A Retailing Pacesetter Pulls Up Lame

When Sol Price opened a 100,000-square-foot discount store outside San Diego in 1976, he launched a retailing revolution. Selling tires, office supplies, and five-pound tubs of peanut butter at rock-bottom prices, his 25-store Price Club chain was generating $2.6 billion a year in sales within 10 years and had spawned a flood of imitators. Indeed, it gave birth to an industry.

But 17 years and a raft of new competitors later, Price has been faltering. And on June 16, the company said it would merge its 95 stores with $6.6 billion competitor Costco Wholesale Corp. The deal was a stunning reversal of fortune: Heading the combined companies will be Costco's 57-year-old CEO, James D. Sinegal, who had worked for the Prices for 23 years before becoming one of their most formidable competitors.