What Happened to Fedmart? Why Did Fedmart Shut Down?
by Rubaditsha
Updated Jul 24, 2023
What Happened to Fedmart?
FedMart was a chain of discount department stores founded by Sol Price in the early 1950s. It started as a single store in a converted airport hangar in San Diego, California. The concept of FedMart was unique at the time, offering discounted prices and catering mainly to government employees who paid a membership fee to shop there.
Under Sol Price's leadership, FedMart experienced significant success and expanded into a chain of stores. Price introduced several innovative practices that would later influence the retail industry. For instance, FedMart became the first retailer to sell gasoline at wholesale prices, saving customers money on fuel purchases.
Additionally, FedMart was a pioneer in offering in-store services, such as opening an in-store pharmacy and establishing optical departments. These practices set a precedent for other retailers to follow in later years.
In 1975, Sol Price sold two-thirds of FedMart to Hugo Mann, a German retail chain. Unfortunately, this marked the beginning of a decline for the company. Price was forced out of his leadership position the following year, and this change in management led to difficulties for the company.
As time went on, FedMart faced increasing competition from other discount retailers, and the company struggled to keep up with changing consumer preferences and market dynamics. The chain faced financial challenges and was unable to adapt effectively to the evolving retail landscape.
By 1982, FedMart had accumulated substantial debts and was unable to overcome its financial troubles. As a result, the company made the difficult decision to close its doors and cease operations. The closure of FedMart marked the end of an era for the discount department store chain that had once been a trailblazer in the retail industry. While its legacy lived on through some of the practices it pioneered, the company itself was no longer in business.
Today, FedMart is remembered as a significant player in the early days of discount retailing, and its founder, Sol Price, is recognized for his contributions to the industry.
Why Did Fedmart Shut Down?
FedMart shut down primarily due to financial challenges and an inability to sustain its operations in the competitive retail landscape. Despite being a pioneer in the discount department store concept and introducing several innovative practices, the company faced difficulties in the later years of its existence.
One significant factor that contributed to FedMart's closure was the change in ownership and management in the mid-1970s. Founder Sol Price sold two-thirds of the company to Hugo Mann, a German retail chain, in 1975. This change in ownership led to a shift in the company's direction and management approach, which may have affected its ability to adapt to changing market conditions effectively.
Additionally, FedMart faced increasing competition from other discount retailers, including the rise of warehouse club stores and larger discount chains. These competitors offered similar products and services at competitive prices, putting pressure on FedMart's profitability and market share.
Another factor that likely impacted FedMart's financial situation was the decision to close all of its store pharmacies and automotive departments. These closures could have led to a loss of revenue and foot traffic in their stores.
Furthermore, it is worth noting that FedMart's decision to sell the pharmacy inventories of 27 Southern California stores to Gemco could have been a sign of financial distress. While the exact reasons behind the sale and the subsequent shutdown of all its stores have not been explicitly stated in the provided information, it is possible that FedMart faced mounting debts and operational challenges that made it difficult for the company to continue its business operations.
Overall, a combination of management changes, increasing competition, the closure of important store departments, and financial difficulties likely contributed to FedMart's decision to shut down its retail operations. Unfortunately, despite its early success and pioneering efforts in the retail industry, the company was unable to sustain its business in the long run.
Fedmart
FedMart was founded by Sol Price as a discount department store, initially catering to government employees who paid a $2 per family membership fee to shop there. The first year of FedMart's operation was highly successful for some, but the company also faced challenges during this period. Despite this, FedMart steadily expanded over the next two decades, establishing a total of 45 stores, primarily in California and the Southwest United States.
The chain's annual sales reached an impressive figure of over $300 million. During its expansion, FedMart ventured into multiple states in the Southwest and repurposed many former White Front or Two Guys locations for its stores. The company's growth was driven by its discounted pricing strategy and the popularity of its membership-based model.
In 1975, Sol Price made a significant business decision by selling two-thirds of FedMart to Hugo Mann, a German retail chain. This change in ownership marked a turning point for the company. Subsequently, Price was forced out of his leadership position the following year, leading to further alterations in the company's management and strategic direction.
Despite its past success and growth, FedMart faced mounting challenges in the retail industry, including fierce competition from other discount retailers and changing market dynamics. These challenges, combined with the internal management changes, financial pressures, and possibly other factors, eventually led to FedMart's closure in 1982.
After more than two decades of operations, FedMart ceased to exist, marking the end of an era for the discount department store chain that had once shown great promise and growth under the leadership of Sol Price.
Fedmart History
In the mid-1950s, Sol Price, while working as an attorney in San Diego, noticed a unique retail operation called Fedco in Los Angeles. Fedco was a nonprofit, member-owned retail store that offered extraordinary discounts exclusively to federal employees, acting as a sort of commissary for civilian federal workers. Seeing the potential for a similar venture in San Diego, Price proposed the idea to his clients, who were in the wholesale jewelry business and had been supplying watches to Fedco.
With the support of eight individuals who each invested $5,000 and his law firm contributing the remaining $10,000, Price launched FedMart in 1954. The store started with a limited inventory of jewelry, furniture, and liquor, but despite the unconventional mix, the business thrived and exceeded expectations, generating $4.5 million in its first year.
FedMart's early success led to the establishment of more warehouse stores and a more focused merchandising strategy. Price introduced several retail innovations, such as selling gasoline at wholesale prices, opening in-store pharmacies, and launching in-store optical departments.
The chain expanded rapidly, opening stores in various states across the Southwest, and its success attracted further investment. However, in 1975, Price sold two-thirds of FedMart to the German retail company Hugo Mann, which eventually gained a controlling interest in the company. This marked a turning point for FedMart, and Price was fired from his leadership position shortly after the takeover.
Under Hugo Mann's ownership, FedMart received additional funding for expansion and made acquisitions, including the purchase of Two Guys and Globe Store chains. However, by the early 1980s, the company began to face financial troubles, resulting in store closures and losses.
In 1982, Hugo Mann made the decision to close FedMart, leasing the store locations to other retail firms. Target leased 35 locations, allowing them to enter the competitive Southern California market, while the rest were leased to Ralphs Grocery Stores.
Despite its eventual closure, FedMart played a significant role in the retail industry and influenced key figures, such as James Sinegal, who went on to found Costco. While the chain may have come to an end, its impact on the retail landscape and innovative practices continued to shape the industry in the years to come.
What Happened to Fedmart:FAQs
FedMart was founded by Sol Price.
FedMart began its operations in 1954.
FedMart started as a membership-based store open exclusively to government employees who paid a $2 per family membership fee.
At its peak, FedMart had 44 stores in California, Arizona, New Mexico, and Texas.
Sol Price pioneered several innovative practices in the retail industry, including selling gasoline at wholesale prices, opening in-store pharmacies, and establishing in-store optical departments.