Leo Kahn, entrepreneur who helped found Staples office-supply business, dies at 94

Leo Kahn, 94, a warehouse supermarket pioneer who applied his all-under-one-roof approach to pencils and paper clips as a co-founder of office-supply giant Staples, died May 11 at an assisted living facility in Boston of complications from a series of strokes.

The son of a wholesale grocer, Mr. Kahn transformed his family’s small business into Purity Supreme, one of the largest supermarket chains in New England.

One of Mr. Kahn’s innovations was Heartland Food Warehouse, a big-box-style grocery that Inc. magazine called “the first successful deep-discount supermarket in the country.”

After he sold Purity Supreme in 1984, Mr. Kahn and his onetime industry rival, Thomas G. Stemberg, combined to start a discount office-supply store in Brighton, Mass.

Now in its 25th year, the Staples chain has sales of $27 billion a year and more than 1,800 locations around the world.

Besides Staples, Mr. Kahn also started Fresh Fields, a health-oriented grocery store founded in Rockville in 1991.

Inside Fresh Fields, which had locations across the region, customers could shop in aisles filled with tofu, organic goat cheese and wheatgrass juice. The company was sold to Whole Foods Market in 1996.

For all his successes, Mr. Kahn — called a “serial entrepreneur” by his family — had his share of flops.

A discount auto-parts store did not work out. Neither did a Legal Sea Foods fish market spinoff or an upscale grocery store in Phoenix. Staples almost became a pantyhose company.

For much of his career in the Boston area, Mr. Kahn competed directly with stores led by Stemberg, his future partner. The executives constantly battled to undercut each other’s prices.

In one advertisement, Inc. reported in 1989, Mr. Kahn guaranteed the best price on turkeys for Thanksgiving. Shortly after, Stemberg said his company matched the lowest-advertised price for turkeys — nullifying Mr. Kahn’s offer.

Despite their intense business rivalry, the two became friends and bonded over basketball games at Harvard University, their alma mater. They exchanged business ideas about untapped retail markets.

After a number of brainstorming sessions, Mr. Kahn and Stemberg came up with a list: pantyhose, pet products, medical supplies and telephones.

Ultimately, Stemberg suggested office supplies. Mr. Kahn agreed and put up the cash for an initial investment.

The first store opened in May 1986 and catered to every office need, whether reams of copy paper or instant chicken soup. Staples offered lower prices by acquiring products directly from manufacturers.

To lure customers, Stemberg placed an advertisement in a Harvard student newspaper: “It’s amazing how many great minds will pay 79 cents for a 12-cent pen.”

The company eventually expanded and attracted blue-chip investors such as Mitt Romney, who told the New York Times in 1989 that Staples was a “classic ‘category killer,’ like Toys R Us.”

For Staples, the Washington region was a particularly lucrative market. Over the years, competitors including Office Depot and OfficeMax have attempted to copy the Staples strategy.

Today, Staples claims to be the largest office-supply company in the world.

Leo Kahn was born Dec. 31, 1916, in Medford, Mass., to immigrant parents from Lithuania.

After graduating from Harvard, he received a master’s degree in journalism from Columbia University. He was a reporter in New Bedford, Mass., before serving as a navigator in the Army Air Forces during World War II.

When the war ended, he returned to Boston and began working at his father’s wholesale grocery, Purity Supreme. He led the company’s rapid expansion and built it into a regional powerhouse before selling the company for $80 million in 1984. The stores are now part of the Stop & Shop supermarket chain.

In the early 1990s, Mr. Kahn sought to capi­tal­ize on the growing trend of health-food grocery stores.

When Fresh Fields opened in 1991, the store marketed its “good for you foods.” Mr. Kahn employed many of the same business tactics at Fresh Fields that made Purity Supreme and Staples highly profitable. Money magazine named Fresh Fields the store of the year in 1993.

He sold his share of the business in 1994 for $40 million. Two years later, he opened Nature’s Heartland in the Boston area. The grocery store was founded on the same principles as Fresh Fields, and Mr. Kahn sold that chain to Whole Foods in 1999.

His first wife, Dorothy Davidson, died in 1975.

Survivors include his second wife, Emily Gantt Kahn of Newton, Mass.; three children from his first marriage, Joseph Kahn of New York, Daniel Kahn of Needham, Mass., and Elizabeth Mallon of Topsfield, Mass.; two stepdaughters, Lisa Birk of Cambridge, Mass., and Xandria Birk of Asheville, N.C.; and 11 grandchildren.

T. Rees Shapiro is an education reporter.
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