FedMart
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| FedMart | |
|---|---|
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| Type | Discount membership store |
| Founded | 1948 |
| Headquarters | San Diego, California |
| Industry | Retail |
| Products | clothing, footwear, housewares, sporting goods, hardware, toys, electronics, food |
| Website | None |
FedMart was a chain of discount department stores started by Sol Price, who later founded Price Club. His first location in San Diego, California was in a converted airport hangar. It was originally a discount department store open to government employees, who paid a membership fee of $2 per family. FedMart's first year was highly successful. Over the next 20 years Fedmart grew to include 45 stores in a chain that generated more than $300 million in annual sales. However, Price sold FedMart Corp. after losing leadership of the company in 1976. Soon the business took off, expanding to several states in the Southwest United States. Many stores were previous White Front or Two Guys locations. Price later sold the chain to Hugo Mann, a German retail entrepreneur, in 1975.
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[edit] History
Sol Price began his storied career in the mid-1950s, when he was working as an attorney in San Diego. His first venture sprang from the coincidence of two fateful events: the inheritance of a vacant warehouse in his home town and a knock on the door of his law office. Price needed to find a tenant for his warehouse, and the solution to his problem was answered by the knock on his office door. A couple of Price's clients had stopped by to ask him to take a short trip to Los Angeles to give his opinion on an unusual business they had come across. The clients were involved in the wholesale jewelry business, and they had been selling watches to a non-profit, member-owned, retail operation in Los Angeles called Fedco. Price made the trip north and noticed that Fedco's facility was similar to the warehouse he had inherited. He asked his clients to look at his warehouse, suggesting that his building could be used for the same purpose. His clients agreed, marking the beginning of FedMart and the first traces of the membership club industry.
The business was begun in 1954, started with a $50,000 capital investment. Price solicited the help of eight individuals, who each invested $5,000, and he convinced his law firm to invest the remaining $10,000. Price obtained his inventory from his clients, beginning with the two jewelry wholesalers. Another client, who was involved in the furniture business, provided Price with a small selection of furniture. A third client sold liquor, giving Price's FedMart the odd merchandise mix of jewelry, furniture, and liquor. He opened membership to government employees of all levels—federal, state, and local. Despite the less than comprehensive selection of goods, Price's business thrived from the start, collecting $4.5 million during its first year in business, four times the total projected by Price and his investors.
Success spawned the establishment of other warehouse stores and a more coherent merchandising strategy. FedMart developed into a chain of stores, and along the way, Price pioneered several innovations in the retail industry. FedMart became the first retailer to sell gasoline at wholesale prices. The chain was the first to open an in-store pharmacy. FedMart also opened in-store optical departments, establishing a format that was aped widely decades later. Aside from developing several industry firsts, Price guided the company into food retailing, a product line that would underpin the chain's development. Price was joined in his business by his son, Robert, who served as FedMart's executive vice-president until the father-and-son team sold the chain in 1975. After 21 years, Price's start-up had flowered into a 45-store chain with sales exceeding $300 million.
[edit] Hypermarket
Hugo Mann owned a number of successful hypermarkets in Europe, which combined clothing, electronics and household goods, along with food (much like a Wal-Mart Supercenter, but smaller). After the acquisition of FedMart, he began to convert the stores into hypermarkets. Rather than stack items on shelves, they were tossed into wire baskets and unfortunately, FedMart's choice of labels for their own brand of food closely resembled that of the free food distributed to the poor by the USDA at that time. These changes made the store look cheap and disorganized.
[edit] Bankruptcy
The economic downturn of 1981-1982 was more than FedMart could bear, and the chain filed for bankruptcy, liquidating merchandise and closing for good in 1983. Most stores were acquired by Target. (This information is incorrect.) FedMart did not file for bankruptcy. Hugo Mann used the financial woes of FedMart to gain approval from the German Government to bring more Deutschemarks into the United States. Mr. Mann simply ceased retail operations of FedMart and transferred the tremendous portfolio of valuable real estate to his real estate holding company, Sunbelt Management Company, orginally headquarted in Boca Raton, FL. The FedMart properties were primarily leased to Target, Ralphs, Vons and Mervin's. Hugo Mann has since added millions of square feet of office and retail properties throughout the US to his portfolio. A couple of triva facts are that Hugo Mann in the late 70's offered to purchase Wal Mart from Sam Walton for cash; and when the lease agreemnts were consumated with Target Stores he loaded a Mercedes limo into a FedMart truck and delivered it to the CEO of Target in Minneaplois, as a gift. (I know this information to be factual as I served as Property Development Coordinator and Engineer for Hugo Mann and after being one of the last employees to leave FedMart, served as Engineer for Target Stores.)
[edit] Trivia
- Until 2002, the oldest remaining FedMart sign still standing was located on Hwy 111 in Calexico, California. The store had been razed years ago.
- The logotype of FedMart is very similar to that of QuikTrip although the two chains are not related at all.
