Sol Price, Founder of Price Club

Sol Price is another notable addition to our ‘High Achievers and Other Interesting People‘ category here at Jewish Achievement Blog.com – this blogger had no idea that the ‘Price Club’ was a double entendre! Mr. Price was a Jewish retail magnate who three decades ago altered both the American landscape and the American way of shopping by founding Price Club, the first nationwide members-only discount warehouse.

Mr. Price died in December 0f 2009 at 93 years old, of natural causes.

With Robert, Mr. Price started the first Price Club in 1976 in a cavernous former airplane parts factory in an unfashionable part of San Diego. The business, which offered consumer goods as varied as tires, books and household appliances at extremely low prices, proved to be the leading edge in the multibillion-dollar influx of discount big-box stores, among them Costco, Wholesale Club and Sam’s Club.

By 1990, members-only retail clubs had become the fastest-growing sector of retailing, The Associated Press reported.

Continued, as excerpted from the New York Times:

Price Club merged with Costco in 1993. Afterward, Sol and Robert Price founded PriceSmart, which operates more than two dozen membership warehouse clubs in the Caribbean and Central America.

The Price Club philosophy was simple: Keep overhead to an absolute minimum. Mr. Price accomplished this by doing no paid advertising, sharply curtailing inventory (his stores typically carried only a few thousand products, with limited brand selection), saving on real estate (most stores were in out-of-the-way locations) and, for many years, refusing to accept major credit cards.

“We think the secret of good mass merchandising is the intelligent loss of sales,” Mr. Price told The New York Times in 1986. “It means you have to decide what sales you are prepared to live without. Can you live without credit cards that cost you two points? Can you live without advertising? Can you live without $35-to-$40-a-foot occupancy costs for a prime location?”

Mr. Price made it up in volume. By 1993, shortly before merging with Costco, Price Club comprised 94 stores in the United States, Canada and Mexico, with annual revenue of more than $6 billion. Mr. Price, who was long active in philanthropic affairs, had an estimated net worth of $500 million, The San Diego Business Journal reported in 2006.

Sol Price was born in the Bronx on Jan 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.) After moving with his family to San Diego as a youth, he 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, a local discount warehouse, with several partners in 1954. Membership in FedMart, which eventually sold liquor, pharmacy items, household goods and premium gasoline, cost $2 and was limited to government employees and their families. (At first, the $2 fee bought membership for life, but the term was later changed to a year.) The FedMart chain grew to include more than 40 stores throughout the Southwest.

In the mid-1970s FedMart was sold to a German retailer, and before long, at the age of 59, Mr. Price found himself out of a job. He and his son founded Price Club, which was originally aimed at small-business owners. For an annual membership fee of $25, for instance, an accountant could buy inexpensive office stationery, or a saloonkeeper could buy cigarettes and toilet paper.

In its first year, Mr. Price’s business lost $750,000. Only after membership was extended to the general consumer did it began to thrive, and before long Price Club had become an integral part of the American retail experience.

Vast, concrete-floored and teeming with shopping carts, Price Clubs exuded a certain spartan cachet. Industrial shelves were stocked with a variety of products, including cigarettes, auto parts, alcohol, clothing, Robert Ludlum paperbacks, Rolex Oyster watches, 10-pound bags of rice and gallon jars of mayonnaise.

For a time, many Price Club warehouses had attached tire installation centers, an operation owned by Mr. Price’s son Laurence. But in a widely reported feud with his father, Laurence Price filed for arbitration after Sol Price canceled the leases on those centers in 1985; Laurence was awarded $3.7 million.

In 1987 Laurence Price sued his father for emotional distress, contending that the elder Mr. Price had interfered with the raising of Laurence’s sons. The suit was thrown out of court in 1989.

Besides his sons Robert and Laurence, Mr. Price is survived by five grandchildren and four great-grandchildren. His wife, the former Helen Moskowitz, whom he married in 1938, died last year.

Mr. Price’s legacy is visible nationwide. In 2007, Investor’s Business Daily reported that membership wholesale clubs were a $70 billion industry in the United States, with more than 40 million members.

One of the chief beneficiaries of Mr. Price’s legacy, Sam Walton, acknowledged the debt in his 1992 memoir, Made in America (Doubleday, 1992; with John Huey). Mr. Walton, the founder of Wal-Mart and Sam’s Club, wrote, “I guess I’ve stolen –  I actually prefer the word borrowed -as many ideas from Sol Price as from anybody else in the business.

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