By the seventies, FedMart had expanded throughout the Southwest, with its own stores and a number of franchises. Sinegal ran the distribution-warehouse system, which operated almost as a separate business and had become a profit center for the company. In 1975, the German businessman Hugo Mann invested in FedMart. Price hoped that this would be a chance to expand, but to Mann, it became clear, the deal was a takeover. “Those of us who knew Sol figured he would last between one day and six months,” Sinegal told me. “He almost lasted six months.” As the family weighed its next move, Robert had an idea. What if they made Sinegal’s distribution system the crux of a new endeavor, setting up a warehouse that stocked wholesale goods for small businesses?
The first Price Club warehouse opened in 1976, in a former airplane hangar on San Diego’s northern outskirts. Price Club charged its small-business clientele twenty-five dollars a year for membership, cash flow that could be factored into the company’s gross margins. And wholesaling introduced a new level of efficiency—goods sold from the pallets on which they were delivered required little handling. Within a few years, Price Club began welcoming ordinary shoppers, and it soon had more than two hundred thousand members across locations in California and Arizona. The company went public, in 1979, almost by accident: there was no I.P.O., but, following stock splits, its number of shareholders had exceeded the S.E.C. maximum for a private company.
The company’s début got Wall Street’s attention. Suddenly, Sinegal told me,“everybody found out how successful they were. Nobody dreamed it.” The next two years saw the opening of imitators such as Pace, BJ’s, and Sam’s Club. Price, now in his sixties, had managed a remarkable second act. (FedMart, meanwhile, was liquidated seven years after his departure.)
In 1982, Sinegal, who had been working as an independent broker for consumer brands, was contacted by a Seattle retail heir named Jeffrey Brotman. His family had approached Price Club about opening a store in Seattle, but the Prices weren’t interested. Now Brotman suggested that he and Sinegal launch their own wholesale-club store there. The pitch that they made to investors, Sinegal told me, was simple: “Let’s duplicate what Price Club is doing.” They wanted a simple name for the new venture, and, he added, “we couldn’t come up with anything clever.”
“Costco Wholesale Club Comes to SEATTLE,” a flyer for Costco’s first warehouse opening, in 1983, read, faintly implying that it already existed elsewhere. Costco, though, was a shrewd recombination of what had come before rather than a straight copy. It took up Price Club’s wholesale model of bulk efficiency and substantial membership fees, then, as time passed, added such FedMart staples as private-label goods, gas, and groceries. Staff, too, carried over: Sinegal recruited FedMart veterans.
Costco’s success was swift—two more warehouses opened before the end of its first year. By the early nineties, Sinegal and Brotman (who had become the chairman) were gaining momentum, as was Sam’s Club—Walmart’s warehouse-club chain. Price Club, meanwhile, was flagging. Sol Price had relinquished his official leadership role, and Robert’s fifteen-year-old son had recently died of cancer, devastating the family. In 1992, the Prices decided to seek a buyer; Costco was the natural choice. The new company now had the scale to compete with Sam’s Club—but the enduring partnership that Price had hoped for did not materialize. “My dad had this idea that we could take these two companies that were so similar in terms of philosophy,” Robert told me, “and I would be chairman and Jim would be the C.E.O. It never worked.” Within a year of the 1993 merger, Robert left.
