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shop at one, so the stores don™t have to be located in prime rent districts;
and (3) the self-service stores could process more merchandise at a lower
cost and sold a higher volume of goods per payroll dollar.35
Thus encouraged, Walgreens naturally sought to expand its self-service
operations, opening eight more self-service stores in the program™s second




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the pos t war era 157

year. But as Herring™s baby grew, Walgreens also discovered less-obvious
lessons along the way. For example, the initial building costs for a self-
service store were higher than for a conventional store because the store
layout was more important”it had to be designed not for trained clerks
but for unfamiliar customers who had to make their way through the store
easily and effectively. The store could only pay for itself with greater floor
space and more products than in a conventional store because the self-
service profit margins were smaller. Self-service required a greater em-
phasis on displays and packaging. As the Kogans wrote, without clerks,
“the package became the salesman.”36 Walgreens, a leader at marketing
since Charles Sr.™s day, quickly adjusted, giving their company brands of
rubbing alcohol, Dolph Insect Bombs, and Tidy Deodorant new, eye-
catching labels.37
The change also required Walgreens to reeducate its customers on
how to shop in its stores. A happy by-product of self-service was the ele-
vation of the pharmacist from glorified clerk and stock boy to specialized
professional who only handled prescriptions. “Back in those days, the
clerks were often pharmacists,” Chuck said in an interview at age 97. “We
had to move it gradually from clerk service to self-service, because the cus-
tomers were confused about what they should take off the shelves and
what we should.”38
Once up and running, however, Walgreens learned customers preferred
the wider selection, lower prices, and, possibly, the additional privacy such
stores offered. Walgreens™ executives also figured out that when they fol-
lowed the basic principles practiced by Piggly Wiggly and Sav-On, self-
service delivered what it promised. What they soon surmised, however,
was that it was much easier to launch new self-service stores from scratch
than to convert long-running clerk-service stores to self-service”which
was as tricky as retrofitting an airplane in midflight.
“That was a horrible experience, to go from a clerk-service store to a
self-service store,” Chuck said, with characteristic candor. “When you
start with self-service, it™s not too bad, like Osco [drug stores] did; but when
you start with clerk service, it™s harder. But I felt we had self-service licked




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once we got a few stores up and running. Frank redesigned the stores; and
because I liked architecture [Chuck™s original major at Michigan], I
watched that very carefully. And we always experimented first. That paid
off, too”and reduced costs, as well.”39
In addition to the complications of converting a single clerk-service
store to self-service, Walgreens™ executive team ran into unforeseen snags
whenever it started one self-service store in a district dominated by its tra-
ditional clerk-service stores.
“In order to make self-service pay,” Chuck explained, “you had to ad-
vertise your low prices. But in clerk-served stores, with your higher cost of
doing business, prices had to be higher to show a profit.”40
This created a conflict between Walgreens stores, one with no simple
solution. If the executives allowed the self-service stores to advertise their
low prices, the clerk-service stores in the same cities would look bad selling
the same goods at higher prices. But if the executives allowed the clerk-
service stores to sell their goods at the self-service prices, they lost money.
Finally, if the self-service stores had to sell their merchandise at clerk-
service prices, they wouldn™t attract enough customers. “[When] we swung
over to self-service, that was a real challenge,” Chuck said. “In cities where
we had one store, that was relatively easy. But in cities where we had mul-
tiple stores, it was very difficult and costly.”41
Walgreens tried to strike a balance between the competing needs of the
two store systems, but it was never perfect. However, as CEOs from Chuck
Walgreen to David Bernauer will tell you, the key then is the key now:
Those who put their own interests ahead of the company™s don™t last very
long at Walgreens.
Walgreens put this spirit of compromise”and the self-service concept
itself”to the test in June 1952, when it opened a new store at 87th Street
and Cottage Grove Avenue in Chicago. Though the company had origi-
nally planned to build a conventional, clerk-service store in the small spot,
Chuck and his colleagues decided it was time to throw the dice when an
adjacent property became available, expanding the store™s space to a work-
able 13,000 square feet. Although it would not be the company™s first self-




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service store, it would be the first in the Chicago area, one situated very
close to the company™s conventional stores. Therefore, Chuck knew, how
the new store fared would have a great influence on the debate among the
still-uncertain executives watching close by, likely tipping the scales either
for or against the self-service strategy.
As he so often did in such pressure situations, Walgreen picked a young
upstart for the honor, a 30-year-old man named Robert Schmitt, son of
long-time executive Roland Schmitt. Walgreen tried to ensure that the
young man was not being set up for failure by sending letters to other
South Side store managers, urging them “to minimize any confusion or
complications in the thinking or operation of our regular Walgreens
stores” and to cooperate fully with the new self-service store.
With the company watching, the young Mr. Schmitt hit a home run.
During the store™s first four months, it “more than doubled the company™s
most optimistic estimates.”42
(Soon thereafter, Roland invented the now-familiar automatic en-
trance gates, which he named the “In-a-matic,” the predecessor to the au-
tomatic doors almost all major stores have today.43
Self-service was a hit and was here to stay. (And so was Robert Schmitt,
who would become a company vice president.)



the shopping center is born

In the process of surveying other stores around the country, Walgreens
found another interesting idea in Texas and California: the shopping
center, a collection of several stores in one facility with a large parking lot,
all located outside major cities”as groundbreaking then as the shopping
mall would be in the 1970s. The innovation fit perfectly into the growing
car culture, a way of life that introduced the interstate highway system and
popularized drive-up motels, drive-in movies, and drive-in restaurants.
Holiday Inn, McDonald™s, and Levittown (the pioneering Long Island
suburb) all came of age during the 1950s.




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In the early 1950s, Chuck Walgreen and family still lived on the South
Side of Chicago. So each day on his way north to the Walgreens™ head-
quarters on Peterson Avenue, he would drive past a 21-acre vacant lot at
the corner of 95th and Western in a suburb called Evergreen Park. When
Walgreens decided to build its first shopping center, Chuck Walgreen de-
cided, “This is the place,” and Chicagoland real estate king Arthur Rubloff
would be the agent.44
But, Walgreen recalled, shopping centers were still so new in the early
1950s that when they approached Rubloff with the idea, he replied,
“What™s a shopping center?” In fairness to Rubloff, Evergreen Plaza would
be the first such development east of the Mississippi.
Rubloff bought into the project, but he had a hard time attracting other
tenants because they complained the concept was “too new, too chancy,
[and] too competitive with their existing locations.”45 But eventually
the Fair Store”a venerable downtown Chicago department outlet”
joined up, followed by Lytton™s clothing store, Jewel Tea, and a Kroger gro-
cery store.46
The centerpiece, however, was a massive Walgreens with 40 depart-
ments selling everything from parakeets to party supplies to auto parts
to an actual ton of ice cream kept chilly behind glass freezer doors”all
on the self-service model, so you could simply reach out and pick up what
you wanted.
Evergreen Plaza opened in 1952, proving the naysayers wrong from day
one. It was a huge hit, one big enough to change the direction of com-
merce in the city forever. “It was then and there,” Chuck said, “that we de-
cided we would never again open a conventional store.” But, he said, “The
conversion took a full ten years because we™re talking about changing over
500 stores, and it wasn™t just a question of changing the checkouts.”47
Nonetheless, by 1953, just three years into the Great Experiment,
Walgreens had already become the country™s largest self-service business of
any sort”including grocery stores like Piggly Wiggly.
The rest of the nation started taking notice. In the March 7, 1953, issue
of Business Week, a reporter judged that, “It is already possible to see that




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self-service is eventually going to have a major impact on drug retailing.
Some signs even point to a revolution.”48
The prediction proved prescient, of course. Just five years later,
Walgreens had either opened or converted 141 of its 410 stores in 37 states
as self-service outlets. That same year, 1958, Barron™s picked up the scent.
In a story titled “Flourishing Walgreens Has Found the Right Prescription
for a Retail Drug Chain,” the publication said,

Along with the drive to open self-service units in advantageous lo-
cations, the company is also overhauling its older stores. The effect
of this streamlining is evident in the improved operating results.
Although profit margins [for self-service stores] are ordinarily lower,
expense ratios compare very favorably with those of the older units.
Once these new stores begin to ring up a certain volume, their prof-
itability is greater than that of traditional outlets.”49

Five years after that assessment and eleven years after Walgreens
opened its Evergreen Plaza, Value Line, a respected Wall Street invest-
ment-analysis publication, concluded that Walgreens™ stock performance
“should bring joy to the heart of every shareholder,” a statement Wall
Street analysts would be happy to repeat today.50



the four-way test

Under Charles, Chuck, or Cork Walgreen or Dan Jorndt or Dave
Bernauer, Walgreens seems to work its hardest to reconnect with its core
values when it™s flying its highest”in the 1920s, the 1950s, and the 1990s.
Thus, it was probably no accident that in 1955, shortly after the company™s
initial success with self-service, Chuck distributed to every Walgreens
store and office something he described as a “prescription for living, a new
version of the Golden Rule,” to reinforce the basic values on which his fa-
ther had built the company.




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Called “The Four-Way Test of the things we think, say, or do,” it con-
sists of four simple questions:51

1. Is it the TRUTH?
2. Is it FAIR to all concerned?
3. Will it build GOODWILL and BETTER FRIENDSHIP?
4. Will it be BENEFICIAL to all concerned?

If these words sound familiar, it™s probably because Chuck™s friend
Herbert J. Taylor, who composed the piece in 1932 after it came to him
while meditating on how to save his failing company (it worked), gave it
to Rotary International in 1946, a service club both men belonged to,
which distributed it around the world.
Nine years later, in the midst of the self-service boom, Chuck had the
Four-Way Test stamped on hundreds of plaques to be displayed in every
Walgreens store and office. In the company newsletter issued at the same
time, Chuck explained, “These four guiding principals apply to all our
dealings”not only with customers but with each other. It™s the one way to
achieve company success”and individual success”and to earn everyone™s
respect along the way.”52
“If you use a test like that for the things you say or do,” Chuck said late
in his life, “you won™t be making mistakes.”53
Tom Brewer has never forgotten the kindness of two strangers he met
behind the counter of his neighborhood Walgreens in Fort Collins,
Colorado.

It was the day before Christmas, 1959, and I still hadn™t found a pres-
ent for my mother. I shopped all the big department stores and as a
last resort I went to the new Walgreens in the shopping center. They
had it”the perfect gift for Mom from a 15-year-old boy. Imagine my
disappointment when the cashier told me the total, and it was more
money than I had. She must have read the look on my face, because
she said, “Don™t worry, honey. We™ll help you out.” She fished around




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the pos t war era 163

in her uniform pocket for change, and then called for the cigar clerk
to come over. The two of them helped with my purchase, and then
said, “This is our Christmas gift to you.”
I don™t remember what the perfect gift was, but I™ll never forget
those two Walgreens clerks, Annabelle and Helen. In fact, when I
turned 16 the next year, Walgreens was the only store I applied to,
and I had the pleasure of working with them through my high school
and college years and for a few years as a pharmacist.
Annabelle and Helen are the reason I started with Walgreens in
1960, and the many Walgreens employees like them are the reason
I™m still with the company in 2000.54



chuck™s legacy

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