Although it takes place primarily at Christmastime and has become a holiday favorite, director Ernst Lubitsch’s romantic comedy The Shop Around the Corner was initially released just after the Christmas season ended, 85 years ago this week in January 1940. Its wistful tone is fitting for the post-holiday period, though, when people are feeling a mix of listlessness, regret, and tentative hope for the year ahead. Like other Christmas-adjacent vintage Hollywood films that are now popular yuletide viewing options (It’s a Wonderful Life, Meet Me in St. Louis, The Bells of St. Mary’s), The Shop Around the Corner is more melancholy than its reputation might suggest, but that only makes its sweet moments feel even sweeter.
Six years before starring in It’s a Wonderful Life, James Stewart plays Alfred Kralik, the senior clerk in a Budapest leather-goods shop, Matuschek and Company. He’s hard-working and unassuming, and his biggest thrill is when his boss Mr. Matuschek (Frank Morgan) invites him over for dinner. The only reason he’s found a potential paramour is because he was looking through the newspaper classifieds to buy a used encyclopedia, and he happened to stumble upon a personal ad posted by a woman looking to make an intellectual and spiritual connection.
Alfred doesn’t know it yet, but that woman is his new co-worker, Klara Novak (Margaret Sullavan), with whom he establishes an immediate antagonistic relationship. Klara is just as oblivious to the identity of her pen pal, and that misunderstanding creates plenty of opportunities for gentle comedy. It’s the kind of high-concept set-up that could easily fuel a contrived modern rom-com, and indeed the play by Hungarian writer Miklós László has provided the source material (both officially and unofficially) for numerous updates, most notably 1998’s You’ve Got Mail.
Lubitsch and screenwriter Samson Raphaelson take a more low-key approach, starting with the unveiling of the connection between the main characters, elegantly delivered via a tossed-off line about a planned meet-up one evening. This isn’t a movie about dragging out a contrived central deception, although some element of deception remains in place until the final moments. Alfred and Klara are occasionally manipulative in the way they treat each other, but only because they’re so eager to prove to themselves that their love is genuine, even if their methods for getting there are misguided. Thanks to the effortlessly charming performances from Stewart and Sullavan, it’s easy to see the romantic possibilities between the characters whether they’re swooning over their anonymous letters or arguing over workplace attire.

Alfred and Klara are not the only people who work in the store, though, and The Shop Around the Corner is only partially their movie. “This is the story of Matuschek and Company — of Mr. Matuschek and the people who work for him,” reads an opening title card, and Lubitsch takes that designation seriously. The dalliance between Alfred and Klara is only one of the little dramas unfolding in the store, which Matuschek runs as a benevolent dictator.
The employees rush to open the taxi door for Matuschek every day when he shows up to work, and there’s plenty of talk about the difficulty of finding employment in the current economic climate. But there’s also genuine, believable affection among the employees for their boss, which is especially evident in the third act after Matuschek suffers a personal tragedy. Although Klara’s two fellow female employees don’t get much to do other than offer support and concern, there’s plenty of comic business for neurotic family man Pirovitch (Felix Bressart), who amusingly runs and hides every time Matuschek starts asking for honest feedback, and ambitious errand boy Pepi Katona (William Tracy), who eventually gets drunk on the perceived power of a minor promotion.
Lubitsch deftly balances all of these characters and subplots, leading to a quietly heartbreaking revelation about Matuschek and one of the other employees that’s just as significant as the secret between Alfred and Klara. It all plays out almost entirely within the shop itself, with only a handful of scenes elsewhere. As Matuschek says toward the end of the film, he’s spent most of his life in the shop, and it represents the center of the other characters’ lives as well, for better or worse. Even if they end up building a life together, it seems likely that Alfred and Klara will be forever associated with Matuschek and Company.
That sounds like a depressing prospect, but The Shop Around the Corner makes it warm and comforting, just like the romance between Alfred and Klara. That sense of solidarity and togetherness, more so than the Christmas tree that’s occasionally visible in the background, makes The Shop Around the Corner an ideal holiday movie. Matuschek has created a welcoming enclave where hard work pays off, colleagues treat each other with care, and romance can blossom.
“The Shop Around the Corner” is streaming on TCM and is available for digital rental or purchase.