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from the CEO’s desk
I AM TAKING over the Front End page in
this issue to pay tribute to a visionary,
mentor and friend, Sol Price. Sol, creator
of the warehouse club concept and founder
of Price Club, passed away on December
14, 2009, at the age of 93. He was one of the
greatest merchants of the 20th century and
changed the face of retail around the world.
MICHAEL CHRIS TMAS
His contributions to our company are
Sol was working as a lawyer in San Diego in 1954 when he started FedMart, a
membership shopping club offering a limited selection of products—pharmacy items,
clothing, photo supplies, detergent and other consumer goods—to government employees and their families. FedMart was extremely successful and grew over the next two
decades into a multimillion-dollar, 41-store chain across the southwestern United States.
In 1975, Sol sold controlling interest in the company to a German firm.
Not long after taking over FedMart, the new owners fired Sol and locked him out
of his office. He was 60 years old. Not missing a beat, Sol, his son Robert and business
associate Rick Libenson (who still serves on Costco’s board) launched Price Club in
1976. The first location was an old airplane hangar on Morena Boulevard in San Diego.
Over the next decade and a half, Sol and the other founders expanded Price Club to 94
warehouses across the country and opened Price Clubs in Canada, Mexico and Korea.
I started working at FedMart while still in college, as did many of our company’s
current executives. Sol gave us incredible opportunities to learn the business, teaching
us the skills and core principles we applied when we launched Costco in 1984. Sol had
a great impact on our business and merchandising philosophy. He believed in developing strong operating efficiencies and continually emphasized passing on savings to
customers. He also insisted that suppliers and employees be treated with respect and
that the latter be paid competitive wages.
In 1993, our two companies merged to form the company we know today.
We owe our legacy to the retail concept that Sol pioneered with FedMart and
Price Club, as do our competitors in the industry and big-box retailing in general. For
example, Sam Walton, who started Wal-Mart in 1962, later admitted he “borrowed”
many of Sol’s innovations, to which Sol reportedly replied, “If I was so helpful, why
But Sol was not only a business innovator. Early in his career, he did considerable
pro bono work as an attorney, and later created the Price Family Charitable Fund and
Price Charities. Through these organizations, Sol spearheaded the redevelopment of
City Heights, an economically challenged area of San Diego. His efforts led to the
development of school programs in the area and to the building of a new library and
a police station.
After the death of his 15-year-old grandson, Sol established the Aaron Price Fellows
Program to teach high school students about government and civic involvement.
The mission of the program is to give a diverse group of students an in-depth look at
government, cultural, nonprofit and business institutions with the hope that they will
become responsible members of their communities.
Sol also was actively involved with Alzheimer’s research, education programs in
Israel and the provision of school supplies to children in Central America. His multiple
philanthropic endeavors have contributed millions of dollars toward education, healthcare, leadership and communications.
In summing up, the thing that was remarkable about Sol was not just that he knew
what was right. Most people know the right thing to do. But he was able to be creative
and had the courage to do what was right in the face of a lot of opposition. It’s not easy
to stick to your guns when you are swimming against the current of traditional thought
when it comes to wage and compensation plans for employees.
I’m pleased that Sol is being recognized as the father of the warehouse club industry, as well as for his business acumen and his philanthropic efforts. But, more important, I’m honored to have worked for and with Sol and to have known this giant for
so many years. His lessons and philosophy—that business is about more than making
money and that a company also has an obligation to serve society—are still valuable
reminders for many of us in business today. C
FEBRUARY 2010 ;e Costco Connection 7
Jim Sinegal and Sol Price celebrate the
25th anniversary of the founding of
Price Club in this 2001 photo.