Es Geht Wohl Anders (Things Turn Out Differently): The Unexpected Life of Walter Arlen

The Dichter Family Business and Department Stores in German-Speaking Europe

Industrialization and the Rise of the Department Store
While most commonly associated with technological innovation, the Industrial Revolution also gave rise to the modern department store. The advent of steam powered boats and railroads, in combination with coal-fired factories producing iron and steel, fundamentally changed the European economy and society, resulting in a massive population shift from agricultural communities into urban areas. These changes began in Great Britain where rapidly expanding cities created new bases of customers for those selling textiles and other consumer goods. British retailers soon grew small mom-and-pop shops selling lace, buttons, linens and men's haberdashery into much larger stores selling a mixture of merchandise in one place. By the mid-19th century, these department stores had grown to be "palaces of consumption,” the most famous including Harrods in London, Au Bon Marché in Paris, and Macy’s in New York.
 
Germany and Austria also experienced a retail evolution, as “mom-and-pop-shops" grew into large retail business enterprises. Oscar Tietz provides a compelling example of this family-oriented pattern of growth. The youngest of five children, Tietz trained as a retail apprenticeship with his Uncle Chaskel in Prenzlau and after completing his training in 1879, joined his older brother Leonhard and uncle Hermann in their small haberdashery store in Stralsund. He and Leonhard eventually parted ways, and Oscar found work at a furniture and carpet store in Berlin, where he earned a large salary. In 1882, with financial support from his uncle Hermann, he opened his own button, linen, and wool business in Gera, a small city of just 35,000. Then Oscar initiated joint purchases of all of his relatives' separate companies, including his uncle Julius' stores in Nuremberg, Plauen and Greiz and his uncle Markus' stores in Bamberg, Chemnitz and Schweinfurt. By purchasing goods together, each store could get their products at a discount, enabling them to sell more goods at lower prices and increase profitability.

Oscar Tietz, his brothers, and uncles had chosen careers in retailing because of the limited professional options available to Jews in the Austro-Hungarian empire, where they had been excluded from craft guilds and lacked ready access to capital. Similarly, they chose to establish their stores in smaller, more obscure cities like Gera, Stralsund, Plauen, and Griez where there was less competition and cheaper rent, and therefore less required founding capital. But after a decade of success, available cash had expanded as had the number of manufacturers supplying merchandise, enabling the Tietz family to construct department stores in major German-speaking cities. Uncle Hermann Tietz founded a store in Munich in 1889 in the vicinity of the train station, offering a wider variety of goods, including shoes, toys, porcelain, furniture, and carpets. Success in Munich fueled additional large stores in the major cities of Berlin, Karlsruhe, Stuttgart, Strassburg, and Hamburg. Oscar's older brother Leonhard Tietz also opened a store in Cologne in 1891 and Berlin in 1905. From a small haberdashery shop, Oscar helped to grow his family business into one of the largest retail enterprises in Germany.[1]

Jews and Department Stores in Vienna 
Having accorded Jews full and equal rights as citizens under the law by the 1867 Constitution, Austria's Jewish population grew rapidly in the late 19th century, rising from around 40,000 in 1870 to 150,000 by the turn of the century to over 190,000 by 1910. The overwhelming majority of Jewish people settled in Vienna, which became a thriving cultural capital, renowned for its Jewish psychologists, composers, authors and philosophers, such as Sigmund Freud, Alfred Adler, Gustav Mahler, Arnold Schoenberg and Ludwig Wittgenstein.

By the early 20th century, Vienna's Jewish population was concentrated primarily in three districts: the Second District of Leopoldstadt, located between the Danube and the Danube Canal where the Viennese Jewish Community (Israelitische Kultusgemeinde) was established in the 17th century (34% of the population); the Ninth District of Alsergrund, where Sigmund Freud and other middle-class Jewish professionals made their homes (21% of the population); and the First District, known as the "Innere stadt" (inner city), home to Vienna's wealthiest Jews, along with imperial palaces and famous historical sites (20% of the population).  As this geographical dispersal suggests, Viennese Jews varied considerably in terms of income, but owed to a variety of historical factors, were highly concentrated in certain sectors of Vienna's economy. According to historian Josef Fraenkel, Jewish proprietors controlled the trade in scrap-metal, wine, and shoes and owned the majority of the city's furniture stores, advertising firms, self-service restaurants, and banks.[2]

Jewish proprietors also played prominent roles in the trade of textiles in Vienna, and accordingly, established many of the largest, most fashionable department stores in the city's First District. The career of Abraham (Alfred) Hirsch Gerngross provides an example of the strong connection between the world of textiles and Viennese department stores. Gerngross learned the textile trade in Fürth, Germany, and along with his brother, opened his own textile store in 1879. The store was located on Mariahilfer Strasse, along the Emperor’s daily route from the summer palace (Schönbrunn) to the winter residence (Hofburg), and specialized in silk and wool fashions that appealed to high-income clientele. The business was vertically integrated, selling textile products manufactured in three tailor shops Gerngross also owned. By 1907, ten of the twenty-four department stores in Vienna were located on the street serving the city's fashionable elite.[3]

Other Jewish-owned department stores were located near the "Judenplatz" (Jewish square), in the oldest part of the city center where the first synagogue had been erected in the 13th century (it was later destroyed). Among the largest was that of Jacob Rothenberger, once himself a tailor, who hired architects Ferdinand Fellner and Hermann Helmer, designers of the Vienna Opera House, to design his second location across from St. Stephens Cathedral.With an elaborate, ornamented façade and interior, the store was described as being, "more reminiscent of an elegant palace than a retail store," and sold high-end merchandise like men’s travel and hunting outfits, fur coats, and tuxedos. At the time of his death in 1899, Rothenberger employed 300 as well as 600 independent tailors making goods for his stores, and his sons later opened branches in Paris and London.[4]
 
But not all Jewish-owned department stores were located in the city center nor did they all sell luxury goods to an upscale clientele. These included Julius Krupnik, Ignaz Wodicka and Leopold Dichter, who's store in the Sixteenth District of Ottakring was where Walter Arlen spent his early years. 

The Dichter Department Store
​Walter Arlen’s grandparents Leopold and Regine Dichter founded a department store in the Ottakring section of Vienna in 1890. The Dichters timed their grand opening to coincide with Emperor Franz Joseph I’s incorporation of the village of Ottakring as part of the 16th District in Vienna’s western side, opening their store at that time and location in the hopes they would profit from the area’s growth. By 1910 new industries added 70,000 blue-collar workers to the former village, and Ottakring became heavily populated by working class people, although only a few of whom were Jews. These lower-income residents had some expendable cash for replacing or upgrading the everyday necessities, but not the luxuries of Persian carpets, fur coats, or silk clothes. The Dichter Department Store found success by adapting the strategies that created “palaces of consumption” to serve a middle and working class clientele. 

Like other department stores, the Dichter Store offered a wide array of merchandise but rather than offer luxury items, the Dichter Store specialized in cooking utensils, rubber goods, toys, and leather goods. These items were often displayed on the exterior of the building, clearly signaling to consumers what was available in the store.
 
The Dichters also boosted their profits by employing family members. Leopold and Regine’s firstborn son Isidor, worked in the men’s department, their eldest daughter Mina, Walter’s mother, ran her own department for women’s leather bags, Charlotte served as head cashier, Esther supervised the toy department, Margarete worked in ladies’ apparel, and their youngest daughter, Rosl, was responsible for keeping an eye on all the cash in the building. Employing family members enabled the Dichters to bring down their labor costs and allowed them flexibility in paying salaries during times of business slowdown without incurring an employee strike. 

The Dichter Department Store also adapted the advertising strategies of larger department stores to cultivate their reputation in the neighborhood. Rather than buying expensive advertising space in local newspapers to promote price reductions and sales, they affixed their logo to the products sold, using a sticker to seal the wrapping of purchased merchandise. Individually wrapping the items enhanced the store’s reputation for top-notch customer service and the seal signaled the item was of high quality, bolstering the association between the Dichter logo and quality goods at affordable prices.
 
While the Dichter Department Store, like other retail businesses, was hurt by the onset of World War I, by the time Walter (Aptowitzer) Arlen was born in 1920, it was well on its way to becoming a profitable business once again, supporting not only Leopold and Regine, but the entire extended Dichter family.
 
 
 
[1] Kurt Zielenziger, Juden in der deutschen Wirtschaft (Berlin: Welt – Verlag, 1930): 210-212.
 
[2] Josef Fraenkel, The Jews of Austria: Essays on Their Life, History and Destruction (London: Vallentine Mitchell, 1967): 480.

[3] Astrid Peterle (ed.), Kauft bei Juden! Geschichte einer Wiener Geschäftskultur (Wien: Amalthea Signum Verlag, 2017): 41, 44.
 
[4] Description of the store in Neues Wiener Tageblatt, March 24, 1895 in Peterle (ed.), Kauft bei Juden!, 33-34, 39-42.
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