Sol Price, along with his son Robert Price took a risky move in the mid-70s that redefine the wholesaling industry. "They pioneered what is now termed “warehouse retailing.” In this business model, business owners operate warehouse stores located in the cities, where buildings and real estate property have lower prices" (www.thehistoryofcorporate.com). Consumer products are bought directly from the manufacturers and delivered straight to these warehouse stores, where they are sold by the bulk at cheaper prices than that in department stores.
Price Club, is the company formed by Sol and Robert Price, they opened its first warehouse in San Diego in 1976. Although its first year of operations wasn’t profitable, the second year saw Price Club very lucrative profits. Soon after, Price Club was able to rapidly recover all the money they put in and open another warehouse store in Phoenix, Arizona in 1978. Eventually, Price Club became a leading name in the warehouse retailing industry.
Jim Sinegal, an executive vice president for Price club, left from Price Club and went to create Costco Wholesale Corporation in 1983. Costco’s marketing and distribution copied from Price’s designs. This is where the kirkland signature brand came into play. By 1988, Costco became Price’s biggest competitor, with expansions reaching Canada and profits amounting to $2 billion.
In 1993, when competition threatened both Price Club and Costco Wholesale, the two companies decided to be come partnerts. after Price’s earnings dropped to 40%. The new company, named PriceCostco, Inc., this action was to focuse heavily on international expansion, which led to the two owners opening stores in Mexico, South Korea, and England. Even tho they were trying to recover losses, sales continued to drop. The two owners eventually started to disagree, Robert Price and Jim Sinegal, formally announced their