Sol Price, Price Club Changed America's Shopping Experience, 93, Washington Post
DGH
http://www.washingtonpost.com/wp-dyn/content/article/2009/12/14/AR2009121403336.html
Sol Price, 93
Price Club changed America's shopping experience
By Peter Eisner
December 15, 2009
Sol Price, 93, a business visionary whose Price Club retail stores
revolutionized the way millions of Americans shop -- in no-frills warehouses
that offer bulk items at cheaper prices to consumers willing to pay
membership fees -- died Dec. 14 [2009] at his home in La Jolla, Calif. His
family said he had been in declining health in the last two years and did
not cite a specific cause of death.
The retail models that Mr. Price pioneered with Fed-Mart in 1954 and Price
Club in 1976 were the inspiration for companies such as Wal-Mart, Sam's Club
and Costco, with which Price Club later merged. Sam Walton, who started
Wal-Mart in 1962, later admitted he "borrowed" many of Mr. Price's
innovations, to which Mr. Price half-jokingly responded, "If I was so
helpful, why don't you just pay me a finder's fee?"
If Mr. Price, as the acknowledged father of warehouse superstores, found
consumers receptive to his approach, the same could not always be said of
manufacturers. Initially, many producers, sometimes pressured by traditional
retailers, rejected selling their products to Fed-Mart and Price Club.
Mr. Price responded by creating his own store brands, guaranteeing equal
quality at a lower price. The resulting sales volume forced manufacturers to
give in, said Walter Loeb, a retail consultant and board member of the
Washington-based National Retailers Federation. Manufacturers needed the
sales. "They had to sell" to Mr. Price, Loeb said.
Mr. Price was determined to keep prices and overhead low, figuring he would
make a profit on the volume of sales. He paid high wages, worked with labor
unions and gave generous benefits to his employees. In return he demanded
scrupulous honesty and ethics in the pursuit of the lowest possible prices.
Bob Ortega, author of a biography on Walton, "In Sam We Trust," described
the differences between Walton and Mr. Price. "Sam Walton and Sol Price came
from right angles to one another in their approaches to life and work,"
Ortega wrote. "Price liked to claim he read the Daily Worker instead of the
Wall Street Journal. . . . He was considerably more generous with benefits
and wages than other discounters, Walton included. And, unlike Walton in
those days, Price gave money to charities generously and often, through a
foundation he created and to which he handed $70 million."
Mr. Price was a San Diego lawyer when friends urged him to look into a Los
Angeles area business called Fedco that offered discount products to
government employees. Hoping to duplicate the model, they started Fed-Mart
in a dingy warehouse neighborhood near the San Diego docks. Offering at
first a limited variety of products, Fed-Mart was an immediate success and
expanded into pharmacy items, liquor, clothing, photo supplies, detergent
and other consumer goods. Mr. Price built Fed-Mart into a
multimillion-dollar, 41-store chain across the Southwest.
In 1976 at age 60, Mr. Price found himself on the street and locked out of
his office, stripped of his Fed-Mart business by a Germany-based partner.
Mr. Price brainstormed ideas with his son, Robert, and within months created
Price Club, a warehouse store he opened that summer in an airplane hangar
once used by Howard Hughes in San Diego. Shoppers came from miles around,
eager to pay a $25 annual membership fee for the right to buy super-size
jars of mayonnaise and huge boxes of laundry detergent at low prices.
In 1992, at the zenith of its business, 94 Price Clubs in the United States,
Canada and Mexico earned a record $134.1 million on $6.6 billion in revenue.
In 1993, Price Club merged with Costco, which had been co-founded by James
Sinegal, who started in the business in 1955 as a part-time stocking clerk
at Mr. Price's first Fed-Mart.
After the merger with Costco, Mr. Price and son Robert spun off PriceSmart
Inc., which operates 26 warehouse stores in the Caribbean and Central
America.
Son of immigrants
Sol Price -- his family said it was never Solomon -- was born Jan. 23, 1916,
in New York City, the son of Samuel and Bella Price, who came to the United
States from Russia during the wave of Jewish immigration in the first years
of the 20th century.
Mr. Price said his father had worked with organizer David Dubinsky in the
creation of the International Ladies Garment Workers Union and later founded
his own clothing factory in Lower Manhattan. His father, who became ill with
tuberculosis, relocated the family to San Diego in the late 1920s.
After high school, the elder Price's mother decided to take the children
back to New York. They traveled by car, and Sol Price, who did the driving,
got a firsthand look at the results of the Great Depression. "I saw with my
own eyes farmers standing with guns pointed at the sheriff, keeping them
from coming on the land and foreclosing the land," he recalled.
Mr. Price received undergraduate and law degrees from the University of
Southern California in Los Angeles in 1938. By that time, he and his
girlfriend, Helen Moskowitz, had eloped and married in Las Vegas and after
law school eventually moved back to San Diego for good.
His wife died in 2008. Survivors include two sons, Robert and Larry, both of
San Diego; five grandchildren; and four great-grandchildren.
At the start of World War II, Mr. Price was classified 4-F because of an
early infirmity -- a drooping left eyelid that eventually caused blindness
in that eye. He began working for Convair, the predecessor of General
Dynamics, training maintenance workers to service engines on B-24 airplanes.
He described working 12-hour afternoon shifts at the San Diego airport,
Lindbergh Field, during the war, while keeping up his law practice in the
mornings.
At times he worked pro bono for Jewish organizations and also obtained work
with pawnshop dealers and other local businessmen. His rates were low, but
his legal work taught him life lessons about business. He learned about
taxation, corporate structure and the fine points of negotiating a deal.
In addition, Mr. Price had an uncanny ability to leverage real estate deals.
"He bought the worst locations in the country and made money by making the
properties viable and attractive," Loeb said. Mr. Price created Price Legacy
REIT, one of the first real estate investment funds, and it was fabulously
successful.
Politics and philanthropy
In 1994, Mr. Price created one of his best-known philanthropic projects,
after he negotiated with San Diego on a plan intended to reduce urban blight
and crime in a neighborhood known as City Heights. He invested millions of
dollars in what was widely called a renaissance in housing, including
schools, a new police station, library and recreation center.
He established the Aaron Price Fellows Program for teaching high school
students about government and civic involvement in honor of a grandson who
died of cancer in 1989.
His Price Charities also provides school supplies to thousands of children
in Central America and conducts philanthropic programs in Israel.
Among his many political and government activities, Mr. Price was a board
member of the Washington-based Urban Institute, which advocates good
government and civic responsibility, and the Center on Budget and Policy,
also in Washington, which studies budget and tax policies and advocates the
needs of low-income people in the United States.
Mr. Price was active in Democratic Party politics. He was an early backer of
the late California Gov. Edmund G. "Pat" Brown, as well as Brown's son
Jerry, another former governor. A visit with Mr. Price was standard for
Democratic presidential candidates, from John F. Kennedy to Barack Obama.
Mr. Price was referred to at times as tough, even tyrannical, by his
employees. But many also said that he masked his deep compassion and
kindness behind a cantankerous demeanor. Recently, he recalled a request
from a young African American woman who needed money for college. Giving the
young woman a pencil and paper, he encouraged her to map out her daily tasks
at school and recreation time and showed her she had free time to work and
pay her school obligation.
"It's really depressing when I see people like this living on the edge," Mr.
Price said. But in the end, "I loaned her the money."
Peter Eisner, a former editor for The Washington Post, is writing a book
about Sol Price.