Sol Price, philanthropist and entrepreneur, dies at 93
By Peter Eisner
LA JOLLA, California–Sol Price, the founder of Price Club and the acknowledged father of warehouse superstores who was a life-long advocate of liberal politics and quietly gave millions to charity, died at his home in La Jolla, California, on Monday at the age of 93. 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 model that Mr. Price pioneered with the advent of Price Club was the inspiration for companies such as Costco and Sam’s Club and changed the way millions of Americans shop. Typically, customers pay an annual membership fee to shop in such no-frill warehouse stores, in return for buying mega-quantities of products that save money over traditional retailers and wholesalers.
Early on, 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 to consumers. His first retail venture, Fed-Mart created in 1954, was the prototype for Wal-Mart, created by Sam Walton, who visited the stores and took “as many ideas from Sol Price as from anybody else in the business.” Mr. Price would accept such acknowledgments with self-effacing comments. “I don’t want to sound dumb, but my idea was simple,” he once said. “All I wanted to do was sell for the lowest price possible.”
He moved to San Diego from the Bronx, New York, seven decades ago, and said he developed early on a concern for the common man, which he said was instilled by his parents, committed social activists. He also said he never lost his love for the New York Yankees. 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. President Obama met Mr. Price in 2006; Mr. Price said he was greatly impressed. “He’s a very, very good observer,” Mr. Price said of then candidate Obama. “He listens and he knows how to make you feel he’s really leveling with you and not just making a speech.”
Mr. Price’s biggest contribution to retailing came in 1976, when he found himself literally on the street and locked out of his office in 1976, stripped of his Fed-Mart business by a German-based partner. The first Fed-Mart had opened in 1954 in a warehouse district of San Diego; in 20 years Fed-Mart was a multimillion dollar, 41-store chain across the Southwest.
Suddenly without a job, Mr. Price was 60 years old, an age at which many people are contemplating retirement. Instead, Mr. Price brainstormed new ideas with his son, Robert, as they walked around San Diego, his adopted hometown. They interviewed local shopkeepers, and asked about the challenges of running a small business; in a matter of months, they synthesized the idea of selling a limited variety of wholesale goods in outsized packages and quantities, cutting out the middleman and finding the lowest possible price for business customers.
The product was the first Price Club, a warehouse store he opened that summer in an old airplane hanger once occupied by Howard Hughes in San Diego. Financed with the help of friends who invested $5,000 per share, Mr. Price designed Price Club as a membership store. After a shaky start, he expanded his wholesale concept to retail as well as wholesale customers. With that decision, the business took off. Individual shoppers came for miles around, eager to pay the $25 annual membership fee for the right to buy super-sized jars of mayonnaise and huge boxes of laundry detergent at low mark-ups.
In 1992, 15 years later, 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 revenues. Each original investor had become a millionaire many times over.
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 Store on Main Street in San Diego. Sinegal is now the chief executive officer of Costco, the third largest retailer in the United States and the ninth largest in the world.
“He was an incredibly generous person, compassionate and a great teacher,” said Sinegal, discussing Mr. Price in an interview. “One time a reporter found out how long I had worked for Sol. He said ‘you must have learned a lot.’ ‘That’s inaccurate,’ I said. I learned everything. I was a fly on the wall observing Sol. I had such a great admiration for him, and the things he stood for and his intellect.”
Sol Price was born on 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 recalled that 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. But his father moved to San Diego in 1928 when he became ill with tuberculosis.
Mr. Price, his mother, older brother Henry and younger sister, Evelyn, followed the elder Price to San Diego a year later. “We came on the train and it took us four or five days,” Mr. Price recalled in an oral history. “”All the kids in the Bronx were so envious because we were going west with the cowboys and the Indians.”
Mr. Price was graduated from San Diego High School in 1931 at the age of 15; he had already met his future wife, Helen Moskowitz, the daughter of a scrap metal dealer in San Diego. After high school, Mr. Price’s mother decided to take the children back to New York. This time they traveled by car, and Mr. Price, driving the car himself, got a first hand 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 studied for a while at New York University and shuttled with his mother and siblings several times from coast to coast. He eventually obtained undergraduate and law degrees from the University of Southern California in Los Angeles in 1938. By that time he and Helen had eloped and married in Las Vegas, and after law school, eventually moved back to San Diego for good. Mr. Price recalled that he was one of a close-knit group of lawyers in pre-war San Diego. At times he worked pro-bono for Jewish organizations, and also obtained work with pawn-shop dealers, and other local businessmen. His rates were low, but his legal work taught him life lessons about business.
At the start of World War II, Mr. Price was classified 4-F because of an early infirmity – a drooping left eye that eventually caused blindness in that eye. He resolved to contribute as he could and 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 Lindbergh Field during the war, while keeping up his law practice in the mornings.
Among other things, his knowledge of how many things could go wrong on an airplane engine – including one mishap in which a malfunction caused a fire while he was in the cockpit – provoked a decision to avoid flying in airplanes for a long time. When he started Fed-Mart, Mr. Price had a bus outfitted for business travel, and traveled from California to Arizona and Texas on overnight bus trips with his top employees to manage the business.
One of Mr. Price’s wartime clients was the Seven Seas Locker Club, which catered to sailors who needed a place to change to civilian clothing and stock up on supplies during shore leave. That business, along with Post and Navy Exchanges during the war – contributed to the creation of Fed-Mart, whose clientele was originally government employees and members of unions and credit unions.
While Fed-Mart was clearly out to make a profit, Mr. Price wanted to provide a needed service. “Although we are all interested in margin, it must never be done at the expense of our philosophy,” Mr. Price wrote in a memo to Fed-Mart employees in 1967. “Let us concentrate on how cheap we can bring things to the people, rather than how much the traffic will bear, and when the race is over Fed-Mart will be there.”
Fed-Mart went out of business several years after Mr. Price was ousted from the company by Hugo Mann, an equally successful German retail mogul. But many Fed-Mart employees migrated to Price Club and eventually to Costco, which merged in 1995. Sinegal still keeps a copy of that 1967 memo on his desk.
Costco, he said, is a full reflection of Mr. Price’s brilliance and expertise. “It is the roots of everything we’re doing today, and the results of everything we tested over the years. And because of Sol, we’re the same team.”
Mr. Price rarely accepted plaudits for his business success or the charitable works his success allowed him to pursue. Among his other admirers was Sam Walton, the founder of Wal-Mart. Walton acknowledged “borrowing” the Fed-Mart concept, even down to the name for creating his stores. “I really liked Sol’s Fed-Mart name so I latched right on to Wal-Mart.” Years later, Walton wandered into a Price Club store in San Diego, and was stopped by employees when they caught him dictating notes as he walked the aisles. Robert Price said that employees gave him the tape, but he sent it back to Walton without listening to it. The Prices didn’t see why they should stop Walton from imitating their formula.
Years later, Mr. Price had dinner with Walton, who continued praising his warehouse concept and the resulting success of Walmart. “If I was so helpful,” Mr. Price recalled saying, only half joking, “why don’t you just pay me a finder’s fee.”
After the sale of Price Club, Mr. Price concentrated on his innovative knowledge of real estate, having created one of the first Real Estate Investment Trusts in California. The Price REIT was successful as were many of Mr. Price’s investment ventures. Mr. Price’s son, Robert, is now the chairman of a Price Club spinoff, Pricesmart, which operates 26 membership warehouse stores in the Caribbean and Central America.
Mr. Price was instrumental in the creation and success of the Weingart Foundation, established by his friend Ben Weingart, a wealthy Southern California real estate developer. The foundation reports having given grants of $856 million to social services, educational and community programs since 1972.
One of Mr. Price’s most enduring philanthropic enterprises is City Heights, an development project that transformed an inner city San Diego neighborhood. In 1994, Mr. Price negotiated with the city of San Diego to invest in projects to reduce urban blight and crime in City Heights. He invested millions of dollars of investment in what was widely called a renaissance in housing, education, a new police station, library and recreation center in City Heights, and his foundation, Price Charities, continues to work in the neighborhood.
Mr. Price and his wife Helen established The Price Family Charitable Fund in 1995. In 1991, following the death of their grandson Aaron (the son of Allison and Robert Price), Sol created the Aaron Price Fellows Program. Among his many other philanthropic efforts, Mr. Price donated $2 million to the construction of the student center on the campus of the University of California, San Diego, which opened in 1989. Price Charities also provide school supplies to thousands of children in Central America, and conducts a number of philanthropic programs in Israel.
While Mr. Price thought big in establishing businesses and in establishing philanthropic funds, he always thought of providing help to the less fortunate. He often criticized people who approached him seeking money, warning them to be careful and avoid going into debt. In his stores, he maintained a policy of never accepting credit cards, saying he never wanted to people go into debt because they were buying his merchandise.
Mr. Price was referred to at times as tough, even tyrannical by his employees. But they also said he masked his deep compassion and kindness behind his cantankerous demeanor. Recently, he recalled a request from a young African-American woman who needed money for college tuition. Giving the young woman a pencil and paper, he encouraged her to map out her daily tasks at school, recreation time and show 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.”
Among his many political and government activities, Mr. Price was a member of the board of trustees on the Urban Institute, the board of directors for the Center on Budget and Policy Priorities, and the San Diego Financial Review Panel.
Mr. Price avoided most public events and played down praise for his generosity. “I’ve always said that people give money for one of three reasons: guilt, ego, or emotion.” In his own case, he said, guilt and emotion were the main factors.
In any case, he said acquiring wealth was a question of luck.
“Most of life is luck,” he said in an 1985 newspaper interview. “Obviously you have to have the will and intensity, and in my case discipline and idealism had a lot to do with it. But if you move back a step, even that is luck.”
Mr. Price’s wife, Helen, died in 2008. He is survived by his sons, Robert and Larry, five grandchildren and four great-grandchildren. His family planned a private funeral on Wednesday and would announce a celebration of life service, planned for January. In lieu of flowers, the family suggested donations be made to organizations providing food and social services to people in need.
Peter Eisner, a former editor for the Washington Post, is writing a book about Sol Price. His story was provided by Price Charities