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Pay 'n Save

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Not to be confused with Pak'nSave or Pay 'n Pak.
Pay 'n Save Corporation
Company typePrivate (1940–1964; 1984–1987)
Public (1964–1984; 1987–1988)
Subsidiary (1988–1992)
IndustryRetail
FoundedTemplate:Sda, in Seattle, Washington, United States
FounderMonte Lafayette Bean
Defunct1992 (1992)
FateAcquired by PayLess Drug
Headquarters
Seattle, Washington
,
United States
Number of locations
124 (1992)
Area served
Western United States
Key people
M. Lamont Bean (president (1959–1984))
ProductsPharmacy and General Merchandise
Number of employees
3,500 (1992)
SubsidiariesPay 'n Save Drugs, Ernst/Malmo Nursery, Bi-Mart, Lamonts, Sportswest, Schuck's Auto Supply, Yard Birds, Von Tobel's, Price Savers Warehouse

Pay 'n Save Corporation was established in 1940 in Seattle, Washington by Monte Lafayette Bean. Throughout its existence, it grew to become the dominant drugstore chain within Washington state and held ownership over multiple regional retailers such as Lamonts and Ernst. After being sold to the Trump Group in 1984 and undergoing an unsuccessful repositioning as a low-cost merchandise retailer by 1986—leading to losses approaching $50 million—the company was acquired by Thrifty Corporation in 1988. Subsequently, the stores were transferred to PayLess Drug, which phased out the Pay 'n Save brand. Most of the company's divisions were either spun off into independent entities or closed down. As of 2023, the only remaining business from the original corporation is its membership-based discount chain, Bi-Mart, which has operated as an employee-owned firm since 2003.[1]

At its height, Pay 'n Save managed 313 outlets across ten western U.S. states, as well as locations in Canada and the United Kingdom. These stores operated under various brand names including Pay 'n Save, Ernst, Bi-Mart, Lamonts, Sportswest, Schuck's Auto Supply, Yard Birds, Von Tobel's, and Price Savers.[2]

Origins and Expansion

Monte Lafayette Bean relocated from Portland, Oregon to Seattle, Washington in 1940 to assume control of Tradewell Stores, Inc., a grocery chain.[3] By 1947, he and his son M. Lamont Bean launched the inaugural Pay 'n Save pharmacy at the intersection of Fourth Avenue and Pike Street in Seattle.[3]

M. Lamont Bean assumed the presidency of Pay 'n Save in March 1959 and began exploring diversification beyond drugstores.[3] Soon after, attention turned toward acquiring Ernst Hardware—a local hardware chain owned by brothers Fred and Charles Ernst.[3] In February 1960, Fred Ernst consented to sell Ernst Hardware's nine stores to Pay 'n Save.[3] Two years later, in 1962, Pay 'n Save purchased Malmo Nursery and initiated the creation of hybrid Ernst-Malmo stores that combined hardware goods with garden and nursery supplies under one roof.[3] The first such combination store opened at Seattle's University Village shopping center.[3] By 1982, the Ernst chain had grown to encompass 68 hardware outlets.[3]

In 1965, Pay 'n Save expanded further by acquiring Rhodes department stores.[4] The flagship Rhodes store located in Seattle was closed in 1968.[4] Subsequently, in 1970 M. Lamont Bean rebranded the suburban Rhodes locations as Lamonts.[4] During 1976, Pay 'n Save added discount retailers Bi-Mart and Yard Birds to its portfolio.[5][6]

Passing of the founder; acquisition by Trump Group

File:Bi-Mart store.jpg
A Bi-Mart location in Ontario, Oregon

Monte Lafayette Bean, the company's founder, passed away in October 1982 at the age of 83.[3] The following year, in 1983, Pay 'n Save ventured into the wholesale club market by launching its inaugural Price Savers Warehouse in Salt Lake City, Utah.[3] Later that year, in December, Pay 'n Save expanded by acquiring Schuck's Auto Supply, Inc. for approximately $70 million paid in Pay 'n Save common stock.[7] At that point, Schuck's operated 58 stores across Washington, Oregon, and Idaho.[7]

In September 1984, the board of Pay 'n Save resolved to sell the retail business and granted a lockup option on $4.1 million shares to the Trump Group (distinct from New York real estate developer Donald Trump[8]) as a strategy to prevent competing bids.[2]

The largest stakeholders of Pay 'n Save, Stuart Sloan and Samuel N. Stroum, pledged to oppose the sale.[2] Holding an 18 percent stake, Sloan and Stroum urged shareholders to avoid making rushed decisions.[2] On September 12, 1984, the Trump Group announced withdrawal of its purchase offer to engage in negotiations with Sloan and Stroum.[8] Ultimately, on October 15, 1984, Pay 'n Save was officially acquired by the Trump Group for $358 million.[9]

Divestiture of subsidiaries

File:Ernst Home & Nursery.jpg
A shuttered Ernst store located in Boise, Idaho

In 1984, the company divested its sporting goods division, Sportswest, which was subsequently closed down entirely.[10] Shortly thereafter, Thrifty Corporation reopened these outlets under the Big 5 Sporting Goods brand.[11] Sportswest marked the initial step in a series of sales involving various Pay 'n Save divisions over subsequent years.[10]

By May 1985, Pay 'n Save announced plans to put all its subsidiaries on the market.[12] During this period, Dayton-Hudson's division Mervyns was anticipated to acquire the company's 20 Lamonts stores, while Southland Corporation—then proprietor of 7-Eleven—expressed interest in purchasing all 58 Schuck's Auto Supply locations.[12] The initial subsidiary sold was Price Savers Warehouse in August 1985 to Cincinnati-based Kroger.[13]

On November 1, 1985, Pay 'n Save completed a spin-off of Bi-Mart, Lamonts, and Schuck's into a newly formed entity named Northern Pacific Corporation.[14] Collectively, these divisions generated approximately $450 million in sales, establishing Northern Pacific as one of the largest retail enterprises in the Northwest.[14] Merely eight days later, control of Pay 'n Save’s primary drugstore chain transferred to a partnership equally owned by the Trump Group and a consortium led by William Zimmerman, proprietor of California discount retailer Pic 'N' Save.[15] Following this transaction, Pay 'n Save retained ownership of 69 Ernst Home Center outlets, three Yard Birds stores, and the wholesaler Northwestern Drug Co.[15] By January 1986, the company had been renamed Seattle Standard Corp.[16]

Return to Public Ownership

After being privately held for 19 months, Pay 'n Save revealed its intention to re-enter the public market in May 1986. The company aimed to offer 3 million shares at a price ranging between $16 and $18 each. As part of this deal, Pay 'n Save acquired Bi-Mart, which was previously a division of the original Pay 'n Save Corporation. The original entity had first issued common stock to the public in 1962 before transitioning back to private status in October 1984.

Shortly after announcing its plans to go public once more, on May 15, 1986, Pay 'n Save unveiled a new branding strategy along with intentions to renovate its 108 retail locations. This revamp included adopting a new blue-and-green color scheme. The company also emphasized a renewed focus on value-priced merchandise and outlined plans to raise $225 million through the sale of convertible bonds and decade-long notes.

In June 1986, Pic 'N' Save initiated legal action against Pay 'n Save's investment bank, alleging that documents related to Pay 'n Save's stock offering misrepresented the involvement of Pic 'N' Save’s former chairman, William Zimmerman. Upon his departure from Pic 'N' Save in August 1984, Zimmerman had agreed not to engage with competing firms for one year; however, Pic 'N' Save was investigating whether this agreement had been breached. Filed in Los Angeles Superior Court, the lawsuit claimed that the “Zimmerman merchandising strategy,” integral to Pay 'n Save’s business plan, incorporated trade secrets and confidential data belonging to Pic 'N' Save. On July 1, 1986, Pic 'N' Save escalated the matter by filing a civil suit against Pay 'n Save, Zimmerman, and associated parties, seeking over $50 million in compensatory damages along with an equal amount in punitive damages.

By late July 1986, Zimmerman and the Trump family successfully transitioned Pay 'n Save back into a publicly traded company through a $52 million stock offering (equivalent to approximately $Template:Format price in Template:Inflation/year), despite experiencing a significant downturn in sales since their acquisition. The company subsequently reported a $12.8 million loss for the quarter ending August 2. Mike Reynolds, senior correspondent for Chain Drug Review, attributed this decline to Zimmerman's strategy of prominently displaying tables filled with inexpensive imported products. By December, Maynard Jenkins resigned as company president to pursue opportunities in California, and the retailer discontinued its discounted product lines.

Reversion to Previous Format

In January 1987, Pay 'n Save disclosed a nearly $50 million deficit for the preceding year.[17] At that time, CEO Gerald Nathanson expressed confidence that implementing a revised merchandising approach and organizational restructuring "would reinforce Pay 'n Save and significantly enhance its future results".[17] The following month, February 1987, the company announced it would shut down all locations in Montana and Wyoming.Cite error: The opening <ref> tag is malformed or has a bad name

By June 1987, Pay 'n Save introduced its "back to basics" retail strategy.[18] This plan involved restoring the 106 drugstores to their traditional blue-and-green color palette, updating signage, and improving store lighting.[18] The stores intended to concentrate on product categories such as confectionery, snacks, stationery, household cleaning products, and greeting cards, while pharmacies remained central to each outlet.[18] The expenses related to remodeling were attributed to a $9.6 million loss reported in the company’s third quarter.Cite error: The opening <ref> tag is malformed or has a bad name

Thrifty Corporation and PayLess Drug

In April 1988, Pay 'n Save was placed on the market.[11] Interest in the acquisition was shown by Thrifty Corporation, which had previously purchased Sportswest from Pay 'n Save in 1984.[11] On May 13, Thrifty declared its intention to buy Pay 'n Save’s 110 drugstores along with 37 Bi-Mart discount stores for stock valued at $232 million.[19] They also planned to retain the Pay 'n Save and Bi-Mart brand names as well as existing staff members.[19] In the previous two years, Pay 'n Save had recorded losses of $49 million in 1986 and $27 million in 1987.[19]

Gerald Nathanson stepped down as president and CEO of Pay 'n Save in August 1988.Cite error: The opening <ref> tag is malformed or has a bad name Richard Dortch, who started at Pay 'n Save as a store clerk in 1969, was appointed president of the chain’s 124 drugstores in January 1991.Cite error: The opening <ref> tag is malformed or has a bad name

By February 1992, Pay 'n Save was once again available for purchase.[20] Shortly before this announcement on February 5, the company reported an $88 million loss following a $250 million after-tax special charge.[20] In March of that year, PayLess Drug Stores, then a subsidiary of Kmart, emerged as a potential buyer for some or all of Pay 'n Save’s 125 drugstores.[21] At that time, representatives from PayLess did not provide comments.[21]

In June 1992, PayLess Drug Stores officially acquired the financially troubled Pay 'n Save drugstore division from Thrifty Corporation.[22] Concurrently, Leonard Green & Partners, a Los Angeles-based investment firm specializing in management buyouts, agreed to purchase Thrifty’s other division including Bi-Mart.[22] After this transaction, all Pay 'n Save outlets were rebranded as PayLess Drug.[22]

M. Lamont Bean, who served as president of the company from 1959 until 1984, passed away on February 5, 2004, at age 79.[3]

In 2023, Rite Aid—the successor entity to PayLess Drug—filed for Chapter 11 bankruptcy.Cite error: The opening <ref> tag is malformed or has a bad name Subsequently, on May 5, 2025, Rite Aid initiated Chapter 11 proceedings for a second time within two years, reporting assets and liabilities ranging between $1 billion and $10 billion. As part of its restructuring efforts addressing debt burdens, intensified competition, and inflationary pressures—including those impacting PayLess Drug—the company planned to liquidate all assets.Cite error: The opening <ref> tag is malformed or has a bad name

Former subsidiaries

  • Bi-Mart: The parent company of Bi-Mart, Thrifty PayLess, was acquired by Rite Aid in October 1996 for $1.3 billion. In 1997, Rite Aid divested Bi-Mart, selling it to Endeavour Capital. By 2004, Endeavour Capital transitioned ownership of Bi-Mart to its employees through an employee stock ownership plan. Currently, Bi-Mart remains the last operating former subsidiary of Pay n' Save.
  • Ernst Home Centers: Ernst Home Centers went public in 1994 aiming to raise $50 million to fund the opening of 55 superstores. However, intense competition from larger retailers led the company to file for Chapter 11 bankruptcy protection in July 1996 and shut down 33 locations. Continued financial difficulties resulted in the announcement of closing the remaining 53 stores by November 1996.
  • Lamonts: Northern Pacific sold Lamonts to Aris Corporation, based in Scottsdale, Arizona, for $135 million in August 1989. The retailer filed for Chapter 11 bankruptcy twice—first in January 1995 and again in January 2000. In April 2000, California’s Gottschalks acquired Lamonts’ store leases for $19 million (approximately adjusted for inflation). This transaction excluded Lamonts’ inventory, which was liquidated separately. Gottschalks itself later filed for Chapter 11 bankruptcy and ceased operations during the late-2000s recession.
  • Price Savers Warehouse: After owning Price Savers for just three years, Kroger sold the 16-store chain to a management-led investment group in September 1988. Subsequently, Kmart’s Pace Membership Warehouse division purchased Price Savers in January 1991 for an undisclosed cash amount. Pace was ultimately integrated into Wal-Mart’s Sam's Club division by 1993.
  • Schuck's Auto Supply: In 1987, Jules and Eddie Trump merged Schuck’s with Kragen Auto Parts and Checker Auto Parts to create Northern Automotive, which was later renamed CSK Auto. CSK Auto went public in 1998 and became the first prominent auto parts retailer to sell products online in 1999. In 2008, O'Reilly Auto Parts, the third-largest U.S. auto parts chain, acquired CSK Auto for $528 million and rebranded all former CSK stores under the O’Reilly name shortly thereafter.

Yard Birds

Founded in 1947 in Centralia, Washington, Yard Birds began as a surplus store. Additional locations were established in Chehalis, Olympia, and Shelton. Although the business initially focused on war surplus merchandise, it evolved into a discount store featuring diverse departments such as hardware, toys, footwear and apparel, automotive supplies, pet products, sporting goods, furniture, and a full-service grocery section. The Yard Birds brand was identified by a logo depicting a black bird with a yellow beak, evoking the style of the cartoon duo Heckle and Jeckle. In 1987, Seattle Standard transferred ownership to its workforce via an employee stock ownership plan. Co-founder Rich Gillingham passed away in 1992. The chain shuttered one of its outlets in 1993 and ultimately closed its final two stores in 1995.

The Chehalis location spanned over 300,000 square feet (28,000 m2) and was regarded by its early proprietors as the West Coast’s largest surplus retailer. In 1971, this site featured a 100 foot (30 metres) tall black bird statue large enough for vehicles to pass through. After it was accidentally destroyed by fire in 1976, the store replaced the statue and added smaller versions over time. This particular Yard Birds outlet was the subject of the documentary Skinny and Fatty: The Story of Yard Birds. Later, the Chehalis store transitioned into a vendor mall and storage facility under the same name before permanently closing in 2022. Starting in April 2024, unclaimed and abandoned stock was cleared from the premises and placed in the parking area, with most items distributed free to the public.

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  20. ↑ 20.0 20.1 Cite error: Invalid <ref> tag; no text was provided for refs named sale92
  21. ↑ 21.0 21.1 Cite error: Invalid <ref> tag; no text was provided for refs named payless
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