Sebastian Kresge

Sebastian Kresge was among the most successful retailers in American history. The founder of what would become the K-Mart chain of discount stores, he was also an accomplished philanthropist who focused his efforts on capital grants and building projects.

Kresge’s background was the definition of “hardscrabble.” Born in 1867 to ethnically German farmers, he was raised in rural Pennsylvania to be upright and God-fearing. His parents instilled lifelong habits of piety, thrift, and industriousness in their son, but hard work was no proof against drought and depression. When Sebastian was eight years old, his parents lost the family farm to foreclosure, victims of the Panic of 1873.

In his teens, Kresge set his sights on becoming a teacher. To finance his education, he struck a bargain with his parents: if they would pay his tuition, he would sign over his wages until age 21. In the meantime, he would live on the proceeds of his beekeeping business, which Sebastian had started as a boy.

He kept the bargain, finished college, and spent one term teaching before he decided that his real interest was business. After a brief stint as a deliveryman and clerk in a Scranton hardware store, Kresge became an itinerant tin-and-hardware salesman, which brought him into contact with a group of men who would later become his mentors in the retail sales business: F. W. Woolworth, S. H. Knox, and John McCrory.

For an initial investment of $8,000, paid out of savings the young man had assiduously accumulated over the years, Kresge acquired two struggling five-and-dime stores. A dozen years later, he had spun his foothold in Detroit into 85 stores. Kresge was on his way to building the retailing empire that eventually became K-Mart.

Kresge’s genius, most business historians agree, was in finding and occupying an unfilled retailing niche, the middlebrow space between low-cost five-and-dimes and more expensive, brand-name retailers. He was personally involved in almost every aspect of his expanding empire, showing himself especially adept at finding cheap real estate, usually just months before the middle-class customers that were his bread and butter moved out to the newly tilled suburbs surrounding his shopping centers. Well ahead of his time when it came to labor relations, Kresge was also one of the first retailers to offer paid vacations, pensions, and profit sharing. Eighty years after its founding, at its 1979 high-water mark, K-Mart Corporation posted sales of $11.7 billion in 1,891 stores across the United States, Canada, and Australia.

Kresge was notoriously frugal—his two early marriages foundered because of his personal stinginess, and he gave up golf because he couldn’t stand the lost balls. He was nevertheless profoundly generous to civic and charitable causes all his life. A lifelong Methodist, he was weekly to be found in the pews of a particularly austere country church in Monroe County, Pennsylvania, near his birthplace. Early on, he confided to fellow churchgoers that he hoped to give away his entire personal fortune. His philanthropic credo was simple. I want, he would say, “to leave the world a better place than I found it.”

While simply derived, his approach was anything but simplistic. Befitting a man who created a whole new retailing niche, Kresge also developed a distinctive philanthropic identity. As a relatively young man, he became known for his opposition to alcohol. Kresge was a lifelong teetotaler who abhorred the damage that liquor caused in the lives of the working poor. He supported anti-liquor groups long after the temperance movement ceased to be trendy, and even after it became evident that Kresge’s anti-liquor politics were hurting his bottom line.

When he funded the Kresge Foundation with an initial $1.3 million in 1924, he decided to focus on building and maintaining existing charitable efforts, leaving to other foundations the task of identifying new approaches and groups. Not surprisingly for the man who founded a beekeeping operation before he turned 10, Kresge’s foundation also focused on self-help charitable efforts that enabled the poor to lift themselves out of poverty. And driven by his intense religious devotion, Kresge favored religious organizations that without his support would be forced to rely on government funding—and the secularization that accompanied it. Kresge’s earliest grants reflected this preference for mature organizations: the YMCA and the Girl Scouts were among the earliest grantees, and remain grantees to this day.

Under Sebastian’s close personal guidance—he remained an active member of the board until his death—the Kresge Foundation has distinguished itself by its willingness to give large grants to support major brick-and-mortar projects for established institutions. The Kresge name can be found among the supporters at many large universities, hospitals, arts institutions, and museums. It has supported hospital expansions from Columbus to Fresno; built wings on museums and concert halls in Albuquerque and Indiana; and supported a medical school in Ann Arbor, a law library at Notre Dame, and a chapel at the Claremont Theological School in California. Perhaps the Kresge Foundation’s largest brick-and-mortar grant brought it back to the birthplace of the Kresge retailing empire, Detroit, where in 2002 the Foundation gave a $50 million challenge grant to the city to support its ambitious downtown riverfront renovation.

Nearly 100 years old when he died in 1966, Kresge gave his foundation a total of $60,577,183 during his lifetime. That alone made him one of the largest donors in the country. And he almost achieved his wish to divest himself of the wealth he worked so long and intently to accumulate: when he died, his personal estate was worth less than one-tenth the value of what he had given to the foundation which bears his name.

~ Justin Torres

 

Further reading:

  • Stanley Sebastian Kresge and Steve Spilos, The S. S. Kresge Story (Western Publishing, 1979)
  • “The Pinch-Penny Philanthropist,” Time, October 28, 1966


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