Kresge, Sebastian Spering

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KRESGE, SEBASTIAN SPERING

There are certain businesses that have shaped and reshaped the American landscape: the automobile business, the radio and television industry, and what is called "the variety store industry." The variety store was a social invention of S. S. Kresge (1867–1966), the man who, at the turn of the twentieth century, began building so-called "five-and-dime" stores. By the mid-century these stores had evolved into the Kresge "variety stores" found in most American towns. They later became major innovators in retailing, operating huge discount retail stores known as K-Mart.

Sebastian Kresge was born in a small community in Pennsylvania in 1867. He was studious as a youngster and attended Fairview Academy, Gilbert Polytechnic Institute in Pennsylvania, and Eastman Business College in New York state. From an early age, he knew how to negotiate a business deal. When his parents had severe financial problems during his school years, Kresge made a deal with them: if they would finance his education, he would, as repayment, turn his entire salary over to them until he reached age twenty-one.

During his late teens, Kresge taught classes and worked as a deliveryman and clerk. By age twenty-three he was in the business world, working as a bookkeeper, selling industrial insurance, and investing in a half-share of a bakery.

The 1890s, for most Americans, were a time of economic depression. During this period of "hard times", Kresge had the idea of starting a chain-store operation based on low-end products. By 1899 Kresge and his partner J. G. McCrory opened stores in Memphis, Tennessee, and Detroit, Michigan. During 1899 Kresge traded his interest in the Tennessee store to McCrory and took full possession of the Detroit store. The Detroit store was a starting point of the largest chain-store company in America, the S. S. Kresge Co.

The large sign on the Detroit store read: "Nothing Over 10 Cents in Store" and customers poured in. Kresge opened another store with his brother-in-law in Port Huron, Michigan, about 150 miles from Detroit. By 1907 Kresge had created S. S. Kresge stores in Indianapolis, Indiana, in Toledo, Columbus, and Cleveland, Ohio, and in Chicago.

While making a fortune by selling his inexpensive products under one roof, Kresge was also developing a reputation as a miser. Though he became a millionaire while quite young, he still wore his suits until they became threadbare and he often lined his old shoes with paper instead of resoling them. He was a devout Methodist and Republican who never used alcohol or tobacco and who refused to be charitable toward anyone who did drank or smoked. Kresge was once asked to give a speech to a school of business administration. The speech, aimed at business students, was stunningly short and to the point. It had only 6 words: "I never made a dime talking!"

Kresge was able to maintain the ten-cent limit in his stores until 1920, when he began selling items worth up to one dollar. After World War II he began selling a range of goods at various prices. His store became a "variety store," but he was still holding on to the inexpensive end of the product market. By 1961 Kresge approved an $80 million deal to finance a line of stores called K-Mart and another discount chain, to be located in deteriorating neighborhoods, known as Jupiter stores. By 1966 the Kresge chain stores were the second largest in the country, with annual sales of $850 billion.

Though Kresge lived much of his personal life like a pauper, his consistent philanthropy, which became evident when he started the Kresge Foundation in 1924, served as an example for other benevolent foundations. Kresge explained his philanthropic spirit simply: "I can get a greater thrill out of serving others than anything else on earth. I really want to leave the world a better place than I found it." Since its founding in 1924, with an initial endowment by Kresge of $1.3 million, the Foundation has generously helped children's organizations, colleges, universities, and many other causes. By the time of his death (in 1966, at age 99), Kresge had endowed the Kresge Foundation with over $275 million.

Kresge was a businessman who aimed his business at those who were not rich, and he made a fortune by doing so.

See also: Chain Stores