- Jun 27, 2003
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PRICE CLUBS
At a great bargain, make a pause.
Unknown
Sol Price practiced law for seventeen years before launching the FedMart Corporation, a successful one-stop mass merchandise and supermarket chain. A West German retailer purchased the company, fired Sol, and promptly went broke. Calling it a low point in his life, Sol began envisioning a warehouse-like store that would cater to small businesses. He raised $2.5 million and opened the first warehouse in a former airplane parts factory in San Diego. The first year Sol lost $750,000 on $16 million sales. To broaden his customer base, he began selling memberships to government employees, credit union members, bank employees, and the like. Originally, each wholesale member had to pay a $25 fee and could designate two other buyers for $10 each. The warehouse added more retail items, from appliances to fresh baked goods.
Once the concept caught on, news about the operation was spread by word of mouth. Prices generally run about 8 percent above cost, whereas regular retail stores have a 30 percent to 50 percent markup. Sol Price claims the secret of his success is simple: We sell things as cheaply as we can. Stores are in non-prime locations, and no credit cards are taken. Price says that selective membership and the membership fees help to reduce shoplifting and bad checks. Even the stores hours of operation are limited to save labor costs. The entire company makes an effort to set the appropriate mood, as corporate offices are Spartan and the annual report is plain, with no pictures.
CONSIDER THIS: Even in discounting, the secret to success is having people who care about providing top-quality service and merchandise, and making sure that customers get what they want.
Submitted by Richard
At a great bargain, make a pause.
Unknown
Sol Price practiced law for seventeen years before launching the FedMart Corporation, a successful one-stop mass merchandise and supermarket chain. A West German retailer purchased the company, fired Sol, and promptly went broke. Calling it a low point in his life, Sol began envisioning a warehouse-like store that would cater to small businesses. He raised $2.5 million and opened the first warehouse in a former airplane parts factory in San Diego. The first year Sol lost $750,000 on $16 million sales. To broaden his customer base, he began selling memberships to government employees, credit union members, bank employees, and the like. Originally, each wholesale member had to pay a $25 fee and could designate two other buyers for $10 each. The warehouse added more retail items, from appliances to fresh baked goods.
Once the concept caught on, news about the operation was spread by word of mouth. Prices generally run about 8 percent above cost, whereas regular retail stores have a 30 percent to 50 percent markup. Sol Price claims the secret of his success is simple: We sell things as cheaply as we can. Stores are in non-prime locations, and no credit cards are taken. Price says that selective membership and the membership fees help to reduce shoplifting and bad checks. Even the stores hours of operation are limited to save labor costs. The entire company makes an effort to set the appropriate mood, as corporate offices are Spartan and the annual report is plain, with no pictures.
CONSIDER THIS: Even in discounting, the secret to success is having people who care about providing top-quality service and merchandise, and making sure that customers get what they want.
Submitted by Richard
