Pace Membership Warehouse

Company History

Throughout the 1980s the United States saw a boom in warehouse chains. These stores were meant to offer bulk sizes of goods you’d normally find in a department store for a much lower cost. While the concept had been around for at least 10 years by this point, early warehouse stores were mostly operated by established retailers in limited areas, serving more as a proof of concept. The first successful warehouse chain is usually considered Price Club, which was built from the ground up by the Price family. Their success was quickly copied by other warehouse chains like Costco. Not wanting to miss out established retailers also bought into the trend mostly by purchasing preexisting chains.

By the late 80s the dominant player in warehouse stores was Wal-Mart who had been test marketing their Sam’s stores in Texas in since the early 80s. Not wanting to miss out on the action Kmart made the decision to purchase the small but profitable Pace Membership Warehouse chain. Initially the stores performed well, but a mistake was made by expanding into markets like Houston and Dallas where they experienced fierce competition. This quickly put a financial drain on Kmart, who were putting lots of focus into expanding and diversifying their entire business. Pace first tried to solve money issues by selling more profitable locations to Wal-Mart who converted them to Sam’s. This left the chain limping along with locations that were either underperforming or too close to existing Sam’s stores. The money from this sale was meant to be put towards Super Kmart’s expansion, and would launch Kmart’s divestiture of all non-core businesses.

This commercial aired in 1993 in the Texas market. It was a last ditch effort to capitalize on free membership.
Houston History

Houston’s first experience with a warehouse chain was Gemco who opened five stores here in the early 70s. After experiencing issues Gemco sold 3 locations to Wal-Mart to convert to Sam’s Club, with the others sold to Fiesta. Sam’s would continue expanding here unabated until 1992 when multiple warehouse chains expressed interest in expanding into Houston. These chains were Pace, Price Club (who would build on I-10) and, Costco (who did not end up in Houston).
The first location selected by Pace was part of what was termed as a Kmart power center. Three Kmart anchors were built to be with spaces leased to smaller shops. The anchors were a Big Kmart, Pace, and Builder’s Square with a parcel left for future expansion. The property selected was at the Southwest corner of I-45 and West Road and had previously held Houston’s final drive-in theater. Pace was the first to leave the shopping center along with the other Houston store in 1994. The former store was temporarily converted to a company owned Compaq Outlet Store, before being converted to the furniture retailer The Dump. Builder’s Square was next to leave in 1998 with Kmart finally vacating in 2003. The building which is now Fry’s was originally Builder’s Square. Fry’s enclosed the garden center to extend floor space and the former Kmart is now subdivided by Ross and Fallas Parades. While the external facade has been dressed up, the original shape of the store has been kept. Since then, the strip center has done pretty well, and had some spots fill out, although the 4th anchor location is still vacant.
The second Pace opened at 8715 West Loop South. This was in another Kmart owned center. However, rather than the Power Center this location was simply a Builder’s Square and Pace Warehouse in close proximity. The two buildings were not connected and the outparcels around the shopping center were mostly leased to restaurants. The Builder’s Square location was originally Children’s Palace’s and was purchased by Kmart during bankruptcy. While Builder’s Square reused the original building, It would be eventually demolished for Lowe’s. As for Pace’s after their exit from Houston, the building sat vacant for many years. Finally, being subdivided and split among multiple tenants. The first to move in was Hobby Lobby in 1997, with Mars Music following shortly after. While Hobby Lobby still occupies the space, Mars music over expanded and closed their stores by 2002. Since then, the space has hosted a few different tenants, most recently K&G Fashion and Planetary Cycles.

Photo Gallery

Store No
#43310251 North Fwy, Houston, TX Building now used by "The Dump"
#4348715 West Loop S Houston, TX Building now subdivided by K&G and Hobby Lobby

One comment

  1. Price warehouse had the business model from Makro, a Dutch owned company started in 1968. None of the warehouse businesses in the US came up with the model. Most people don’t know that