The Origins of 11 Big Box Stores
By Scott Allen
Saturday may be for small businesses, but Black Friday is all about the big box stores. Here’s a look at the origins of 11 big stores that are probably promising big savings (and long lines) this weekend.
1. Best Buy
© Best Buy/St. Paul Business Journal, Michael Maloney/San Francisco Chronicle/Corbis
Richard Schulze opened his first Sound of Music store in St. Paul, Minnesota, in 1966. The store, which originally sold home and car stereos, was a success, and Schulze opened eight additional stores in the area over the next decade. By 1981, Sound of Music had added VCRs, laserdisc equipment, and household appliances to its offerings. That year, a tornado ravaged the most profitable of Schulze’s nine stores, but the inventory was spared. In response, he poured money into print and radio advertisements for a “Tornado Sale,” which was to be held outside the damaged store. Schulze stocked the parking lot with additional inventory from his other stores, which he closed for the day. The event was such a huge success that Schulze rethought his business.
Two years later, he changed the company name to Best Buy and opened his first superstore in Burnsville, Minnesota. Best Buy enjoyed enormous growth over the next two decades thanks to effective advertising and its wide selection of electronic goods at discount prices.
2. Home Depot
In 1978, Bernie Marcus and Arthur Blank were fired from their high-ranking positions at California-based Handy Dan Home Improvement Centers. But they didn’t spend much time wallowing in their sorrows.
With the help of investment banker Ken Langone, Marcus and Blank purchased four JC Penney stores in Atlanta and opened the first Home Depot in 1979. Their business model was simple: buy directly from manufacturers and set prices lower than the competition, making up lost margin in volume of sales.
According to their book Built From Scratch, the duo asked Ross Perot, who had founded Electronic Data Systems Corp. and was a friend of Langone, if he was interested in investing in the company while it was still in its infancy. Perot allegedly declined because Marcus wanted him to assume the lease on his used Cadillac. “My guys at EDS drive Chevrolets,” Perot said.
No matter, the company went public in 1981 and took off from there. The first super-sized Home Depot opened in California in 1986, one year after the chain opened its 50th store. By 1989, Home Depot had put Handy Dan out of business. Today, there are more than 2,000 Home Depots worldwide.
3. Toys “R” Us
Image credit: Flickr user dcmaster
In 1948, 25-year-old World War II veteran Charles Lazarus began selling baby furniture in his father’s bike shop in Washington, DC. Recognizing the demand for children’s toys, Lazarus soon broadened his inventory and renamed the store Children’s Supermart. He opened Baby Furniture & Toy Supermarket in 1952, using backwards R’s in the sign to grab attention. Five years later, he opened Children’s Bargaintown, which became the first Toys “R” Us, in nearby Rockville, Md. The store’s giraffe mascot, Dr. G. Raffe, was renamed Geoffrey shortly before Lazarus sold Toys “R” Us to Interstate Stores in 1966.
After Interstate went bankrupt, Lazarus helped revive the Toys “R” Us brand and led the chain to enormous growth over the next two decades. His stores were some of the first to use scanning guns, which made checkout lines faster for the consumer and helped the company track inventory daily. The first Kids “R” Us store opened in 1983 and Babies “R” Us launched in 1996. Today there are more than 800 Toys “R” Us and Babies “R” Us stores across the country.
4. Dick’s Sporting Goods
In 1948, 18-year-old Dick Stack developed a business plan to sell fishing equipment at the Army and Navy supply store where he worked in Binghamton, New York. After the supply store’s owner rebuffed him, Stack used $300 from his grandmother to open his own bait and tackle shop in Binghamton later that year. Over the next decade, the inventory at the original Dick’s expanded to include a wide variety of sporting goods.
Dick’s remained a small operation until 1984, when Dick Stack’s son, Edward, became CEO. In 10 years, Edward helped the company grow from two stores in Binghamton to 22 stores in 11 markets. The company experienced a minor hiccup in 2000, when it announced it was changing the address of its online store to dickssportinggoods.com. Previously, the company had spent millions of dollars on an advertising campaign to familiarize consumers with dsports.com. That proved to be a poor alternative to dicks.com, which the company didn’t use out of fear that it would be blocked by filters on some Internet search engines. The chain has continued to expand and now boasts more than 300 stores across the country.
Maxwell Kohl made a living operating traditional grocery stores before opening his first supermarket, Kohl’s Food Stores, in 1946. He opened his first Kohl’s department store in Brookfield, Wisconsin, in 1962. In addition to selling general goods, the original Kohl’s department store was paired with a grocery store. Over the next 10 years, the dual-store concept was abandoned and Kohl opened four additional department stores. Maxwell Kohl’s sons, including future US Senator Herb Kohl, managed the business until 1979, when an investment firm took control and helped expand the Kohl’s brand to markets outside of the Midwest. Today, there’s at least one Kohl’s in 49 of 50 states.
Image credit: Flickr user Eric M. Martin
In 1902, George Draper Dayton, who founded the Minnesota Loan and Investment Company, built a six-story department store in Minneapolis. Dayton ran the store along with his five sons until his death in 1938. The Daytons opened Southdale, the world’s first fully enclosed two-level shopping center, in 1956, and opened the first Target discount store in Roseville, Minn., in 1962. According to the company’s website, it debated more than 200 possible names before settling on Target and the bullseye logo. “As a marksman’s goal is to hit the center of the bulls-eye, the new store would do much the same in terms of retail goods, services, commitment to the community, price, value and overall experience.”
By 1970, the upscale discount chain had opened stores in Colorado, Missouri, and Texas. Today, there are more than 1,500 Targets nationwide.
Home Depot’s main competitor was founded in North Carolina in 1946. H. Carl Buchan and his brother-in-law, James Lowe, ran a small hardware store before Buchan bought out his partner’s share in the business. Buchan reorganized the store’s business model by dealing directly with manufacturers and stocking the shelves almost exclusively with hardware and building materials to capitalize on the post-war building boom. The strategy worked and Lowe’s, which was incorporated in 1952, expanded to six stores by 1955. The company went public in 1961 and continued to grow over the next three decades. The first Lowe’s megastore was opened in 1994.
Hendrik Meijer, a barber, opened North Side Grocery store in Greenville, Michigan, with his 14-year-old son in 1934. Meijer stocked his original store with about $300 of merchandise that he purchased on credit. From these humble beginnings, Meijer built a chain of more than 20 stores by 1960. But his biggest contribution to the retail business was yet to come.
In 1962, Meijer opened Thrifty Acres in Grand Rapids, Michgian. Thrifty Acres sold food and general merchandise and is considered one of the first retail supercenters. According to Thrifty Years: The Life of Hendrik Meijer, the original Thrifty Acres stores were built with six-inch floors so that they could be converted into car showrooms if the supercenter concept failed. It didn’t. Thrifty Acres stores were rebranded as Meijer in 1986. Today, there are nearly 200 locations nationwide.
Image credit: Flickr user Julep67
Jim Sinegal, an executive vice president for Price Club, left the company to start his own venture and opened the first Costco in Seattle in 1983. Price Club, founded by Sol and Robert Price, had pioneered the warehouse retail model when it opened its first store in San Diego in 1976. Price Club and Costco entered into a partial merger in 1993, but split again one year later. Sinegal changed the company name from PriceCostco to Costco Wholesale in 1997 and continues to manage it to this day. With nearly 600 locations across the world, Costco boasts a membership base of more than 50 million. It's also the largest wine retailer in the U.S.
10. Sports Authority
Like Bernie Marcus and Arthur Blank, Jack Smith, one-time CEO of Herman’s World of Sports, put his former employer out of business with his own upstart company. Smith opened the first Sports Authority in Fort Lauderdale, Florida, in 1987, bringing the superstore model to the sporting goods industry. Kmart CEO Joseph Antonini acquired Sports Authority for $75 million in 1990, which provided the financial clout necessary for Sports Authority to expand from an eight-store Florida enterprise to a nationwide chain. Today, the Colorado-based company operates more than 450 stores in 45 states.
Sam Walton opened his first discount store in Rogers, Arkansas, in 1962 and the company was officially incorporated as Wal-Mart Stores seven years later. The first Walmart distribution center opened in 1970. In 1983, Walmart introduced People Greeters in its stores and Walton opened the first Sam’s Club in Midwest City, Oklahoma. By 1987, Walmart had more than 1,000 stores. Today, there are nearly 9,000 locations worldwide and the company boasts revenues of more than $400 billion. And in case you were wondering, a single Walmart grocery distribution center can store four million bananas.