Sol Price, the man that started it all with Price Club, passed away Monday at age 93. Without Mr. Price, there would have been no Costco, so I thought it only right to take a moment here to talk about his extraordinary influence on the retail market space.
Over 30 years ago, in 1976, Mr. Price and his son Robert founded the first nationwide members-only warehouse club called Price Club outside of San Diego. That first location was located in a former airport parts factory, and as you can imagine, was cavernous but not very glamorous. Price Club sold a wide variety of items, tires to kitchen appliances, at very low prices. The no frills environment allowed them to be cheaper than other stores. And of course, it was the precursor to stores like Costco, BJ’s Wholesale Club, and Sam’s Club. By 1990, members-only retail clubs had become the fastest-growing sector of retailing! And then in 1993, Price Club merged with the fledgling Costco. After the merger with Costco, Sol and Robert Price also founded PriceSmart, which operates more than two dozen membership warehouse clubs in the Caribbean and Central America.
From the beginning Sol Price had the philosophy that you could make more money by keeping prices low by getting rid of some aspects of the typical retail business. All of the careful trimming lead to much lower overhead costs. So, the stores had far less inventory at just a few hundred items, they did no paid advertising, did not accept credit cards, and located the stores in more out of the way locations.
This bare bones retail strategy definitely worked for Price Club though, because by 1993 they had 94 stores and an annual revenue of $6 billion, and Sol Price had an estimated net worth of around $500 million.
But did you know that Price Club wasn’t Mr. Price’s first foray into the retail club market? In 1954 he opened FedMart with some fellow investors. FedMart was a membership club that was open to government employees and their families for the price of a $2.00 membership fee (originally that was the membership fee for life, then it was changed to just a single year), where they could buy liquor, pharmacy items, household goods and premium gasoline. Eventually, FedMart grew to more than 40 stores spread across the Southwest before being sold to a German retail company in the mid-1970s; it was at this point that Sol Price started Price Club with his son, Robert Price.
Sol Price was born in the Bronx on January 23, 1916. His parents worked in New York City’s garment industry. The original family surname has been lost to time. It was changed, prophetically, to Price at Ellis Island. While still a youth, the Price family moved to San Diego. Mr. Price did undergraduate study at several colleges before earning a law degree from the University of Southern California in the late 1930s. Mr. Price worked as a business lawyer in San Diego before starting FedMart.
When Dave lived in LA he was a Price Club member, even before they merged with Costco. We probably still have stuff that he bought there!
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