Closed door (or membership) stores were discount stores that existed in the US since the late-1920s, when some retailers distributed ‘membership’ cards to some of their customers. In some cases, only card holders could shop there; at others, the card holder received lower prices than the noncard holder.
One of the largest was GEM International. GEM (Government Employees Mutual) had units from Boston to Honolulu (and even into Canada, England and Puerto Rico.) (Rotary) (GEM was also referred to as Government Employees Mart.)
The overall operation of the GEM store is that portions of the facility were leased to various merchandising enterprises; the commodities in which they deal were sold to members of the GEM; a percentage of the gross sales was paid for the use of the space occupied by the merchants.
Only members of the GEM were permitted to make purchases in this warehouse store and prices prevailing at the GEM store are substantially below prevailing retail prices elsewhere. (Supreme Court of Colorado)
A GEM membership cost $1 to $2 and was open to active and retired members of any level of government, the military, educational institutions, businesses with government contracts, and non-profit organizations. (Torontoist)
It started in Denver, Colorado; the Women’s Wear Daily June 12, 1956 issue reportedly noted, “New Discount Setup For Government Help Is Opened in Denver.”
“GEM, Government Employees Mutual, Denver’s first large discount house, carrying both hard and soft lines opened here at 5200 Smith Road. Shopping at the new firm will be restricted to city, county, State and Federal employees and military personnel.”
Glenn Kaya is credited with bringing the GEM stores to Hawaiʻi – starting with Kapalama, on Dillingham Boulevard (July 17, 1957) and Ward Avenue (August 1, 1962.) (Ulukau) Following the mainland model, GEM itself did not carry inventory, it leased space to concessionaires operating different ‘departments.’
Later, stores were added at Waipahu, Hilo, Kauai and Kaneʻohe and GEM became the No. 2 retailer in the state (behind Sears.) Shortly before the Waipahu GEM opened in 1970, the membership requirement was eliminated. (Sigall)
“Many of Hawaiʻi’s well-known companies were GEM departments. ABC Stores, Wong’s Drapery, CS Wo, Mid-Pacific Lumber, Kim Chow, Honolulu Sporting Goods and Hauoli were all GEM tenants.” (Kaya; Sigall)
It was creative with promotions, too. “When GEM Stores in the new state of Hawaiʻi hooked Huckleberry Hound, Yogi Bear and Quick Draw McGraw for personal appearances to build store traffic and plug the stores’ third anniversary promotion … KHVH-TV, Honolulu, was used to implement the program.”
“Starting almost two months before the visit, a strong TV spot campaign was initiated to recruit members for the H Hound fan club and plugging Huckleberry for President buttons.”
“When Huck and his pals armed at Honolulu International, about 10,000 of their loyal Hawaiian fans turned out to great them — the largest crowd in the airport’s history.” (Source – The Weekly Magazine Radio and TV Advertisers Use, February 1961)
“The crowd out to greet Huckleberry with campaign manager Yogi Bear and Quick Draw McGraw (who is slated for a high State Department post if Huckleberry Hound wins) exceeded that drawn earlier by President Eisenhower and visiting royalty from Japan and Iran.”
“Traffic was tied up in the air and on the ground, and the (GEM) store had to lock its doors when 25,000 had thronged in, according to Ed Justin, assistant campaign manager”. (Broadcasting, August 8, 1960)
“Glenn Kaya, general manager of GEM, reported that store sales were way up during their Honolulu junket. Results were equally record-breaking on their visits to other islands”. (The Weekly Magazine Radio and TV Advertisers Use, February 1961)
Later, GEM International merged with Parkview Drugs of Kansas City. In 1965, GEM had 34 stores across the country and Parkview had 39 drug stores and other leased departments, including 22 in GEM stores. Control would be vested in Parkview. (Southeast Missourian, December 22, 1965) Kaya was made Parkview-GEM Vice President.
While sales were good, GEM and other discounters were concerned about Hawaiʻi’s Fair Trade Act that had been passed on May 14, 1937. It authorizes minimum price fixing contracts as to the sale or resale of products sold under trademark brand or name. (A manufacturer could state the minimum price a product could sell for.) It noted:
“Wilfully and knowingly advertising, offering for sale or selling any commodity at less than the price stipulated in any contract entered into pursuant to the provisions of this part, whether the person so advertising, offering for sale or selling is or is not a party to such contract, is unfair competition and is actionable at the suit of any person damaged thereby.” (US Court of Appeals 9th Circuit, 1960)
Through efforts of Kaya and others, “The legislature of the State of Hawaiʻi has repealed that state’s Fair Trade Act, effective May 11, 1967. … Hawaiʻi’s resale price maintenance statutes had favored large mainland manufacturers’ brand name products, and that such a statute tended to keep prices up.” (Journal of Marketing, 1967)
Later (January 15, 1974,) the Washington Post noted that the parent Parkview-Gem, Inc., of Kansas City, Mo., was reorganized under a section of the Bankruptcy Act. The nationwide discount chain has incurred losses for several years, and had closed 35 stores during the past year. The Hawaiʻi stores closed in 1993.