Federal Employees' Distributing Company
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| Former type | Department Store |
|---|---|
| Industry | Retail |
| Founded | 1948 |
| Defunct | 1999 |
| Headquarters | Los Angeles, California |
| Products | clothing, footwear, housewares, jewelry, garden, furniture, appliances, sporting goods, produce, hardware, toys, electronics |
Federal Employees' Distributing Company, known as Fedco, was a membership department store chain that operated in Southern California from 1948 to 1999.
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[edit] History
[edit] Beginning
The chain was unusual in that it was a nonprofit consumers' cooperative. It was founded by 800 U.S. Post Office employees who wanted to leverage their buying power by purchasing goods directly from wholesalers. The Board of Directors headed by Robert Kee established the first store on Slauson Avenue in Los Angeles. Members would come into the store and find items they wished to purchase in various catalogues. As demand grew the Board of Directors began to carry merchandise in the store. Business flourished and they took over adjoining storefronts. Under the guidance of Board President Robert Kee FedScript was developed. This allowed for a form of "borrowing" but ensured that the funds could only be spent at FEDCO. Lines included general merchandise, grocery, and in some locations, auto services and furniture. MA lifetime membership was less than five dollars for employees of the U.S. government, students, and their family members. In later years, Fedco membership opened to the general public, with memberships being sold at swap meets. Fedco's lifetime membership cost $10 in 1998.[1]
At its peak, Fedco had ten department stores plus three appliance-only stores, and served 4 million members.
[edit] Business model
The management strove to make Fedco a one-stop shopping destination, similar to a hypermarket concept. The customer/member was presented with a wide variety of consumer products: camera equipment, office machines, major and minor appliances, garden supplies, clothing, jewelry, liquor and groceries. The stores also had a full-service deli and a separate produce department. Many stores also had a tire and battery shop. The corporate buyers often found one-of-a-kind deals on miscellaneous items. At the holiday season the garden department became a toy shop.
The stores were tightly managed. To foster smooth operation, romantic interest between employees was discouraged, and married couples were not allowed to hold Fedco jobs concurrently.[citation needed]
Some of the departments around the periphery of the building were not Fedco businesses, but were concessions operated by others. For example, the Stereo Components department was run by Coastron, seller of the Soundcraftsmen line of stereo equipment. Coastron paid rent to Fedco to operate in the building. Other concessions included the Optical Department (later bought out by Fedco), the Shaver Shop, and the Key & Lock Shop. Fedco offered a variety of private label items, including electronics, liquor, watches and some groceries.
The membership model was successful for Fedco for decades. It was common for the stores to be crowded, with long lines at checkout. A picture of a packed LA Coliseum, posted above the drinking fountain near the exit of the San Bernardino store, proclaimed, "More people shop at Fedco stores each week than the attendance of the 1984 Olympic Games opening ceremonies!" There were separate registers for general merchandise, groceries and produce. At one time purchased merchandise was placed in a bag and a color-coded tape was placed on the stapled bag. The tape color varied from day to day to prevent theft. In later years as merchandise was bagged, the bags were stapled shut and the receipt stapled on the top. In a precursor to the common practice at most membership clubs today, the sealed bags and receipts were checked at the exit.
Fedco had an aggressive pricing model and employed "secret shoppers" to determine prices of other retailers. The Fedco price on many items ended in 87 cents to claim the lowest price, even if it was only pennies below the customary 99 cent prices of competitors.
For most of its lifetime, Fedco was closed on Wednesdays, though some employees would work re-stocking or taking inventory. During the Christmas season, Fedco was open 7 days a week to accommodate the customer surge. Fedco would sometimes require employees to work up to 10 hours a day.[citation needed] Working 6 days a week was possible during Summer surge and Christmas Season.
Fedco employees were members of the Teamsters Union, many in Local 232 and 542. They struck the company in the summer of 1979 seeking higher pay as compared to members of the Retail Clerks Union. The strike was resolved after about 3 weeks.
[edit] Fedco stores
Fedco had several locations in Southern California including:
- Los Angeles (originally located on Slauson Ave, later relocated to La Cienega Blvd)
- Pasadena
- San Bernardino
- San Diego (Webster/Oak Park area) (closed when the Nat'l City store opened)
- San Diego (National City)
- Cerritos
- Costa Mesa
- Buena Park
- Ontario
- Van Nuys
- Escondido
- Lakewood (closed when the Cerritos store opened)
[edit] Fedco Reporter
The Fedco Reporter was the store's catalog and magazine. Board President Robert Kee and Edward Butterworth were instrumental in establishing the Reporter. Edward Butterworth rose from company attorney to Board member to the position of CEO. The department was run by art director and department manager Thomas Kimball and editor Michele Brunmier. The Reporter was a bi-monthly 62-page dated catalog mailed to members. There were seasonal specials and sales with themes like "Buyers' Goof Days". In addition to showcasing products, it also contained short one-column articles. Most issues contained one article about updates in federal policy that might affect federal employees. The majority of the articles were about minor but colorful stories in California history, and were labeled with a "California Historical" logo.
[edit] Bankruptcy
Fedco predated the giant chains Walmart, Target, Kmart, Ames, and fellow membership chain Costco, but remained a regional chain and eventually was unable to compete with the national chains. Fedco filed for Chapter 11 bankruptcy in 1999, at which point it had been the longest-operating membership-based store in the country. Most of its locations were sold to the Target chain,[2] while others (like the Escondido, California location) were eventually torn down, and the Ontario location eventually became the city's police department. The $10 lifetime membership at Fedco was exchanged for a $300 Target coupon book at the 1999 bankruptcy.[3] The proceeds of the bankruptcy sale were placed in a trust fund intended to charitably serve communities that had hosted Fedco stores.
[edit] See also
[edit] References
- ^ Robert Scally, "New format positions Fedco for future growth," Discount Store News November 23, 1998, online at CBS bnet.
- ^ Robert Scally, "A final farewell to Fedco," Discount Store News, September 6, 1999, online at CBS bnet.
- ^ "Fedco to offer coupons to settle membership". Discount Store News 38 (20): 4. October 25, 1999. http://findarticles.com/p/articles/mi_m3092/is_20_38/ai_57443499. Retrieved September 18, 2006.
[edit] Sources
- Karen Newell Young, "Discount Stores in County Proliferate: A Profile of Fedco,", Los Angeles Times (Orange County ed.) February 19, 1988, Orange County Life p. 8.
