1980s: Commerce

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Editors: Cynthia Johnson and Lawrence W. Baker
Date: 2012
Bowling, Beatniks, and Bell-Bottoms: Pop Culture of 20th- and 21st-Century America
Publisher: Gale, a Cengage Company
Document Type: Topic overview
Pages: 9
Content Level: (Level 5)
Lexile Measure: 1330L

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1980s: Commerce

After nearly a decade of slow business growth and declining consumer confidence, the American economy experienced a period of strong performance and inflating confidence beginning in 1982. The cheerleader for this decade of economic optimism was none other than the nation's president, Ronald Reagan (1911–2004). He told America that it was time to get government off of people's backs. He reduced government regulations, reduced taxes, and let businesses seek their maximum profit.

The 1980s were an era in which big businesses got even bigger. Many large companies sought to gain power by purchasing competitors. Corporate buyouts, mergers, and “leveraged buyouts”—in which a corporate raider gained control of another company's stock and forced its sale—became commonplace. This intense corporate competition was symbolic of the age, as an intense focus on profit and getting ahead seemed to be common among many Americans. Gordon Gecko, the evil hero of the 1987 film Wall Street, put it best when he said, “Greed is good.”

For the average American, the booming economy of the 1980s meant a rise in disposable income—the money that people have to spend on items they do not need, but want. Many Americans engaged in “conspicuous consumption,” purchasing luxury goods to show others that they were doing well. Others simply spent more freely on the

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wide range of consumer goods available. Several successful companies capitalized on the free spending of the 1980s. The Starbucks Coffee Company expanded dramatically in the 1980s when it began offering intensely flavored (and high-priced) coffee drinks at its upscale coffee shops. Retailers like J.Crew and Land's End offered stylish clothes in mail-order catalogs that filled America's mailboxes. The Home Shopping Network—a cable TV channel—offered a steady stream of discount merchandise with aggressive selling techniques. IBM, long one of the nation's leading companies, got even bigger by selling personal computers to Americans who were just learning how to use the complicated, ever more powerful machines. In short, Americans loved spending money in the 1980s.

Home Shopping Network

The Home Shopping Network (HSN) was the first major business to earn huge profits by combining two beloved American pastimes, shopping and watching television (see entry under 1940s—TV and Radio in volume 3 ). Followed by many imitators, the network has expanded from small beginnings on a Florida radio (see entry under 1920s—TV and Radio in volume 2 ) station to become a multibillion-dollar corporation that broadcasts into nearly one hundred thousand homes.

The Home Shopping Network got its start in St. Petersburg, Florida, where the company is still headquartered. In 1977, real estate developer Roy Speer (1932–) and radio broadcaster Lowell “Bud” Paxson (1935–) started a radio call-in shopping club called Suncoast Bargaineers. The club was so successful that by 1982, Speer and Paxson moved it to a local cable TV (see entry under 1970s—TV and Radio in volume 4 ) channel, renaming it Home Shopping Network. The concept of HSN was that while items were being advertised live on the air by attractive hosts, viewers could call on the telephone and order them. Home Shopping Network concentrated on selling to older middle-class and working-class Americans. Their most popular products included costume jewelry, cooking pots and utensils, house-cleaning equipment, and celebrity clothing and cosmetic lines. The idea of shopping without leaving home had great appeal to the viewing public. By 1985, HSN was carried

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on national cable stations and had over seventy-five thousand regular customers.

The Home Shopping Network remained the only television shopping channel until 1986, when seventeen other companies began to compete with them. One of these, QVC (the abbreviation stands for Quality, Value, Convenience), has grown to be HSN's major competitor in television sales, although QVC tends to appeal to a younger, wealthier audience than HSN. In 1995, Barry Diller (1942–), the former chairman of Fox Network, bought HSN and became its chairman. Under Diller's leadership, HSN, Inc. acquired Ticketmaster and the USA and SciFi cable networks.

However, HSN is still best known for television sales. The network's sales shows are broadcast live twenty-four hours a day, every day except Christmas. The shows reach millions of viewers and offer them not necessities, but the little luxuries of life, available with a phone call and a credit card. The shows are often hosted by sports heroes or celebrities of the past who gain new fame advertising their products on HSN. Lucky callers may even get to talk to the hosts on the air. In 1996, HSN opened the Museum of Modern Shopping in St. Petersburg to showcase their most popular products.

By 2011 HSN, Inc. operated two separate businesses, Home Shopping Network and Cornerstone, the latter of which primarily markets home and apparel brands and operates approximately twenty retail stores. Responding to technological developments and social trends, HSN became the first company of its kind to offer multiple shopping applications for mobile electronic devices such as the Apple iPhone (see entry under 2000s—Music in volume 6 ) and Verizon Android.

Tina Gianoulis

For More Information

Farah, Joseph. “Don't Flip That Dial or You'll Miss the Bargain of a Lifetime!” TV Guide (October 4, 1986): pp. 40–43.

Hayes, Cassandra. “Cashing in on the Home Shopping Boom.” Black Enterprise (February 1995): pp. 120–27.

HSN. http://www.hsn.com (accessed July 5, 2011).

Motavalli, John. “Home Is Where the Mart Is.” Channels: The Business of Communications. (Vol. 6, December 1986): pp. 77–79.

Paisner, Daniel. Tele-shopping: A Guide to Television's Home Shopping Networks. New York: Warner, 1987.

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IBM

Founded by Charles Ranlett Flint (1850–1934) as the Computing-Tabulating-Recording Company in 1911, the company that in 1924 became known as International Business Machines (IBM) started out making shopkeepers' scales and counting machines for the U.S. Census Bureau. IBM became famous for its mainframe computers in the 1950s and 1960s when it was one of America's largest and most powerful corporations. Some say the blue suits worn by the sales staff inspired the press to nickname the company “Big Blue”; others say it was the color of the “big blue boxes,” the large mainframe computers of the 1960s. Always seen as one of the safe bets of American commerce, IBM's collapse in the late 1980s sent shockwaves through the world of computing. By the late 1990s, however, Big Blue had managed to revive its reputation as a major computer manufacturer.


One of the first computers with virtual memory: the IBM System370 mainframe. One of the first computers with virtual memory: the IBM System/370 mainframe. © F8 IMAGING/HULTON ARCHIVE/GETTY IMAGES.

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In the early days under chief executive Thomas Watson Jr. (1914–1993), IBM concentrated on sales. Although it was later to gain a reputation as having a bullying approach to business, IBM was actually very good to its employees in its early years. In the 1930s IBM was among the first companies to offer insurance and paid vacations; it even had a fund for the widows of IBM workers killed in World War II (1939–45). Less commendably, the company has been implicated in assisting the Nazi government in Germany during the war years by supplying it with technology.

With the invention of electronic computing after World War II, IBM entered the mainframe computer market. The sharp-suited sales force enjoyed a lifetime employment policy and sold some of the most technically advanced machines of the time. IBM's domination of the computer market lasted until the 1970s, when smaller companies like Apple Computer (see entry under 1970s—The Way We Lived in volume 4 ) proved quicker to exploit the new personal computer (PC; see entry under 1970s—The Way We Lived in volume 4 ) market. Although the company made record profits of $6.6 billion in 1984—the year it was portrayed as an evil “Big Brother” in a famous advertisement aired by Apple—its dominance was beginning to fade. Barely a decade later, it reported losses of $8.5 billion.

The company rebounded in the first decade of the new century, relocating more than half of its workforce to India, selling its personal computer business to competitor Lenovo, and focusing more on research. In 2009, the company was awarded the National Medal of Technology and Innovation by President Barack Obama (see entry under 2000s—The Way We Lived in volume 6 ) for its Blue Gene supercomputer. IBM also came to the public's attention in 2011 for its artificial intelligence program, Watson, which beat human champions on the TV game show Jeopardy!

Over the years, IBM's image has swung from gentle giant to evil empire and back again. For most of the twentieth century, however, it was a symbol of powerful and efficient American enterprise. In 2011, after seeing a steady rise in profits throughout the economic recession of the early 2000s, IBM was ranked the seventh most profitable company in the world by Fortune magazine. At the start of the twenty-first century, IBM remains one of the giants among several large computing firms competing for dominance in the global market.

Chris Routledge

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For More Information

Black, Edwin. IBM and the Holocaust: The Strategic Alliance Between Nazi Germany and America's Most Powerful Corporation. New York: Crown, 2001.

Campbell-Kelly, Martin, and William Aspray. Computer: A History of the Information Machine. 2nd ed. Boulder, CO: Westview Press, 2004.

Carroll, Paul. Big Blues: The Unmaking of IBM. New York: Crown, 1993.

Gerstner, Louis V. Who Says Elephants Can't Dance? Inside IBM's Historic Turnaround. New York: HarperBusiness, 2002.

IBM. http://www.ibm.com (accessed December 13, 2011).

Maney, Kevin. The Maverick and His Machine: Thomas Watson, Sr., and the Making of IBM. New York: Wiley, 2003.

Maney, Kevin, Steve Hamm, and Jeffrey M. O'Brien. Making the World Work Better. Upper Saddle River, NJ: IBM Press, 2011.

J.Crew

J.Crew, a brand of sportswear first made available in 1983, added a new dimension to casual dress in America. The brand's catalog—which in 1994 was mailed in eighteen “issues” with a circulation of four million copies per issue—presented J.Crew clothing in photographs that illustrated a particular lifestyle. Models were not pictured in standard poses against standard backgrounds as they had been in department-store catalogs for years. Instead, J.Crew models were pictured making Thanksgiving dinner with “family,” spending a day at the beach, playing croquet at a garden party, or lounging in a city loft apartment.

The catalog pictures promoted more than the clothes—stonewashed jeans (see entry under 1950s—Fashion in volume 3 ), T-shirts (see entry under 1910s—Fashion in volume 1 ), and roll-neck sweaters; indeed, they promoted an approach to life. Many young adults, college students, and early career professionals adopted the J.Crew look as their own in the 1980s and 1990s.

By the start of the new millennium, the brand had become worth over $800 million. The company continued expanding or introducing new lines over the next decade, including Crewcuts for kids and Madewell, an all-denim label. The company also focused on opening retail locations throughout the decade, which totalled approximately three hundred by 2011. In 2010, J.Crew agreed to be taken private for $3 billion by two large equity firms in a management-led buyout of shareholders.

Sara Pendergast

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For More Information

jcrew.com . http://www.jcrew.com (accessed July 10, 2011). Rudolph, Barbara. “The Chic Is in the Mail.” Time (July 17, 1989): p. 74.

Starbucks

For decades, Dunkin' Donuts (see entry under 1940s—Food and Drink in volume 3 ) franchises offered consumers the equivalent of a working man's coffee break: a simple cup of coffee (see entry under 1990s—The Way We Lived in volume 5 ), accompanied by a sweet, tasty donut. Starbucks, on the other hand, established a strong market position by portraying itself as a franchise that caters to an upscale, sophisticated coffee drinker. It features not only coffee but also specialty drinks such as latte (coffee mixed with


Starbucks is one of the worlds most successful coffee franchises Starbucks is one of the world's most successful coffee franchises © PAUL J. RICHARDS/AFP PHOTO/GETTY IMAGES.

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steamed or hot milk), Frappuccino (a low-fat, blended beverage), and chai (a strong tea-based drink). Plenty of exotic coffee mixtures, along with assorted confections, pastries, mugs, and coffee-brewing equipment, can be found at Starbucks. Indeed, much of the success flavored, blended coffees and such terms as latte and chai can be traced to Starbucks.

Starbucks is based in Seattle, Washington, and has been in existence since 1971. Back then, it was a retail store, located in the city's Pike Place Market, which offered coffee beans and coffee-making products, but not prepared, ready-to-drink beverages. The firm's rise to international prominence did not begin for another fifteen years, until Howard Schultz (1954–), a company executive who was intrigued by Italy's espresso bars and coffee-house culture, opened Il Giornale, modeled after the traditional Italian coffeehouse. Schultz offered his customers various European-style coffees. Then in 1987, he bought out the company's two original founders, and began opening similar coffeehouses down the Pacific Coast, in Canada, in the Midwest and the Northeast, and, eventually in Europe and Asia. That first year, 17 Starbucks stores existed. By 1990, the number had risen to 84 stores. By 1995, the number of stores was 676; by 2000, it was over 3,300. By 2007, this number had nearly tripled to an incredible 15,000 Starbucks locations worldwide.

Starbucks is a favored daily morning pit stop for white-collar urban commuters, as well as a suburban hangout. It is both a coffee house and a retail store selling coffee beans and brewing equipment. A typical Star-bucks is artfully designed, with tables and chairs of various sizes, modern fixtures, and subdued lighting. Most locations look less like a traditional coffee shop and more like a cozy living space, where patrons are encouraged to get comfortable, enjoy coffee and conversation, and listen to the folksy rock piped in over the loudspeaker. In fact, it is the Starbucks “look” that is as responsible for attracting customers as the company's product.

By the late 1990s, Starbucks had become the number-one specialty coffee outlet in the United States, yet it has attracted as many critics as fans. Its detractors view Starbucks as a glorified fast-food (see entry under 1920s—Food and Drink in volume 2 ) outlet that caters to pretentious yuppies (see entry under 1980s—The Way We Lived in volume 5 ) who believe themselves to be sophisticated and cutting-edge as they order their Frappuccinos, but instead are being sold what amounts to fast food with fancy names. Many perceive the company to be the epitome of corporate over-expansion, whose inescapable sameness is blamed

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for the demise of small, more unique businesses and increased homogeneity in the American marketplace.

During the economic recession that began in 2008, consumers were forced to cut back their luxury spending, and the chain saw its stock price decline by over 50 percent. Sales were further impacted by the entry of lower-priced chains such as McDonald's (see entry under 1940s—Food and Drink in volume 3 ) and Dunkin' Donuts into the gourmet coffee business. By 2009, the chain had shut down nearly one thousand of its stores, cutting eighteen thousand jobs. In the first decade of the century, Starbucks was also boycotted by groups criticizing the chain for various offenses, including oversaturating the market and wasting water and by groups demanding that it use fair-trade coffee. As of 2009, Starbucks operated a total of 16,706 locations in over fifty countries.

Rob Edelman

For More Information

Schultz, Howard. Onward: How Starbucks Fought for Its Life Without Losing Its Soul. New York: Rodale, 2011.

Schultz, Howard, and Dori Jones Yang. Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time. New York: Hyperion, 1997.

Starbucks Coffee. http://www.starbucks.com (accessed July 11, 2011).

Source Citation

Source Citation   

Gale Document Number: GALE|CX1303400089