Fedco

Federal Employees' Distributing Company (Fedco)

Company type	Nonprofit consumer cooperative
Industry	Retail (department store)
Founded	1948
Founder	Robert Kee (chairman of the Board of Directors)
Defunct	1999
Fate	Filed for Chapter 11 bankruptcy; stores acquired by Target and others
Headquarters	Los Angeles , United States
Area served	Southern California
Key people	Robert Kee (Board Chairman), Edward Butterworth (CEO)
Products	General merchandise, groceries, automotive services, furniture, appliances, private label products

Not to be confused with Fedco Food Stores.

Federal Employees' Distributing Company, commonly referred to as Fedco, was a membership-oriented department store chain operating throughout Southern California from 1948 until its closure in 1999.

Origins

Fedco was distinctive as a nonprofit consumer cooperative. It was established by a group of 800 employees from the United States Postal Service, aiming to capitalize on collective purchasing power by buying directly from wholesalers and bypassing typical retail markups. The inaugural store, situated on Slauson Avenue in Los Angeles, was launched under the leadership of Robert Kee, who chaired the Board of Directors. Initially, members selected products from catalogs within the store. As customer demand increased, the Board expanded inventory to include stocked merchandise on-site and eventually acquired adjacent retail spaces. Under Kee’s direction, FedScript was introduced, functioning as a credit-like system that allowed members to "borrow" funds usable exclusively at Fedco locations. The product range encompassed general merchandise, groceries, and, at select outlets, automotive services and furniture. Lifetime membership fees were under five dollars for U.S. government employees, students, and their families.

The company’s structure mirrored that of credit unions: it operated as a nonprofit entity owned by its members, who elected a governing board. Membership eligibility was legally confined to specific groups but expanded over time to include individuals affiliated with federal or local government agencies, their employees and dependents, as well as recipients of government disbursements such as social security benefits.

To enter stores and pay by check, presenting a membership card was mandatory. However, restricting cash purchases by non-members proved challenging because lifetime cards lacked photo identification—unlike later membership retailers like Sam's Club. Consequently, anyone could use a member’s card to gain entry, with name verification occurring only during check transactions.

By 1998, lifetime membership cost $10 (~$Template:Format price adjusted for inflation).

At its height, Fedco operated ten full-line department stores plus three dedicated appliance stores, serving an estimated four million members.

Business model

Fedco's leadership aimed to establish the stores as comprehensive retail hubs, akin to the hypermarket format. Customers and members were offered an extensive assortment of goods, ranging from cameras and office equipment to both large and small household appliances, gardening materials, apparel, jewelry, alcoholic beverages, and grocery items. Each location featured a full-service delicatessen along with a dedicated produce section. Additionally, numerous outlets included tire and battery service centers. Corporate purchasing agents frequently discovered unique bargains on various products, including seasonal merchandise such as holiday toys.

Operations were closely supervised to ensure efficiency. To maintain workplace harmony, romantic relationships among staff were discouraged, and spouses were prohibited from being employed simultaneously at Fedco.

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Classic Fedco sign

Certain departments situated along the store’s perimeter were not directly operated by Fedco but functioned as leased concessions. For instance, the Stereo Components area was managed by Coastron, a retailer of the Soundcraftsmen stereo brand, which paid rent to Fedco for its space. Other concession-operated sections included the Optical Department—which was eventually acquired by Fedco—the Shaver Shop, and the Key & Lock Shop. Fedco also marketed a range of private label products spanning electronics, liquor, timepieces, and select grocery items.

The membership system proved effective for Fedco over many years. Stores commonly experienced heavy traffic with lengthy checkout queues. A photograph of a crowded Los Angeles Coliseum was displayed near the exit of the San Bernardino store above a drinking fountain, bearing the message: "Each week more people shop at Fedco stores than attended the 1984 Olympic Games opening ceremonies!" Separate checkout lanes existed for general merchandise, groceries, and produce. At one point, purchased items were placed in bags sealed with color-coded tape that changed daily to deter theft. Later practices involved stapling bags closed with receipts affixed on top. As an early version of current membership club procedures, these sealed bags and receipts were inspected upon exit.

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A Fedco price tag marking a compact disc

Fedco adopted a competitive pricing strategy that included deploying undercover shoppers to monitor competitors’ prices. Many prices ended in 87 cents to emphasize their status as the lowest cost option, even if only marginally less than rival prices ending in 99 cents.

For most of its existence, Fedco remained closed on Wednesdays; however, some staff worked on those days for restocking and inventory purposes. During the Christmas period, stores operated all seven days weekly to handle increased customer demand. Employees were occasionally required to work shifts lasting up to 10 hours and could work six days per week during peak summer and holiday seasons.

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Front of a Fedco Fedcharge Card

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Back of a Fedco Fedcharge Card

Employees at Fedco belonged to the Teamsters Union, primarily locals 232 and 542. In the summer of 1979, they staged a strike demanding wage increases relative to those received by members of the Retail Clerks Union. The labor dispute lasted about three weeks before reaching resolution.

In 1994, Fedco became one of the pioneering membership retailers to accept bank-issued credit cards. Most discount membership stores avoided credit cards due to high transaction fees relative to their slim profit margins (often single-digit percentages), which would have necessitated raising prices and risking loss of competitive advantage to non-credit card accepting competitors.

Fedco locations

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Fedco store in Cerritos, California

Fedco operated multiple outlets across Southern California, including:

1. Van Nuys (Los Angeles), located at 14920 Raymer Street, store #1, which closed in 1999 and was succeeded by Target (1956–1999)
2. La Cienega (Los Angeles), situated at 3535 South La Cienega Boulevard, store #2, replaced by Target after its closure in 1999 (1961–1999)
3. San Bernardino, at 570 South Mt. Vernon Avenue, store #3, transitioned to El Super following Fedco’s exit in 1999 (1968–1999)
4. Cerritos, found at 11525 South Street, store #4, which ceased operations in 1999 and was taken over by Target (1970–1999)
5. National City, located at 1100 Highland Avenue, store #5, converted into a Walmart after 1999 (1984–1999)
6. Pasadena, at 3111 East Colorado Boulevard, store #6, replaced by Target in 1999 (1965–1999)
7. Costa Mesa, positioned at 3030 Harbor Boulevard, store #7, closed in 1999 and succeeded by Target (1972–1999)
8. Ontario, at 2534 South Archibald Avenue, store #8, which closed in 1999 and the site is now an Ontario Police Department facility (1982–1999)
9. Escondido, located at 1475 East Valley Parkway, store #9, replaced by Home Depot after closing in 1999 (1986–1999)
10. Buena Park, situated at 8450 La Palma Avenue (previously a May Co. location), store #10, converted to Walmart following its closure in 1999 (1993–1999)

Former Fedco premises included:

1. Los Angeles, at 3928 West Slauson Avenue; operations moved to the La Cienega Boulevard location in 1961
2. San Bernardino, located at 1140 West Second Street; superseded by the Mt. Vernon Avenue outlet in 1968
3. Lakewood, at 5436 North Woodruff Avenue; replaced by the Cerritos store in 1970
4. San Diego, corner of 54th Street and Euclid Avenue; replaced by the National City branch (1957–1984)

Fedco Reporter

The Fedco Reporter served as the store's official catalog and magazine. Its creation was largely driven by Board President Robert Kee alongside Edward Butterworth, who advanced from company attorney to Board member and eventually CEO. Leadership of the department was handled by art director and art department manager Sal Heredia, together with editor Anita McManes. Issued every two months, the Reporter was a 62-page catalog sent directly to members, featuring themed seasonal promotions such as "Buyers' Goof Days." Besides product displays, it included brief one-column articles. Typically, each issue featured a piece on changes in federal policies impacting federal employees. Most articles focused on intriguing yet lesser-known tales from California’s history, marked with a "California Historical" emblem.

Archives of the Fedco Reporter along with other Fedco memorabilia are preserved within the Fedco Superstores Inc. Collections housed at the Cal State L.A. University Library.

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Fedco Medicated Chest Rub

Bankruptcy

Although Fedco existed before major retail giants like Walmart, Target, Kmart, Ames, and membership-based chains such as Costco and Sam's Club, it remained a regional player and ultimately could not withstand competition from nationwide retailers.

In attempts to remain competitive, management introduced various strategies including accepting bank cards at a time when many competitors only accepted proprietary store credit cards, renovating store layouts, and permitting fast food franchises like Panda Express to operate within select locations.

The company suffered a $14 million loss due to damage inflicted on its La Cienega store during the Los Angeles riots of 1992.

In 1999, Fedco filed for Chapter 11 bankruptcy, having been the longest-standing membership-based retailer in the United States at that time. The majority of its stores were acquired by Target, while several locations, such as the one in Escondido, California, were demolished; the Ontario site was repurposed as a police department headquarters. During the bankruptcy proceedings, Fedco’s $10 lifetime membership was converted into a $300 coupon booklet redeemable at Target. Proceeds from the bankruptcy sale were placed into a trust fund dedicated to charitable initiatives benefiting communities that had hosted Fedco stores.

See also

• Big-box store
• Hypermarket
• Gemco
• Zody's

Sources

• Karen Newell Young, "Expansion of Discount Retailers in the County: An Overview of Fedco," Archived 2012-11-07 at the Wayback Machine, Los Angeles Times (Orange County edition), February 19, 1988, Orange County Life, p. 8.