning point and growth will continue to slow through the decade.

The reaction to the trend is apparent at Dell, which many had regarded as having mastered the science of selling computers online, but is now putting its PCs in Wal-Mart stores. Expedia has almost tripled the number of travel ticketing kiosks it puts in hotel lobbies and other places that attract tourists.

The slowdown is a result of several forces. Sales on the Internet are expected to reach $116 billion this year, or 5 percent of all retail sales, making it harder to maintain the same high growth rates. At the same time, consumers seem to be experiencing Internet fatigue and are changing their buying habits.

John Johnson, 53, who sells medical products to drug stores and lives in San Francisco, finds that retailers have livened up their stores to be more alluring.

“They’re working a lot harder,” he said as he shopped at Book Passage in downtown San Francisco. “They’re not as stuffy. The lighting is better. You don’t get someone behind the counter who’s been there 40 years. They’re younger and hipper and much more with it.”

He and his wife, Liz Hauer, 51, a Macy’s executive, also shop online, but mostly for gifts or items that need to be shipped. They said they found that the experience could be tedious at times. “Online, it’s much more of a task,” she said. Still, Internet commerce is growing at a pace that traditional merchants would envy. But online sales are not growing as fast as they were even 18 months ago.

Forrester Research, a market research company, projects that online book sales will rise 11 percent this year, compared with nearly 40 percent last year. Apparel sales, which increased 61 percent last year, are expected to slow to 21 percent. And sales of pet supplies are on pace to rise 30 percent this year after climbing 81 percent last year.

Growth rates for online sales are slowing down in numerous other segments as well, including appliances, sporting goods, auto parts, computer peripherals, and even music and videos. Forrester says that sales growth is pulling back in 18 of the 24 categories it measures.

Jupiter Research, another market research firm, says the growth rate has peaked. It projects that overall online sales growth will slow to 9 percent a year by the end of the decade from as much as 25 percent in 2004.

It may very well be that some stores are sprucing up and beefing up customer service to make them more appealing, but in a world in which Circuit City just fired thousands of experienced workers and hired new ones at three bucks an hour less becaue they didn't want to pay for experience, I don't buy it. Yes, my local K-Mart has been spruced up with new flooring and brighter lighting and Sears Craftsman tools and Kenmore appliances, but it still takes just as long to check out.

But if you look at reports for May retail sales figures, they tend to bear out a general slowing down of spending among those companies catering to Americans of modest means:

Consumers' "worries about gas prices have increased from January through April," Wal-Mart said in a June 7 statement. The company, based in Bentonville, Arkansas, predicted June same -store sales will be unchanged to a gain as much as 2 percent.

[snip]

Consumer spending and retail sales were "generally up," and several banks reported faster sales of "luxury items" than lower-end goods, according to the Fed's compendium of regional economic activity, known as the Beige Book, issued this week. In four districts, Fed contacts reported sales were "disappointing or below expectations."

Luxury goods tend not to be sold online, whereas those goods that represent discretionary spending -- books, CDs, DVDs, computers for home use, low-end electronics, and the like -- are more likely to be purchased online.

Fuel prices have also caused already-high shipping costs to shoot through the roof. Yesterday I bought a roll of edging veneer from Rockler, and a $2.99 roll is going to cost $6.98 to ship. Five filters for my furnace's dehumidifier cost over $10 to ship. On the other hand, how long would it have taken me to track down these things in meat world? In even ONE Home Depot store? This way the whole mess took me about fifteen minutes.

Given the amount of advertising revenue the New York Times receives from brick and mortar retailers, it's not surprising that it would run a story gleefully hailing "internet retailing fatigue" among the American people. But the truth is probably more one of a retail channel that is maturing into a more modest, normal growth track. There are those who will never shop online no matter how easy it is, and those who, for reasons unknown to me, actually enjoy the experience of going to a mall and shopping.

For me, you can move it all outdoors, cover it with stucco, call it a Towne Center instead of a strip mall, and put in as many Panera Breads and Green Mountain Coffees as you want -- it's still a shopping mall, and it still carries a bunch of clothes I can't wear and cooking supplies I'll never use and furniture I don't need. When I buy software, or books, or hard-to-find items, or bulky goods I don't want to have to rent a truck to shlep home, you'll still find me online.