May 19, 2024

Leo Kahn, Trailblazer in Big-Box Retailing, Dies at 94

The cause was complications of strokes, his son Joseph said.

Staples brought to office supplies the strategy that worked so well for Toys “R” Us: stock the store with a huge variety of items — including paper clips, Pepto-Bismol and office furniture — and price them at a deep discount.

Small businesses, which could not benefit from the discounts available to big companies, flocked to Staples’ ever-expanding empire of stores. Today the chain has sales of $25 billion, employs 91,000 people and operates in 26 countries.

Mr. Kahn went on to start two chains of health food stores, Fresh Fields and Nation’s Heartland, which combined sharp attention to the demands of fitness-conscious consumers with price-conscious marketing.

“Leo Kahn is betting that he’s seen the future of natural foods retailing, and it’s wearing a suit and tie, not sandals,” Regardies, a business magazine, said in 1992. The bet paid off: Whole Foods bought both chains in the 1990s at a hefty profit for Mr. Kahn.

Mr. Kahn’s partner in starting Staples was Thomas G. Stemberg, who had previously been his biggest competitor in the New England grocery business. Mr. Stemberg, a leader in introducing nonbranded generic merchandise, started his own chain of discount groceries to compete with Mr. Kahn.

An indication of the rivalry’s intensity came when Mr. Kahn ran ads guaranteeing his customers the best price on Thanksgiving turkeys, the magazine Inc. reported in 1989.

Mr. Stemberg parried with his own ads promising that his company would match the lowest advertised price on turkeys. Technically, that made Mr. Kahn’s claim untrue, a point Mr. Stemberg made to the Massachusetts attorney general’s office. Mr. Kahn withdrew his ads.

Mr. Stemberg found himself out of a job in 1985, after he complained to his bosses about the sale of First National Supermarkets’ warehouse division, which he headed. It had been sold to the Supermarket General Corporation, of which Mr. Kahn was chairman. Mr. Kahn had taken that job after selling his own food company, Purity Supreme, to Supermarket General for $80 million in 1984.

Part of the reason Mr. Kahn had been attracted to First National was that acquiring it meant getting Mr. Stemberg on his team. So the two men, both Harvard alumni, went to a Harvard basketball game and traded ideas for starting a new venture in specialty retailing.

After several Fridays visiting shopping malls — coupled with rigorous analyses — they decided that Mr. Stemberg’s proposal to concentrate on office supplies was the right one.

Mr. Kahn invested the first $500,000 in Staples. In May 1986, the first Staples store opened in Brighton, Mass. A dozen yellow writing pads that would have cost $11.55 from a traditional office-supply dealer went for $3.99.

Leo Kahn was born in Medford, Mass., on Dec. 31, 1916, to parents who had immigrated from Lithuania. He graduated from Harvard and Columbia Journalism School, worked as a reporter at a small Massachusetts newspaper, and served as a navigator for the Army Air Forces in World War II. He joined his father’s wholesale grocery company and started a new retail division, which became Purity Supreme.

He first built small stores, then supermarkets. The company came to include the Heartland Food Warehouse, which Inc. called “the first successful deep-discount warehouse supermarket in the country.”

After his success with Staples, Mr. Kahn, whose fortune came from discounting prices, took on a new challenge: the upscale market. His inspiration was the Bread Circus health food stores in the Boston area, which he visited repeatedly. He recognized a new kind of affluent consumer, one concerned about physical fitness, food contamination and the environment.

Instead of buying Bread Circus, he opened his own Fresh Fields store in Washington in 1991. Money magazine named it the nation’s “store of the year” in 1993. In 1996, Whole Foods bought what had become the 22-store Fresh Fields chain. Three years later, it bought another group of Mr. Kahn’s stores, Nature’s Heartland, in the Boston area.

Mr. Kahn’s wife of 11 years, the former Dorothy Davidson, died in 1975. He is survived by his second wife, the former Emily Gantt; his sons Joseph, the deputy foreign editor of The New York Times, and Daniel; his daughter, Elizabeth Mallon; his stepdaughters, Lisa and Xandria Birk; eight grandchildren; and three step grandchildren.

When he was in the grocery business, Mr. Kahn aided a black-owned company that was opening supermarkets in areas of Boston that lacked them by using his influence to get good deals on wholesale food. His philanthropy included endowing two professorships at Harvard and encouraging education about the Holocaust.

In 1987, Forbes magazine asked Mr. Kahn if there were any high-margin areas still to be addressed by “category killers” like Staples. He mentioned back support and other orthopedic supplies; panty hose and lingerie; and telephone installation.

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