Sol Price

Sol Price was a San Diego lawyer who opened FedMart in 1954, a discount store for government employees that sold memberships before it sold anything else. It was one of the first discount chains in America and it was profitable, and in 1975 he lost it — he had sold control to the German retailer Hugo Mann, who fired him. Price was sixty. The following year he and his son Robert opened Price Club in a converted aircraft hangar on Morena Boulevard, selling in bulk to small businesses only, and lost $750,000 in the first year. When he let in government employees and credit-union members the losses stopped, and the warehouse club as an industry began.

What Price invented was not the warehouse but the stance: a small range, a capped margin, a membership fee, no advertising, and a refusal to treat the customer as someone to be extracted from. He was a liberal in a conservative trade, gave away much of what he made, and thought a retailer that took more than it needed was doing something close to wrong. Sam Walton said he had borrowed more from Sol Price than from anyone else; Jim Sinegal, who had worked for him since the age of eighteen, said more or less the same. The warehouse club, Sam's Club and Costco were all descended from the same hangar.

The contested part is the ending. Price Club expanded cautiously while Costco and Sam's Club expanded fast, and by the early 1990s it had lost the industry it had created. The 1993 merger with Costco was presented as a combination of equals and functioned as a takeover: Sinegal ran the combined company, and the Price family left within a year to run the real estate. Price never said publicly that he regretted teaching Sinegal the model. Whether he felt that his caution had been a virtue or a mistake is not in the record; both readings fit the facts, and a student should hold them together rather than choose.