It's an astounding, $30-trillion-a-year industry,
dominated by two of the biggest names in retail.
Costco is one of the most beloved retailers in America.
Walmart is the biggest company on Earth.
With over 11,000 locations,
these two juggernauts rake in
a combined $2.3 billion in profit
every single day.
You can go to one store,
find anything you could possibly need.
But back in the 1950s, this is hardly the case.
You had to go to several different mom-and-pop shops
that each had their own specialty.
There was no central location for shopping.
Department stores were only in big cities.
And they're not cheap.
Until an all but forgotten visionary.
I'll be damned.
Sol Price is the founding father of the superstore.
Took the retail landscape of the past.
You think people wanna come
to where we sell TVs and clothes to buy food?
And pushed it into the future.
If we sell it cheap enough, yeah, I do.
It's a true one-stop shop.
But to get there,
you'll have to go head to head with fierce rivals.
Sam Walton's the greatest businessman in the 20th century.
We have to be ready to compete.
There's a Wild West feel.
They're borrowing ideas constantly.
And former allies.
And then Costco is born.
What elements were taken from Price Club?
Every single thing.
As they embark
on a three decade collision course.
Get outta my office.
To reinvent the retail industry.
Fewer SKUs, you can't lose.
Leading to one of the biggest mergers
in retail history
that no one saw coming.
That's the way that old boy did it.
The birth of the mega store
has really changed the way we shop as we know it.
In the late 1940s, Americans are living large.
Jobs with good wages are plentiful again.
And workers, now flush with cash, are eager to spend.
Americans are shoppers,
especially after World War II and the baby boom.
So in the mid 20th century,
most Americans go to the department store,
in cities, in downtown shopping center areas,
to get the things they need.
But department stores were really nice.
People would get dressed up to go shopping there.
But while they were convenient
and had lots of departments under one roof,
you paid for that convenience.
Because those department stores marked things up
even more than the mom-and-pops.
At the time, fair trade laws
known as the Robinson-Patman Act
prevented large retailers from discounting goods
below the manufacturer's listed price.
This was an effort to control the pricing,
largely to protect the manufacturers,
but also small retailers,
to make sure they could make a full profit margin.
So because of these laws, a large retailer
couldn't just go to a wholesaler and negotiate
like a big discount on huge bulk amounts
of soap, or shampoo, whatever it was,
that wasn't available to a smaller retailer.
The laws were an attempt to keep pricing fair
across the board.
During the 1950s, however,
Congress begins to ease restrictions
on the price-setting laws
to continue boosting the post-war economy.
But all the big retailers in America,
like Macy's, and Sears, Benny's, Montgomery Ward,
said, if we lower prices, we'll make less money.
So, many of the big companies pretty much ignored it.
And that wasn't good for individual consumers.
In Southern California,
a small time attorney named Sol Price
is contemplating a big career change.
He's a Bronx boy, born to Russian Jewish immigrants,
moved out west for the sun,
and becomes a lawyer in San Diego.
As a Jewish immigrant, there is an expectation
levied upon you when you have dealt with discrimination
that you really have to succeed and set an example.
So when his mother-in-law asks him for some help
with a property she's inheriting,
he thinks that there could be some business opportunity
with the property.
It's big.
Yes, it is.
I have the paperwork right here for you to sign.
He was always very interested in the retail space.
And he had learned about a store called Fedco.
Fedco was a non-profit consumer's cooperative
actually founded by 800 postal workers
from the Los Angeles area.
And the idea was to leverage their buying power
so that they could negotiate with wholesalers
to get prices they couldn't otherwise get
and eliminate the additional markup.
It was $5 for a lifetime membership
for government workers and their families.
It had things like jewelry, clothes, housewares,
and prices that they couldn't possibly get
at a regular retail store.
And Sol Price thought that is unheard of in retail.
This is a terrific idea, to have a members-only model
where people are paying to be in the store.
Maybe I could get involved with something like this.
So his mother-in-law gifted him
with a no-frills property to start his new retail dream.
Sol Price was a great businessman.
He realized that you don't have to reinvent the wheel,
so he decides to capitalize on this idea
that Fedco came up with.
I don't need to have fancy lighting
with the mannequins and all the displays,
it's not necessary.
And in turn, it passes the savings onto the consumer.
On December 3rd, 1954,
Sol Price opens his discount retail store, FedMart.
He was inspired by Fedco
in terms of the name for his concept.
And it's only open to federal employees,
but he's gonna do things a bit differently.
Unlike Fedco, FedMart is a for-profit store.
So Sol Price will utilize membership fees
to gain purchasing power with which he can buy goods
at bulk, at a wholesale rate,
and then sell those goods individually
back to members at a more affordable price.
And San Diego is known for being a military town.
It's the command for the Pacific Fleet,
with a substantial number of government employees.
Clearly, that demand is there.
Sol Price is going to make sure
to get the lowest prices possible
so that people are gonna be coming back.
It's $2 for a lifetime membership,
and you get access to wholesale products
and a retail experience.
They had the same stuff the department stores did,
and yet they were a lot cheaper.
There were some great deals on merchandise,
like a rotisserie broiler going for $20.
You have a pretty big TV
going for a little bit over $100.
But there was definitely some skepticism towards this model
because you're paying this membership fee up front
just to shop, and then you still have to pay
for the stuff when you leave?
So they didn't necessarily have an influx immediately.
After three months of lackluster sales,
Price is barely paying his overhead
and needs to find a way to make his new store stand out.
Hey, Jim, right?
What's up?
Sorry to bother you, Mr. Price, but-
As a boy, Jim Sinegal wanted to be Atticus Finch.
He wanted to be an attorney.
When he started working at FedMart,
that's when he realized, I don't wanna be Atticus Finch,
I wanna be Sol Price.
I've had a bunch of guys coming in
and asking if we still pump gas.
They say this used to be a trailer yard
for a trucking company.
He discovered they already have the hookups
for fuel right there.
I'll be damned.
He has this stroke of genius when he realizes,
I'm selling all this other stuff at wholesale prices,
why don't I sell gas at wholesale prices?
From the 1930s to the 1950s,
the landscape of motor travel has changed dramatically.
And the number of gas stations has more than doubled
to over 230,000, but they all sell gasoline
for around the same price.
Folks stopping at a gas station in the '50s
could of course get their gasoline
with a small selection of convenience items,
like gum, soda, chips, maybe a map,
but really there wasn't much else they were gonna get
at the gas station.
Sol Price knows people are not just looking for value,
they're looking for convenience.
So FedMart is the first retailers
to start operating full service gas stations.
And he is selling it
for a nickel to 10 cents cheaper a gallon
than was commercially available.
This had never been done before.
You have a population that's on the go,
more cars are on the road,
people are really seeking convenience and accessibility.
And now, after your daily shopping,
you can just go outside, fill up your car,
and drive off with a full tank of gas.
That is mind blowing.
Not only are you saving a ton of money with this,
you're also saving time.
In its first year, he hoped the store
brings in a million dollars in revenue.
It doesn't.
It brings in $4.5 million.
So because of the cheap gas,
more and more people signed up for memberships.
And so, Sol Price started expanding FedMart
throughout the American Southwest pretty quickly.
While Price's discount store for federal workers
grows to other major cities
in California, Texas, and Arizona,
halfway across the country,
over a hundred miles from the nearest big city,
a small business owner is also dreaming of expansion.
He's pretty much a normal Midwestern guy,
but he was a very driven man, very ambitious.
He loved competition.
If he had a goal, come hell or high water,
he was gonna reach it.
He owned a five-and-dime store in Bentonville, Arkansas.
It's still there to this day, right off the town square.
It sold everything for 5 cents below
or 10 cents and below.
He just had one store,
but the man had an unquenchable thirst
to have the best retail company in the United States.
His name is Sam Walton.
And one day, he'll run the biggest retail store
on the planet, with over 10,000 locations,
and an annual revenue of over half a trillion dollars.
But to build his empire,
he'll need to fight off competitors,
borrow ideas from rivals, and reshape how we shop,
in a battle to see which retail dynasty will reign supreme.
By the end of the 1950s,
Sol Price has managed to turn
what was a vacant industrial space
into a multi-million dollar, membership-only retail chain
throughout the Southwest,
with over 1 million members made up of federal employees.
Sol Price is able to leverage his success
in a really smart and innovative way,
by being one of the first retailers
to add gasoline into his stores.
And by the 1960s, he has another big idea.
Prescription drugs were very expensive.
And he thought they could be a big part
of the value calculus the customers make
when they get a membership.
So he integrated the first in-store pharmacy
in a retail store.
That had never been done before.
He basically made an offer
that these customers couldn't refuse.
And as of 1962, FedMart has 10 locations,
2,000 employees, and is hitting over 82 million a year.
It's a tremendous amount of growth
for essentially less than a decade.
So this is a huge deal.
Sam Walton is saying, what exactly are they doing
that's carrying them through all this success
and how can I apply it?
While Walton has managed
to open a few more five-and-ten stores over the past decade,
he now thinks he can become even bigger than FedMart
by implementing a new retail strategy.
One of Sam Walton's great innovations
was to sort of defy the trends of retailing,
where you put large retail stores in big cities.
Sam Walton said, "I'm not gonna do that."
Sam Walton understood that a customer in the rural South
might have to go to the hardware store
and then the clothing store
to pick up all the things they need,
and they were paying higher costs as a result.
And Sam said we should bring a big discount store
to a small town.
He decided to launch this business in Rogers, Arkansas.
The population is roughly 6,000 people.
There's not a lot going on there.
People said it was a crazy idea,
but he took five grand of his own savings
and he borrowed heavily.
And in July of 1962,
Sam Walton opens his first Walmart store.
It was far smaller than the Walmarts we have today,
but they had a broad array of general merchandise,
sporting goods, toys, auto parts supplies, footwear.
Sam Walton was inspired by FedMart,
so he also worked closely with the suppliers.
And he was a hard-driving negotiator, keeping prices low.
The new Walmart brings in
nearly a million dollars in sales
during its first year alone.
But Walton isn't the only one opening a large discount store.
The Kresge family, they go on to form Kmart in 1962.
And then a few months later,
the Dayton company sets up Target.
So that's the year that FedMart woke up and said,
we need to get in on this or we're gonna be left behind.
Sol Price realized that a lot of these other retailers
do not have membership fees.
Anybody could just go in and shop at a Walmart or a Target.
So in 1963, he actually opened it to anybody.
But without membership fees,
he is taking a tremendous amount of risk.
To set him apart from other discount chains,
Sol Price has a radical idea.
There he is, Mr. VP of wholesale operations.
Come in, come in.
Jim Sinegal worked his way up from the bottom,
but he's razor sharp.
In the dynamic between Sol Price and Jim Sinegal,
Sol Price is the innovator and Jim is the executor.
He's the logistic mastermind.
I wanna show you our newest product line.
Sol Price recognizes, I need to up my game.
What can I do next?
How can I really make this a one-stop-shop for my customers?
Peanuts?
Groceries in a retail store,
that had never been done before.
Food grocery tends to be an extremely low margin business
because food is very expensive to maintain, stuff goes bad.
Back then, people would say that's crazy,
this is the most ridiculous idea they've ever seen.
But he's not saying, let me open a produce aisle
right now in the middle of everything.
He's saying, I'm going to start sprinkling in
non-perishable food.
You think people will actually wanna come
where we sell TVs and clothes to buy food?
If we sell it cheap enough, yeah, I do.
So now you can get gasoline,
you can get prescription drugs,
you can get food all in one building.
This is something that a lot of modern day Americans
take for granted.
But in the 1960s, seeing all of this put together
for the first time has gotta be pretty awe-inspiring
for these FedMart shoppers.
And it's a tremendous success.
With the increased revenue
from non-perishable foods, by the end of 1963,
Price inches closer to his goal
of becoming the first national large discount chain
by expanding to 13 locations,
adding 500,000 more customers,
and topping $1 million in annual profits.
Now, he wants more and more,
so Sol Price decided that they need to go public,
because they need to get more funding to go national,
so they can expand, so they can grow.
Price doesn't know it, but taking FedMart public
will turn out to be the biggest mistake of his life.
In Northwest Arkansas, Sam Walton has opened
a second Walmart location,
but it's not doing as well as his first.
He sat there and he thought,
okay, what can we do today to sell more?
At the time, stores grouped items together,
like shoes and sporting goods,
but Sam thought he could do something different
and tempt customers with deals.
What's hot that we can make hotter
or what's cold that we can turn hot?
So Sam Walton came up with this genius idea
and created the Action Alley.
The big alley that runs left to right across the store,
right behind the cash registers.
It was a high foot traffic area,
where employees would place special items,
like new trendy items, or seasonal items,
or discount items.
They would feature flowers and candy at Valentine's Day,
or decorative items at July 4th,
or back-to-school items in the fall.
Suppliers loved it because the large signage
would catch customer's eyes.
And those suppliers were incentivized to give Walmart
even better deals because they knew
the high volume of eyeballs that were gonna see their items.
Action Alley really worked.
It really resonated with customers.
Over the next few years,
Walton expands beyond Arkansas,
into Missouri, Louisiana, Kansas, and Oklahoma.
Sam Walton went store by store.
He had one store, then he had a few stores.
And his wife said, oh, let's quit
when you get to 10 or 20 stores.
And he said okay.
By 1969, Walmart has 18 locations,
with $12.6 million in total sales.
Meanwhile, out in Southern California,
newly public FedMart sees sales of $135 million
across 35 locations.
But expansion has stalled.
Sol Price quickly realizes he made a mistake
by taking FedMart public.
It actually hurt him.
It stifles his ability to innovate.
He now is answering to a board of directors,
the shareholders.
Sol Price wants to expand,
but he's accountable to his shareholders
and they don't want to open more locations.
So he will do anything to get it back private.
And he finds a retail magnate from Germany,
a guy named Hugo Mann.
Hugo Mann has the money to buy back
a majority stake of FedMart.
So Sol Price sees an opportunity to regain control of his baby.
So even though you own 51% of the shares,
I remain president and CEO
and control the company's day-to-day, right?
Absolutely.
He and Hugo Mann struck up a bit of a friendship
to work together.
So he's gonna get Hugo Mann 51% of the company,
which essentially takes the company private
because they have full control and voting rights.
Mann pays $20 million
for the controlling shares of FedMart
and agrees to maintain Sol Price's standards.
But when you have 51% of a company,
you're in charge, you control the vote,
which means you control any decision
that happens in that company.
Sol Price doesn't realize it,
but he effectively just signed
his own pink slip.
In November, 1975, just eight months
after his company is taken private again,
Sol Price is having seller's remorse.
Sol Price doesn't have majority ownership
of FedMart any longer.
And Hugo Mann was in discussions with other retail outlets
about possibly buying out the company.
When Sol Price caught wind of this, he went ballistic.
Get out of my office, now.
Sol Price made a mistake by giving Hugo Mann control.
He took Hugo Mann at his word.
He thought Hugo Mann was an honorable guy
and that Sol was gonna be able
to still keep control of the company.
Well, you gotta be careful who you do business with
because not everyone is trustworthy.
And by 1976, he's pushed out of his own company.
And that's gotta be a really horrible thing for a guy
who started this from scratch.
I'm with you, boss, wherever you go next.
Price's forced unemployment
could not have come at a worse time.
The mid 1970s are a very uncertain and troubled time
for not only Sol Price, but for the entire country.
America is mired in a recession, there's inflation.
People are dealing with not being able
to afford things they once afforded.
So Sol Price pivots to focus
on his innovative retail concepts.
Yeah, this is Sol Price.
Yeah, is this Harvey?
Hello, this is Jim Sinegal.
Jim Sinegal, his longtime protege,
jumped ship from FedMart to join his mentor.
I'm trying to reach Jeff, the owner.
Do I have Bubba here?
Sol Price was brainstorming ideas for this next business,
and he decided to go to the local small business owners
to see what they needed.
And they were suffering because of the recession.
Yeah, you're in Springfield, right?
He's on the phone talking to these retailers
to learn, what is not working for you,
what can I do?
You want to buy bulk?
Okay, yeah.
Sol Price is like, how can I continue to offer prices
and products that really set me apart from the competition?
And he realized there's a bit of a gap in the market
for small business owners who wanna buy in bulk
like the big retailers and really save a lot of money.
At a time when membership stores in America
have all but vanished,
Price decides to create one from scratch,
with a first of its kind innovation,
super-sized portions of goods.
The retail landscape has fundamentally changed.
You have Target, Walmart, Kmart,
they do not have membership fees or specialize in bulk sizing.
So this is gonna be members-only again,
selling in bulk to small business owners.
And we will get you the things that you need
in order to operate
during this horrible financial environment.
And the idea was after paying $25 a year membership cost,
they can buy giant vats of ketchup 20% or 30% cheaper.
They're not making their money on margin,
they're selling at cost.
Where are they making their money?
On getting you to renew your membership.
On July 12th, 1976,
Sol Price officially launches his new store, Price Club.
This is kind of an amusing name
'cause their sell is low prices,
but it's also his name.
So I think that this is his way of saying,
you haven't beaten me, Hugo Mann.
Watch what I can do by starting anew
with this really innovative retail concept.
Everything was sold at about 10% above
what it cost them to buy.
Most retail stores keep 25%,
and this guy was, hey, you giving me a dollar,
I take 10 cents to cover all my operating costs
and 90 cents goes to the supplier,
which is, like, unheard of.
But Price has taken an even bigger risk
by converting an airplane hangar in suburban San Diego
into a 100,000 square foot warehouse space,
more than double the size of his old FedMarts,
to allow for larger quantities of each product.
For the first time, you have this massive warehouse space
filled with all these bulk items
selling at the biggest discounts possible.
Everything in the place was piled high warehouse style,
forklift trucks buzzing around you, and big quantities,
big bags of things or case lots
made to sell to small businesses.
Stocking roughly 4,000 types of items
in Price Club's cavernous warehouses,
Sol Price is bracing for a banner year.
The first year, Sol Price's Price Club did not do well.
It didn't have a lot of appeal.
And retailers, they didn't like it.
They just didn't wanna spend the money.
Price Club sees a loss of over $750,000.
And unless Sol Price can turn things around,
his name will be erased from the history books
as a giant in the retail industry.
It's the late 1970s and Sol Price
is struggling for a comeback
in the discount retail industry that he helped to create.
After Sol Price is unfortunately
stabbed in the back and ousted by the company he built,
he comes back with Price Club,
a membership-only wholesale retailer.
But unfortunately, it doesn't become a hit.
And that's not the only setback
Sol Price is facing.
Sol, what can I say but thank you.
Taught me everything I know.
Jim Sinegal leaves Price Club
and heads up to the Pacific Northwest to do his own thing.
He realizes it's time for him to branch out on his own.
Change can be a difficult thing,
but Sol Price is not a quitter.
His back against the wall,
Price gambles by broadening membership
from just small business owners
to also include other financially stable customers,
like school teachers, government workers,
and hospital employees.
This changes the game.
Because even though there's annual membership fees,
they're seeing that this is catching on with consumers,
struggling during the recession, looking for value.
Within a couple or three years, it exploded
in terms of sales per store and success.
It had just blown the roof off of revenues.
And their sales were going up and up and up.
By 1980, Price Club
is generating annual sales of $150 million.
And Sol Price is able to open three more locations
across Southern California and Arizona.
Sol Price had word of mouth really bolster him.
They're opening up new stores
and they're getting more customers.
And it's all cycling into this boom for him
that he's able to build up into success.
Sol Price's
meteoric resurgence from the ashes
has been so impressive, it catches the attention
of the founder of Walmart.
I want to do something unorthodox.
Price Club?
Sam Walton was always looking
at everything Sol Price ever did.
We need to be ready to compete.
You know, I gotta hand it to you, Sol,
Price Club is a stroke of genius.
Ah, not so genius.
I just sell larger quantities of less stuff.
Fewer SKUs, can't lose.
I like that.
Sam Walton asks if he can get together for dinner
with Sol Price, and he's gonna try to squeeze out
as much invaluable knowledge as he can.
So you charge a membership fee?
Absolutely.
You charge it monthly, yearly?
It's yearly.
Yearly fee.
Picking Sol Price's brain about all sorts of things.
Who needs that much food?
It'll create the scarcity.
How'd you develop that theory?
Large baskets full of stuff.
Sam asked a lot of questions about,
how do you keep your expenses low,
how do you find places with low rent,
how to look at distribution.
They're saving money?
Oh, yeah.
People gobble it up.
A stroke of genius.
That dinner that Sam Walton had with Sol Price
was the information gathering session.
- To SKUs. - To SKUs.
And shortly afterwards, Sam Walton gets this great idea.
Why don't we do a members-only warehouse chain?
Sol's FedMart is answered by Sam's Walmart.
Sol's Price Club is answered with Sam's Club.
There was really no significant difference
in the basic concept between Sam's and the Price Club.
He took the name from them,
but they were in different places.
Price Club started in Southern California,
and Sam opened his first one in Oklahoma.
So they each had their own territory at first.
In his autobiography, Sam Walton openly admits
that he borrowed most of his good ideas from Sol Price.
And he puts that borrowed in quotes.
Officially opening in 1983,
Sam's Club offers the same type of goods as Price Club
for the same $25 annual membership fee,
but Walton boldly decides to offer something
that Sol Price didn't.
Sam Walton allowed individual members.
And they didn't have to pay for the membership at all.
They just had to pay 5% above the wholesale value
of whatever they got.
For the first time, these palatial stores
are accessible to everyday, average Joes.
And it really surprised everyone
when it was incredibly successful.
It's just American abundance at its height,
to give you more of it than you could ever dream possible.
And we're gonna give it to you at cheaper prices
than you could ever dream possible.
Who would've thought that the appeal
of a three pound jar of mayonnaise is universal?
Sol Price responds
by making the exact same offer at Price Club.
And by 1984, there are 15 Price Club locations
across the country,
while Sam's Club is quickly closing in with 11 locations.
Someone once said to Sol Price,
"You've launched FedMart,
which then launched Price Club,
that led to Walmart and Sam's Club,
how does it feel to be the father
of the warehouse retail industry?"
And he responded, "I wish I wore a condom."
A new copycat store in Seattle
could be a particularly tough pill for Sol Price to swallow.
He's not happy.
And now he finds there is someone else
entering the warehouse retail space.
And it's not his arch rival, Sam Walton.
It's his old protege,
Jim Sinegal.
You taught me everything I know.
And then Costco is born.
By 1984, just five years
after leaving his mentor, Sol Price,
Jim Sinegal's new warehouse membership store
has three locations across the Pacific Northwest,
raking in $100 million in net sales.
What elements of Costco were taken
from Price Club and FedMart?
Every single thing.
Jim Sinegal apprenticed himself with Sol Price
and then took that model
and simply moved it to Washington State.
Sol Price has basically set up and taught
a major competitor who's now come onto the scene.
I would imagine it's probably very difficult
because you wanna take pride
in your protege's accomplishments,
but you might also perceive it a little bit
like a stab in the back.
With a nearly identical business model
to Price Club, Costco warehouses include food,
pharmacies, and gas stations
in its mix of retail goods and services.
But Costco is also the only warehouse chain
in the Pacific Northwest,
where an influx of potential customers
have recently arrived to work
for rapidly growing companies like Starbucks,
Nintendo, and Microsoft.
The crowds were not immediate,
but anybody could get a membership.
So over time, they're getting more word of mouth,
gaining a lot of new members,
and people renewing their memberships.
And they do start expanding relatively rapidly
throughout the Pacific Northwest.
People love Costco,
from the $1.50 hotdog and soda to the fact
that you can literally buy anything you want there.
You name it, they sell it,
and they sell it at a very good price,
cheaper than any other big warehouse stores.
They're only marking these things up 3%.
So they're really in the business of selling
a lot of product in order to make money.
Jim Sinegal was actually taking dramatically reduced pay
for the typical retail CEO
because he was prioritizing long-term growth and success.
By 1985, Costco has 10 locations
across five states and Canada,
with total sales of over $1 billion.
Now, the floodgates are open.
By the mid '80s, a lot more people
were copying Price Clubs.
There's one called PACE out of Denver,
BJ's out of the northeast,
the WholeSale Club out of Indianapolis,
founded by the guy who started Target.
So people were jumping on the concept.
Retail is a space when people are borrowing ideas constantly.
There's a bit of a Wild West feel.
And it's like this mad race to keep ahead of the other guys.
But none of the warehouse clubs
can hold a candle to Walmart,
who by 1990, has become America's number one retailer
with a whopping over $32 billion in sales,
thanks in large part to a recent addition
to many of their stores.
The biggest change in retailing in America
has been the supercenter,
which adds the big supermarket indoors,
altogether with a full general merchandise, Walmart.
So it's a true one-stop shop.
Sam Walton gave Americans a level of choice
and a degree of financial comfort
in knowing you can go to one store,
and anything you could possibly need,
you can find under one roof.
Yet despite having 3,000 Walmart
and 148 Sam's Club locations,
Sam Walton still has not cracked all 50 states.
The key to the whole Walmart strategy for Sam Walton
was that he grew geographically outward.
And by the '90s, they were pervasive,
but they're not everywhere.
He still hadn't built supercenters in California.
So Walton devises a plan
to finally take his stores fully national.
But to pull it off, he'll need help
from someone known for their retail success out West,
his longtime rival,
Sol Price.
In the early 1990s, Sam Walton is proposing
an unlikely merger with his longtime rival, Sol Price.
It took a lot of guts for Sam to do that.
And I know it sounds a little strange,
but that's the way that old boy did it.
The meeting comes at a crossroads for Sol Price.
Over the past year, Price Club's annual sales
have only increased 8%,
while Sam's Club sales have increased 32%
to $6.5 billion,
surpassing Price Club for the first time.
And that's not the only thing that has Sol Price worried.
For about a decade now,
there have been national retailers rising up
and offering discounts.
And I think there comes a point where Sol Price
is sort of like, okay, what needs to happen
in order to keep my stores afloat,
in order to kind of make this wild environment work for me?
And Sam Walton says, listen,
we're greater united than divided.
Let's merge.
Price Club, Sam's Club, let's become one giant company.
In 1993, not long after meeting with Walton,
Sol Price signs a deal
with Costco.
Well, I was not in the meeting
with Sol Price and Sam Walton.
I think it's fair to say that Sol Price
instructed Sam Walton to kiss
a certain sensitive part of his anatomy,
that he should jump in a lake of liquid fire.
Basically, he told Sam Walton,
hell to the no-o-o, I'm not merging with you.
I will however merge with one of your competitors,
someone that I know, his old friend and his old protege,
Jim Sinegal.
And together, we're coming right at you, Sam Walton.
I didn't think there was any bad blood there
or, like, you copied me.
I think he's also looking for an opportunity
to sort of cement his legacy,
cement Price Club as a success story.
And part of that is merging with Costco.
I like to think that when they merged back together again,
that there was a real feeling
of, like, we are the only two people
who truly understand this model.
And they were on the same wavelength with that.
At first, the merger actually resulted
in a new brand name.
It was called Price Costco.
Bit of a mouthful.
So they eventually changed the name back to just Costco.
Today, with over 840 locations
across the planet,
Costco is the world's fourth largest retailer.
If you look at how many members Costco has,
I think it's a hundred million members, right?
It's incredible.
But it wouldn't exist
without the bold innovation of their founder's mentor,
Sol Price.
The primary contribution Sol Price made
to American wholesale retail
is getting all of us the goods we need at cheaper prices.
Sol Price was an inspiration for everything,
from Walmart, Kmart, Target,
to eventually Costco, and Sam's Club, and BJ's.
He is the godfather and the founding father
of the superstore.
Not to be outdone, Sam Walton's legacy
will also live on in the retail history books.
After Henry Ford, Sam Walton's the greatest businessman
of the 20th century.
Walmart's strategy, always low prices,
really helped set them apart.
As they expanded across the country,
word of mouth spread.
The first customers became repeat customers.
And that reliability just ended up
being part of their brand.
With 600 Sam's Clubs in the US
and over 10,000 Walmarts around the world,
the iconic Walmart family of stores
boasts over 2.3 million employees
and averages a profit of over $1 million a minute.
Walmart today is the biggest seller of food on Earth.
But not only that, they're the biggest company on Earth.
They're the first company in world history
to do over $500 billion worth of business in a single year.
These stores, they took the power away
from the manufacturer.
They're able to negotiate better prices,
which ultimately translates
into better prices for the consumer.
So the birth of stores like Costco, Walmart, Sam's Club,
has really changed the way we shop as we know it.
I remember the very first time I went to one of these stores.
There's this notion of one-stop shopping,
but it's not just, I'm gonna pick up napkins,
it's like, oh, I'm gonna go pick up
every napkin I will ever need for the rest of my adult life.
Do you need a jar of peanut butter that can fit an infant?
No.
But then again, yeah.