. 18
( 39 .)


spawned the Po-Do™s original success.
But the Po-Do golf ball”and the hundreds of other Walgreens products
that were rolled out during the Depression”did their job. In an era when
money couldn™t be tighter and brand loyalty still counted for something,
Walgreens™ line of “homemade” goods fit the times perfectly.
The decision to expand Walgreens™ in-house product line provides an
excellent example of the formula the company has used to stay on top for
over a century: old-fashioned values of quality, customer service, and com-
pany pride combined with confidence, boldness, and the ability to adapt
to the times. The Depression provided the acid test. While other compa-
nies were falling by the wayside, Walgreens grew.

get ting the word out

Few things demonstrate confidence in your company and your future like
advertising. Walgreen had been a clever and motivated marketer since he
set up his stand of pots and pans in his first store and watched them fly out
the door; but during the Depression, when most firms were cutting back
their advertising budget because the economy was bad, Walgreen stepped
his up dramatically”for the very same reason. People were going to be
tighter with their money, he figured, so Walgreens had to show them the
tremendous deals their stores offered.
Walgreen was right. In 1931, when Henry Ford was closing a plant that
housed 75,000 jobs”seven times the number of total Walgreens positions
at the time”while blaming the Depression on the laziness of workers,
Walgreen was supporting his people with the $75,000 ad campaign to
promote the chain™s four-day sale that April. When others were backing
off, Walgreens was jumping in, increasing its advertising expenditures
from $905,000 in 1929 to $1.093 million in 1933. And it knew how to
make a splash, too, at one time flooding 150 publications in 125 cities with

110 america™s corner s tore

massive ads, 54 of them full-page. To generate sales for the 1933 Christmas
season, the company took out a four-page, four-color ad in the Chicago
When Americans started listening to the radio, Walgreens saturated
that medium, too. In 1931, Walgreens became the first drugstore chain in
the country to advertise on the “talk box,” sponsoring popular shows from
Ben Potter, Boy Detective (who was no relation to Harry) to Hit Tunes of the
Week (a predecessor to Kasey Kasem™s American Top 40), featuring such
stars as Tommy Dorsey, Guy Lombardo, and Benny Goodman.27
Walgreens wisely recruited Bob Elson, the “voice of the Chicago Cubs,”
to become the voice of Walgreens, too. (His brother Charles enjoyed a
long Walgreens career.) Elson™s trademark delivery was smooth and mono-
tone”perfect for the low-profile Walgreens corporation”and he used it
well enough to earn his spot in the broadcasters™ wing of the Baseball Hall
of Fame. But it has to be said that Walgreens wasn™t Elson™s only “favorite
store.” Hall of Fame pitcher Jim Kaat, who grew up in southwestern
Michigan listening to Elson™s broadcasts, recalls the legendary announcer
telling him, “Kid, when you™re paid as lousy as we are, you gotta try the
market.” Elson persuaded Kaat to invest in Magnavox, which earned both
a small fortune.28
Elson, later nicknamed the Old Commander because he served in the
U.S. Navy during World War II, also padded his income by plugging just
about any company, car wash, or corner barbershop that asked him”often
during games, without the Cubs™ knowledge of his financial arrangement.
As fellow Hall of Fame broadcaster Lindsey Nelson recalled, “I™ve never
heard anybody do as much shilling when he was on the air. We used to kid
that Elson had to be on the take. Bob™d mosey along and say, ˜There™s ball
two”and speaking of ball, did we have one last night at Rosa Mesa™s
Restaurant!™ The [Cubs] never got a penny for Bob™s shilling. . . . Say what
you will about the Old Commander. If shilling was an art, Bob raised it to
a new plateau.”29
Perhaps Walgreens was lucky to catch Elson early in his career, when

nothing to f ear 111

the money was above board, the ads were legitimate, and the baseball fans
and teams weren™t subjected to countless, shameless plugs.

damn the depression,
full speed ahead!

In Walgreens™ century-long history, the Depression was the company™s
toughest time, for both the stores and the employees. Yet, enduring the first
four years of the Great Depression had little real impact on the company.
The company experienced a sea change in the middle of the
Depression, however; and unlike most sweeping historical transforma-
tions, this one can be pinned to a single year, 1933, when the entire
Walgreens corporation shifted its posture from merely surviving the Great
Depression to thriving in spite of it.
In that one year FDR replaced Herbert Hoover, pushed through the
New Deal (including the National Recovery Act Walgreens supported),
and repealed Prohibition. Walgreens prepared its stores to take advantage
of the good news by sending buyers to Europe before the final announce-
ment to bring back all the Scotch whiskey and French wine they could the
day it was declared. Walgreens was ready. The company also joined the
National Association of Chain Drugstores in 1933, broke the million-dol-
lar mark for advertising investment, expanded its Agency system dramat-
ically, and paid the first dividend in company history (25 cents per share),
a happy habit that continues to this day. Charles “Chuck” Walgreen Jr. be-
came an executive vice president and married Mary Ann Leslie, his fa-
ther™s secretary. And, despite a cacophony of pessimism, the city of
Chicago went ahead with its plans to host its second world™s fair, titled “A
Century of Progress,” which enjoyed surprising success. All these events
conspired to help Walgreens enter a bold period of expansion, one that
outsiders thought impossible in that difficult decade.
Chicago™s 1933 World™s Fair had been designed to demonstrate man™s

112 america™s corner s tore

mastery over his environment”which this vibrant city that men had
made out of a swamp could fairly claim”and to celebrate the one-hun-
dredth anniversary of the village™s founding. Planned a decade in advance,
in much flusher times, critics warned that the timing couldn™t be worse and
that the fair was bound to flop.
Once again, however, Chicago™s dogged optimism overcame all, just as
it had so many times before. Though the “Century of Progress” fair”
which must have seemed more than a bit ironically named in the face of
massive unemployment”was not as spectacular as Chicago™s coming-out
party in 1893, the 1933 version might have been more warmly welcomed
by Chicagoans, who were hungrier for reassurance and relief from their
daily struggles than were their ancestors.
The two fairs make convenient bookends for Walgreens™ remarkable
rise. When the previous one hit town, in 1893, Charles Sr. had recently ar-
rived in Chicago on the train, looking for work as a clerk. His future wife”
and food division pioneer”was then just a teenager awed by the bright
lights of the White City. At the time, there were some 1,500 pharmacies
in town”none of them Walgreens.
Forty years later, Charles had graduated from store clerk to the most
prominent pharmacist in the nation, and one of the most successful busi-
nessmen in his adopted hometown. As proof, Walgreens was the “official
pharmacy” of the fair, with two futuristic “art deco” stores on the fair-
grounds that quickly proved inadequate to meet the tremendous demand
of the fairgoers.
Unlike most of the official fair vendors, Walgreens did not raise its
prices to gouge the visitors, but it still managed to turn a decent profit.
Business was so brisk, in fact, that the company decided it had to expand
its presence at the fair”immediately. “Beno” Borg, Chuck Walgreen™s col-
lege roommate, called in all manner of tradesmen one minute after mid-
night on a Sunday, and six days later opened a 175-seat addition to the
nearby 23rd Street plaza store, with 100 stools surrounding the soda foun-
tain and a huge aquarium for a back bar. On Labor Day 1933, Borg™s ex-
panded store served 19,000 customers, which remains the company high;

nothing to f ear 113

the following year the chain reaped a record $54 million in revenues and
realized $2.6 million in profit. Though not a record, in the depths of the
Depression, any profit was noteworthy.
The fair™s popularity defied the skeptics, generating $10 million in gate
receipts alone and $26 million in gross revenues for the vendors, enough
to convince the sponsors to re-up for a second equally successful summer
in 1934. For Walgreens, the fair was especially fruitful. The “Century of
Progress” drew 887 vendors, yet Walgreens alone pulled in fully 4 percent
of gross revenues”about $1 million of the $26 million the fair raised, or
36 times more than the average vendor yielded.
Charles believed that the fair™s real benefit to the chain, however,
would be longer lasting than a few more dollars in the till. While the
Pepper Pod allowed that Walgreens would make a “satisfactory profit” from
the fair, the more important statistic to Charles was the 4 million cus-
tomers served, many of them for the first time, gaining the company “sub-
stantial goodwill and advertising value,” in Charles™s words. “These
millions of people are going to be your everyday customers from now on.
What they think of Walgreens in the future will depend entirely on your
treatment of them.”30
Walgreens knew how to hit the iron when it was hot”or even just
warm enough to make a good dent. While Walgreens™ expansion during
the Depression couldn™t come close to the stratospheric growth it enjoyed
in the Roaring Twenties”from 20 to 397 stores, a leap of almost 2,000
percent”Walgreens grew from 397 stores in 1929 to 493 in 1939, a rate of
24 percent, which could fairly be called robust and, given the times, even
Walgreens™ Depression era expansion was harder than those numbers
suggest because it wasn™t simply a matter of taking the 397 stores with
which it started the decade and adding 96. In 1933, for example,
Walgreens opened 24 units but closed 25; the next year the chain opened
44 but closed 31. Thus, increasing the total fleet by 96 probably required
opening 200-some stores and closing 100 or so, with all the extra effort and
tough decision making that goes with such a strategy.

114 america™s corner s tore

(This vetting process might have been what Robert Knight had in mind
when he mentioned, at Walgreens™ first nationwide conference in 1931,
the necessity of getting rid of lazy drones and replacing them with worker
bees. He did not seem to be advocating that Walgreens reduce the already
stressed labor force”there is no evidence that Walgreens sought to do this
and quite a bit of evidence to the contrary”but that the company could
ill afford to carry deadweight for the sake of it. If you were lucky enough to
be wearing a Walgreens smock while your neighbors stood in breadlines,
you were expected to justify keeping it.)
Emboldened by the Columbian Exposition™s success and encouraged by
the chain™s subsequent growth, Walgreens dared to dream big again, with
the kind of romance that created the chain™s elaborate soda fountains a
decade earlier. Instead of being content simply to add more stores,
Walgreens sought to make something special, something that would stir
souls, starting with the chain™s first “Super Store” in Tampa, Florida.
Finished in 1934, in the heart of the Depression, the glamorous, 4,000-
square-foot art deco building offered customers twice the size”and selec-
tion”of the typical Walgreens, including a grand soda fountain, always a
popular attraction in the sticky South. Walgreens proudly termed the
groundbreaking store, “The most efficient modern retail drugstore yet de-
vised” and soon duplicated the design in Salt Lake City, Milwaukee, and
Rochester, New York.31
Three years later, Walgreens took it a few steps farther”and four floors
higher”when it opened another stunning store at 200 E. Flagler, Miami™s
main drag. The air-conditioned five-story colossus had an 80-foot-long
soda fountain of solid white oak, a banquet hall, a 700-seat restaurant
served by four kitchens, and an in-house ice cream factory that could pro-
duce 600 gallons a day. The success of the store™s comprehensive restaurant
prompted Walgreens to install full-service cafeterias nationwide.32
The most unusual feature of this million-dollar store, however, was the
basement”the only one in South Florida at the time”originally built to
house the store™s own power plant. This became unnecessary when the
local energy company reduced its rates, allowing Walgreens to convert the

nothing to f ear 115

space to the chain™s first “sports department,” replete with golf clubs, ten-
nis rackets, and fishing gear.
“This store was built for service [and] convenience,” Charles said,
sounding like his successors commenting about drive-thru pharmacies and
one-hour photo processing years later, all designed to provide customers
with maximum convenience. “There is no drugstore in the world as mod-
ern or as complete.”33
Apparently the media agreed, with the three local papers competing to
see which could give “the largest drugstore in the country” the most ex-
travagant coverage.
The most impressive Super Store might not have been the biggest, but
it was the stateliest. Although its restaurant sat a relatively paltry 375 peo-
ple, the Walgreens™ Oak Room restaurant and tea room inside the Super
Store at Randolph and State streets in Chicago made a bigger splash when
it opened in 1940, with one of the world™s largest soda fountains and an es-
calator to take you there”something special at the time. By the middle of
the decade, food service accounted for half the floor space in most
Walgreens stores and a third of the profits.
“When we opened these large stores,” Chuck recalled, “we found we
didn™t have enough [merchandise] to put in them.” That, of course, was
the problem Walgreens wanted to have”and one that was easily solved
by simply producing more of its own products, including 2.4 million malt-
eds in 1934 alone.34
In the midst of this unlikely uptick, Walgreens™ success once again drew
outside observers curious to see just how the company was pulling it off. In
1934, Paul H. Davis and Company, a top-rated investment advising firm
in New York and Chicago, issued a report on the drugstore chain that al-
most echoed the analysis John Nickerson and Company had produced just
five years earlier, a few months before Black Tuesday. That one was writ-
ten at the peak of the Roaring Twenties and the other at the depths of the
Depression speaks volumes about the stability of the firm.
Davis and Company praised Walgreen™s “foresight and merchandising


. 18
( 39 .)