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Even Walgreen, however, was taken aback by Spiegel™s 1960 fall/winter
catalog, in which the Chicago-based company offered its credit card cus-
tomers wholesale prices on prescriptions. Though it didn™t spell out exactly
what those prices would be, its chairman, Modie J. Spiegel, promised to
save customers “25 to 40 percent from what they would pay elsewhere.”
Chuck Walgreen™s response? “Preposterous!”25
But no matter how far-fetched Chuck thought Spiegel™s claims, he felt
the need to compete, and he did, cutting the prices on all prescription
drugs, even though they were already the lowest in the field. Walgreen
felt it wasn™t merely customers, prices, or market share at stake, but the fu-
ture of the pharmacies themselves”a battle similar to the one many brick-
and-mortar retailers are waging today against Internet companies. The
Spiegel approach, Walgreen said, would fail because it was “impersonal
and incomplete.”
Walgreen used the May 1961 issue of the Pepper Pod to assure his peo-
ple: “There is no need to push the panic button. . . . Fact is, we thrive on
competition. Always have.”26
Three months later, Walgreen, rising to the challenge, issued a public
statement.

Of utmost importance is the within-minutes availability to doctors
and patients of the thousands of drugs that help defend the health of
America. No physician, no patient should be made to wait through
precious days of healing to obtain medicines by mail. . . . And the
public must not lose the vital physician-pharmacist-patient relation-
ship that traditionally safeguards the patient™s health. . . . We at
Walgreens intend to hold fast to our role as pharmacists. Our answer
is prescription prices as low or lower than any outside source”right
in our neighborhood drug stores. . . . Doctors are only human. And
they make mistakes sometimes”in dosages, strength of medicine, or
compatibility of drugs. A knowledgeable pharmacist is able to look at
a prescription and spot potential trouble. He has the ability to call
the doctor for consultation; the chance, perhaps, to save a life.




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Not only did Walgreen™s counteroffensive”an early rendition of the ar-
guments currently delivered against Internet druggists”stop the Spiegel
strategy in its tracks, but it had the additional effect of curbing drug sales at
discount houses, grocery stores, and variety stores. These competitors
would rise again, of course; but just as his father had defeated pine boards,
Chuck stared the discounters down and beat them honestly. However,
proving once again that, sometimes, you™re damned if you do and damned
if you don™t, Walgreens suffered a backlash from independent drugstores
angered over the chain™s new practice of advertising its low prices”but
this was a by-product Chuck was prepared to bear.
After the dust settled, Walgreens experienced an unexpected boom in
prescription sales. In May 1964, Walgreens filled 21.7 percent more pre-
scriptions than it had the previous year; and the number of prescriptions
would soon exceed one million a month. “In the late 1950s,” said Sol
Raab, the former vice president of store operations, “we began a much
heavier concentration on our prescription business.”27
While the overall profits from the pharmacy department were relatively
small compared to today™s figures, Walgreens™ unwavering commitment
to its pharmacies was already paying off in the 1960s and would pro-
vide the foundation for an exponential increase in sales in the years to
come. During this time, long before prescription drug sales became the
company™s biggest profit center, Walgreens sounded its motto every
chance it had: “Your prescription is our most important responsibility.”



the self-service revolution

All organizations must negotiate a handful of crucial conflicts and cross-
roads in order to ensure their survival”and that™s especially true for fam-
ily companies thriving for over a century.
For Walgreens, the portentous crossroads have included Charles Sr.™s
decisions to devote himself fully to the pharmacy business, to offer cus-
tomers food service and milk shakes, and to risk it all to expand the




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business beyond all previous expectations in the 1920s”a list long enough
for any man. Chuck™s reign might not have been as spectacular as his fa-
ther™s, but he made a few decisions no less vital to the ongoing success of
the company, including raising the professional standards of pharmacists
and, especially, introducing self-service to the industry, which launched
nothing less than a retail revolution.
Of course, the last sentence might make modern readers furrow their
brows. Self-service drugstores? What™s the alternative?
It™s as difficult for us to fathom what preceded self-service drugstores as
it is for contemporary teenagers to imagine a world in which men delivered
milk and eggs to our homes, picked up our dirty laundry, and washed
our windshields. But before the idea captured Chuck Walgreen™s imagina-
tion more than half a century ago, no one could conceive of what a “self-
service drugstore chain” would look like, either”because none existed.
The self-service idea had actually been around for decades when Wal-
greens had the inspiration to apply it to drugstores in the 1950s. Way back
in 1916, Clarence Saunders founded the United States™ first true self-
service grocery story in Memphis, Tennessee. Before Saunders changed the
rules, grocery store customers would give their orders to clerks, by hand or
by phone (as they did at Walgreens, too, which set up the famed Two
Minute Drill). The clerk would then dash about the aisles, gathering the
customers™ products, and then meet the customer at the cash register, wrap
the goods in paper or put them in a nice bag or basket, and send them on
their way.
The practice certainly seemed customer friendly, but Saunders saw the
flaws in this system before anyone else did, especially its inefficient use of
time and labor. So Saunders, a man whom even the chain™s official history
describes as “flamboyant” and who had the wild eyes and shock of gray hair
of a mad scientist, decided to try something outrageous: He would design a
store where customers could shop for themselves.
Saunders took it a step farther when he named his new store “Piggly
Wiggly.” He never explained why he gave his stores that silly moniker.
When someone asked him, he™d simply reply, “So people will ask that very




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question.” If he wanted a name that would be easily remembered, he™d
found it.28
Given the store™s crazy name and crazier concepts”wooden shopping
baskets, open shelves, over 600 products (three times more than conven-
tional stores), and replacing aisle clerks”the smart money said Saunders™s
shop would flop. But Saunders™s very first Piggly Wiggly attracted a huge
crowd of curiosity seekers for its opening day. When he opened the doors,
the customers flooded through the turnstiles and ran through the aisles,
thrilled to be free to do their own shopping. “This,” one impressed ob-
server said, “is the future.”29
The anonymous visitor was right. The Piggly Wiggly stores, which were
the first to provide checkout stands, first to mark a price on every item in
the store, and first to use employee uniforms for safer food handling,
quickly caught on. Within seven years, the chain had 1,200 stores, turn-
ing Saunders™s $23,000 investment into $100 million.
Sadly, however, Saunders lost control of Piggly Wiggly™s stock in the
early 1920s, and he died in 1953, too soon to see his revolutionary self-
service idea spread nationwide. As Piggly Wiggly™s corporate history says,
“Saunders™s creative genius was decades ahead of his time.” A&P, Krogers,
and other national chains adopted the simple but powerful idea decades
after Saunders first conceived it.
Of course, it™s one thing to set up a self-service system in a grocery store,
because most customers don™t need expert advice to buy beer, bananas, or
boxed cereal. But because pharmaceutical products are so critical to the
customer™s health, so difficult to understand, and so quick to change,
experts assumed customers would never feel comfortable buying such
products on their own, without assistance.
After World War II, pharmaceuticals introduced some 400 drugs each
year, an explosion of antibiotics and vitamins, diet tablets, and geriatric
treatments”all new to the field”a boom that was paralleled by one in
toiletries, cosmetics, and other over-the-counter products. This avalanche
of new goods often created confusion among customers.
Ron Stuart, a retired Walgreen worker, recalled a couple of memorable




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exchanges at the State and Division streets store in Chicago: “A gentle-
man put a Po-Do Shave Bomb on the counter and said he wanted his
money back because it wasn™t any good. He said ˜I was set to shave, held it
up to my face, pressed the button, and had a mess all over my head and the
bathroom.™ Another time, a woman put down a bottle of foil-wrapped sup-
positories and said, ˜These are just too hard to swallow.™ At that point, I
was too timid to make any recommendations.” Stuart simply refunded her
money, without comment.30
For these reasons and more, Walgreens stood firmly with the majority of
drugstore chains that believed customers would never take to self-service
stores. And in the postwar years, with so much to do already, the last thing
Chuck was looking for was another major initiative, and certainly not any-
thing as ambitious and unknown as self-service. But like his father (and
later, his son), Chuck was always open to a good idea when he found it.
Walgreens has a knack for bumping into the right idea at the right time,
often by accident”witness the Two Minute Drill, the birth of the milk
shake, and the introduction of the potato salad sandwich. As George
Nuyttens, a retired corporate employee, recalled, “My brother Jack was set-
ting type for menus in the duplicating department in 1952. He mistakenly
set type for a potato salad sandwich, and the menu went out that way. We
got a call from a fountain manager: ˜Who came up with the potato salad
sandwich? It™s going over great!™”31
Likewise, the company stumbled upon the idea of self-service rather by
accident. In 1949 Piggly Wiggly was still a regional chain, largely unknown
outside the southeastern United States; and few other major retailers had
even attempted to imitate them. At the time, Walgreens had dipped its toe
into self-service sensibly enough by experimenting with three of
Walgreens™ 410 stores, but without a very deep understanding of the prin-
ciples that make it work. “We had been doing it in a seat-of-the-pants fash-
ion,” Chuck said years later. “Frankly, we didn™t know anything about
self-service. All we really did at those three stores was to change the
cashiering over to checkout counters.”32
That same year, 1949, Chuck and six Walgreens executives flew out to




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California to finalize the purchase of a 200-store chain called Thrifty,
which, like Walgreens, was based on clerk service. But while they were
in the Golden State, a tiny five-store chain, Sav-On, caught their at-
tention. Sav-On had dared to try self-service and had been rewarded
with greater sales because it could stock more merchandise and sell it at
lower prices.
Chuck was smart enough to realize that Sav-On™s success was not just a
passing fad, but a great way to lower prices, increase sales volume, and re-
duce overhead. He also realized that instituting self-service would require
more than simply installing a checkout counter near the doors. It would
require “remodeling, restocking, restaffing, and, most of all, rethinking”
the entire store operation.33
Chuck then made one of the boldest decisions in company history”if
not the boldest”when he suddenly decided to drop the solid deal with the
safe and sizable Thrifty chain to take up the risky concept practiced by the
fledgling five-store chain down the street and to reengineer his entire 500-
store chain to follow the Sav-On model.
When they returned to Chicago, the executives took a closer look at
the three Walgreens stores already experimenting with self-service”
a small store in Kalamazoo, Michigan; a middle-sized store in Spring-
field, Missouri; and a larger branch in Akron, Ohio”and decided they
really weren™t practicing the techniques that made self-service work at
Sav-On.
When Walgreens has an important job to do, they give it to a busy per-
son. Decades before business gurus urged executives to put a “champion”
in charge of special projects, with an elaborate hierarchy of Masters and
Minions supporting him, Walgreens figured out that the best pioneers are
men on a mission, people like Pop Coulson making milk shakes and
Robert Knight presenting Charles Walgreen Sr. with his proposed ac-
counting reforms”then implementing them.
So it was no surprise that when Chuck returned from California,
chomping at the bit to get going on self-service, the first thing he did was
appoint an up-and-coming district manager named James P. Herring to




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become the first director of the “Self-Service Store Development
Program.” Herring™s Walgreens credentials went back to 1937, when he
worked as a stock boy during college. Herring went on to work for
Walgreens in Phoenix, Miami, and, of course, Chicago and served as a
store manager in Akron and Wichita Falls, Texas, before becoming the
Houston district manager for two years”thereby hitting a good number of
company hot spots”when Chuck came calling.
After giving the energetic young Herring his new job and title,
Walgreen gave him his first directive: “Find out as much as you can as
fast as you can.” Herring did, visiting every kind of self-service store
he could find across the country to unearth the secrets of success in this
brave new world of retail. There was method to Chuck Walgreen™s mad-
ness, because he knew that the self-service strategy was risky and that
many executives needed convincing”including himself. In the May 1950
Pepper Pod, Chuck wrote, “As leaders in the retail drugstore field, it be-
hooves us to investigate the possibilities of this mass retailing as a service
to our customers as well as a benefit to our company.” Interested, yes”but
far from committed.
Herring got right to it, converting four stores scattered around the coun-
try to self-service and launching two brand-new self-service stores in
Cincinnati, Ohio, and Muncie, Indiana. These “practical laboratories,” as
Chuck Walgreen called them, demonstrated the advantages of even rudi-
mentary self-service over clerk service. Just one year into the experiment,
Chuck wrote, “Self-service counters in conventional stores have boosted
sales substantially.”34
Walgreens learned more than that. Chuck spelled out the principal ad-
vantages of self-service in his May 19, 1952, newsletter, namely: (1)
Consumers spent more at self-service stores; (2) they will travel farther to

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