K mart Shedding 5-and-Dime Roots With Kresge Stores Sale

Times Staff Writer

K mart, which rose from its five-and-dime store beginnings 88 years ago to become the nation’s second largest retailer, will part company with its variety store roots and sell the last of its Kresge and Jupiter domestic outlets.

McCrory Corp. of York, Pa., tentatively agreed on Friday to acquire 76 Kresge and Jupiter stores. Analysts said the purchase would make McCrory the largest domestic operator of variety stores, surpassing F. W. Woolworth Co., whose founder opened the first five-and-dime in 1879.

Details of the transaction are still being finalized, and the price was not disclosed.

McCrory had estimated sales in 1986 of about $1.8 billion from the operation of about 1,240 variety stores in 38 states and the District of Columbia including its TG&Y;, J. J. Newberry and Kress chains. It is a subsidiary of privately held Rapid American Corp. of New York. Meshulam Riklis, the husband of Hollywood actress Pia Zadora, is chairman and chief executive of Rapid American.


K mart said it is selling the stores that gave the company its start because the variety store operation no longer fits into K mart’s overall retail efforts, which rolled up $23.8 billion in sales in 1986. “Although the Kresge division has been profitable it doesn’t fit into our corporate growth plans,” said Bernard M. Fauber, the 65-year-old chairman of K mart who began his career at the company as an S. S. Kresge Co. clerk in 1941.

The Kresge and Jupiter stores made up less than 1% of annual sales for K mart, which is based in the Detroit suburb of Troy and operates nearly 4,000 stores in the United States and Canada.

The 18 Jupiter stores and 68 Kresge stores, including one at 11811 S. Hawthorne Blvd. in Hawthorne, will be renamed McCrory 5 & 10 after the transaction closes in early June, said David H. Lissy, vice president of McCrory. He added added that McCrory “will offer jobs to virtually all of” the 1,700 people who work in the Kresge and Jupiter stores.

Featuring a variety of items ranging from shoe strings to greeting cards, the first five-and-dime appeared on the American marketing scene 88 years ago, when Frank W. Woolworth opened shop in Lancaster, Pa.


The idea caught on, and soon a host of young entrepreneurs joined in, including Sebastian S. Kresge, who opened the first Kresge store in downtown Detroit in 1899, under the slogan “Nothing Over Ten Cents.”

By 1912, Kresge had 85 stores, and the five-and-dime concept become a fixture on Main Streets in cities and towns across the nation. Kresge died in 1966 at the age of 99.

The stores fell victim to urban sprawl and the rise of the suburban shopping center. The S. S. Kresge Co. opened its first K mart discount store in 1962 and changed its corporate name to K mart Corp. in 1976.

Although inexpensive merchandise continues to be a staple of today’s five-and-dime, inflation has boosted price tags from single digit levels, and specialty shops such as card stores, health and beauty outlets have cut into variety stores’ traditional market share, experts say.


“Variety stores have basically been a relatively low growth area because of competition from specialty stores,” said Monroe H. Greenstein, an analyst at the investment house Bear, Stearns & Co. in New York. " . . . the bulk of the discount business has gone to operations like K mart.”