John U. Bacon
John Wiley & Sons, Inc.
Copyright Â© 2004 by John U. Bacon. All rights reserved.
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Published simultaneously in Canada.
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Library of Congress Cataloging-in-Publication Data:
Printed in the United States of America.
10 9 8 7 6 5 4 3 2 1
1 From Humble Beginnings 1
The Apple and the Tree 1
Sweet Home Chicago 7
The State of the Profession 14
Walgreen Does Chicago 22
To Live and Almost Die in Cuba 25
Walgreen Returns 27
The Most Important Merger 30
Diving Inâ€”Together 37
2 The Start of Something
Special: 1910â€“1929 43
On His Own 43
The Secrets of the Second Store 44
I Scream, You Scream 47
The Hot Lunch Program 48
Cultivating Leaders 50
Growing Like Topsy 52
The Pepper Pod 55
Steppinâ€™ Out 59
Chicago in the Roaring Twenties 61
On the Lighter Side 65
Fundamental Values 69
Putting Out Fires 71
The Walgreen Creed 74
The Knight Report 75
â€śAbsolute Dominanceâ€ť 82
If They Can Make It Here 83
Read All about It 86
Chain Fight 88
The Good Life 92
3 Nothing to Fear: 1929â€“1945 95
Facing Fear Itself 95
Better Days Are Coming 96
Helping the Mom-and-Pop Shops 101
Walgreensâ€™ Own: From Coffee to Corn Remover 105
Getting the Word Out 109
Damn the Depression, Full Speed Ahead! 111
Finding Time for Fun 117
The Son Also Rises 119
The Accidental Benefactor 122
Charlesâ€™s Demise 126
Defusing a Palace Coup 129
Thereâ€™s a War On 134
Where Everyone Meets 137
4 The Postwar Era: 1945â€“1970 139
The Power Era 139
Mergers and Acquisitions 141
All Power to the Pharmacist 144
Partners in Health 145
Battling the Bargain Stores 149
The Self-Service Revolution 151
The Shopping Center Is Born 159
The Four-Way Test 161
Chuckâ€™s Legacy 163
5 Reinventing the Corporation:
State of the Company 168
Looking for a Few Good Men 171
Walgreenâ€™s Wingman 174
The Turn-Around Team 177
Killing Off Their Little Darlings 182
The Systems behind the Smiles 187
Walgreens Goes High-Tech 189
6 Poised to Pounce: 1990â€“Future 193
â€śThis Is Dan Jorndt, How May I Help You?â€ť 193
Plain and Proud of It: The Anti-Enron 197
Getting the Right People Ready 207
A Good Corner Is a Good Corner 211
Passing the Torch 215
Hello, My Name Is Dave 217
Constant Competition 220
Walgreensâ€™ Advantages 223
The Future Is Now 224
Walgreens Financial Facts 227
Historic Highlights 229
L ate one night, Sean Smith, an eight-year-old boy living in Wilmette,
Illinois, called his mom to his room to tell her he had a sore throat.
â€śI think I need a prescription,â€ť he informed her, then opened wide.
â€śI donâ€™t know, honey,â€ť she said, gazing into his open mouth. â€śIt depends
on what kind of sore throat you have.â€ť
â€śWhat kind needs a prescription?â€ť he asked.
â€śWell, strep throat is one kind that needs a prescription.â€ť
â€śThen thatâ€™s the kind I have,â€ť he concluded, with complete confidence
in his self-diagnosis.
â€śHow do you know?â€ť his mom asked.
â€śWhatever kind needs a prescription,â€ť he said, â€śis the kind I have.â€ť
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It happens every time. Whenever Sean Smith gets sick, he informs his
mom that he needs a prescription. No, Sean is not a junior lobbyist for the
pharmaceutical industry. But he knows that when he needs a prescription,
he gets to go to Walgreens. His mom acquiesces because she knows she can
fill his prescription, pick up some chicken soup, and grab a knit hat, all in
just a few minutes. And Sean, of course, knows Walgreens has one of the
best selections of toys around, which is enough to make young Master
Smith one of Walgreensâ€™ most loyal customersâ€”despite the fact that the
Smiths live three miles from Walgreens, but just across the street from an
A lot of history went into that little transactionâ€”more than a centuryâ€™s
worth. Itâ€™s easy to take such convenience and selection for granted now.
But before Walgreens came along, pharmacies didnâ€™t have wide aisles,
bright lighting, or economical store brands; they didnâ€™t provide self-
service, allowing customers to roam the store freely without waiting for a
clerk; and they certainly didnâ€™t have Intercom, a computer network con-
necting the pharmaceutical databases of all 4,000-plus Walgreens stores,
making Walgreens the worldâ€™s second-largest satellite user behind only the
U.S. government itself.
Other stores, of course, pioneered customer-friendly innovations, too.
However, unlike so many of Walgreensâ€™ long-time retailing peersâ€”Kmart,
Montgomery Ward, and A&P, for exampleâ€”Walgreens is not only surviv-
ing, it is thriving.
Walgreens was born when Charles R. Walgreen Sr. used all his savings
plus a loan from his father to buy his first store on the South Side of
Chicago in 1901. Today Walgreensâ€™ 150,000 employees in 44 states run
more than 4,000 storesâ€”and will run more than 6,000 stores by 2010 (all
in the United States). Walgreens sells more merchandiseâ€”$33 billion
worth in 2002â€”than CVS.
Walgreensâ€™ 600,000-some shareholders have been rewarded many times
over for their investmentâ€”over 125 times, in fact, over the past three
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decades, a performance that trails only that of Southwest Airlines and
Charles Sr., however, would be heartened to learn that the company he
started over a century ago has succeeded by sticking to the basic values he
established in his first store: Put the pharmacy first, even when itâ€™s not
making the most profit; hire people on character and promote internally