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from humble beginnings 39

made certain every customer was cheerfully greeted by him or his sole em-
ployee when he or she walked in.
That last improvement might have been the most important”and one
of the traits that has separated Walgreens from the rest for over a century:
customer service. As with IBM, McDonald™s, and FedEx in their heyday,
the difference usually isn™t the product but the people. Simple profession-
alism”especially in a field broad enough to accommodate snake oil sales-
men like the deadly Dr. Holmes, “Dr. Matthews™ Medicine Show,” and
Myrtle™s old boyfriend Earl, who traveled from town to town with his fa-
ther™s vaudevillian “elixir act””quickly separated Walgreen from the
charlatans surrounding him, including many among those running the
1,500 drugstores operating in Chicago at the time.
Remember, this was a time when pharmacists didn™t simply order and
distribute pills from the manufacturers. They produced most of the cus-
tomers™ prescriptions themselves. So the drugstore customer back then had
to put a lot more faith in the pharmacist than we do today.
All these painstaking tasks, however, didn™t generate much revenue.
Only 2 percent of Walgreens™ profits came from the pharmacy department
in the company™s first decades, whereas two-thirds of the store™s intake was
from tobacco and soda fountains.
While other proprietors required customers to walk to their stores and
wait for the pharmacist to get to them, in due time, Walgreen encouraged
his patrons to call their orders in. He developed an impressive routine he
called the Two Minute Drill. When a customer called, Walgreen would re-
peat the customer™s name, address, and order as he wrote them down to en-
sure accuracy; then he quietly pass the slip to his assistant, Caleb Danner.
Walgreen would keep the customer on the line by discussing everything
from the climate to the Cubs”who were then the dominant team in base-
ball”while Danner collected the items, dashed over to the customer™s
house, and knocked on the door. The customer would tell Walgreen that
someone was at the door, find Danner there with their order, and come
back to the phone to ask Mr. Walgreen, “Just how did you do that?”




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40 america™s corner s tore

It was a neat trick, one that helped spread the word that Walgreen™s
store was a cut above the competition. Walgreen™s ability to provide such
efficient service while forming friendships with his customers quickly es-
tablished his place as the new standard-bearer in the neighborhood.
As Goethe, the nineteenth-century German philosopher, promised,
once Walgreen committed himself, fortune started working on his behalf;
and Walgreen took full advantage of the opportunities presented to him.
One day, for example, a cooking pan salesman walked in to ask where he
could find a good hardware store. It seems that one of his regular customers
had just backed out of a 300-pan purchase, and he had to unload them.
Walgreen remembered his wife™s delight with her aluminum kitchenware,
so he figured he might be able to sell them to other women in his drugstore
better than the salesman could to the men at the hardware store. They
agreed on a price, and Walgreen went to work setting them up on a table in
the middle of the store. At 15 cents each, the handsome pans went fast,
earning Walgreen a tidy profit and more customers. The successful gambit
encouraged him to take more chances in the future to expand his mer-
chandise selection and marketing methods.
The Walgreens were able to make their final payment on the store loan
to Mr. Blood in early 1907. Decades later, Myrtle still remembered the
night her hard-working husband came home, “late as usual,” but this time
proudly waving the final check.
“He put it in an envelope addressed to Blood, and the two strolled to
the mailbox,” the Kogans wrote. “Walgreen pulled down the [mailbox]
flap. His smiling wife inserted the envelope, and he kissed her soundly. On
the walk home, they talked of what they would do with the extra money
now that no more monthly payments needed to be made. ˜One of these
days,™ Charles said, ˜I™ll buy you a fur coat, Myrtle.™”73
The same year, the Walgreens bought their first store outright. William
Valentine, Walgreen™s old boss, told him he planned to sell his bigger store
at Cottage Grove and 39th”the same store Walgreen left after he re-
turned from Cuba because it was too busy and hectic to accomodate his
convalescence”and move back to Terre Haute, Indiana, to buy a com-




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from humble beginnings 41

pany that made clocks. Valentine asked $15,000 for the store, 150 percent
more than Walgreen paid for his first store. Walgreen protested that he
simply didn™t have that kind of money.
“Charlie, you were the best clerk I ever had,” Valentine replied, no
doubt enhancing his memory of Walgreen in light of his recent success.
“And I really want you to have that store. Think it over.”74
Walgreen had finally reached the point of no return. He could continue
dabbling in this or that, looking for a quick hit or a way out of the phar-
macy business, or he could decide that his future was in pharmacy and
make a run of it.
“To make a down payment on a second drugstore,” Charles Jr. said,
“Dad had to sell a half-interest in his first store. His friends advised against
it. ˜Chicago has too many drugstores already,™ they warned. And Dad said,
˜Chicago may have too many drugstores, but it hasn™t enough Walgreens
drugstores.™”75
Walgreen™s resolve was firm. “He now realized more firmly than ever
that the time had come for him to move ahead in the drugstore business,”
the Kogans wrote. “He had no wish, as he would say again and again in
later years, to drift along with a single store and continue to engage himself
in outside business endeavors.”76
Walgreen signed another loan in 1909 to buy Valentine™s store. Because
it stretched his finances so far, however, he could only wangle the deal
with the help of Arthur C. Thorsen, a former colleague and now a phar-
macist at the Armour Company pharmaceutical products plant. Thorsen
agreed to buy half of Walgreen™s first store. Walgreen took this money, plus
some savings, to cover the down payment on Valentine™s store. The two
partners agreed that Thorsen would manage the first store, which was in-
corporated under the name “Walgreen-Thorsen,” and Walgreen would
own and operate the second himself, under the title “C. R. Walgreen &
Company.”
No one”not even Walgreen himself”could have realized it at the
time, but a chain had been born, a chain that would become the greatest
in drugstore history.77




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2
CHAPTER




the start of
something
special:
1910“1929



on his own


A fter opening his first store in 1901, it took Charles Walgreen Sr. a
full 8 years of hard work to secure his second small store, but only
20 more years to create the foundation for an empire.
The 1910s and 1920s were probably the most demanding decades in
Walgreens™ history. All four family members (Charles Sr., Myrtle, and
offspring Chuck and Ruth) worked ungodly hours to feed the chain™s
burgeoning growth. But those might have been the company™s most
exciting years, too, filled with boundless optimism, energy, and inno-
43




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44 america™s corner s tore

vation, without the complications and pressures future expansions
would present.
Like other U.S. corporate giants”such as McDonald™s and IBM”
Walgreens™ initial growth was built on a lot of old-fashioned values mixed
with a few newfangled ideas. McDonald™s grew on a foundation of friendly
service and clean bathrooms, while offering something new: “fast food”
and drive-thru service. IBM boomed not only because of its top-quality
typewriters, but also because of Thomas Watson Jr.™s insistence that his
service people wear coats and ties when visiting clients”a symbol of the
respect IBM exuded for its customers, which business guru Tom Peters be-
lieves was one of Watson™s greatest contributions.
Likewise, Walgreens started with attentive clerks and helpful advisors”
unusual among druggists in that era, who tended to be austere and distant,
standing behind their elevated counters and forbidding partitions”and
offered a few things you couldn™t get anywhere else.
Almost a century before business books gushed about Walt Disney em-
ployees calling their customers “guests,” Charles Walgreen Sr. wrote,
“Every customer is a guest in our store and should be treated as such. It
is unusual service, uncommon thoughtfulness, that makes customers re-
member a store, brings them back, leads them to speak favorably of it to
others. . . . If you can serve your customers with the same thoughtfulness,
interest, courtesy, and friendliness that you would show if they were guests
in your own home, then you will have satisfied customers and find greater
enjoyment in your work.”1
And as usual, he meant it.

the secrets of the second store

Walgreen™s first store established him as an independent businessman, but
it was his second store that set up Walgreens as something special. The
shop at the corner of 39th and Cottage Grove served as a laboratory for
trying out soda fountains and lunch counters; as a training ground to re-
cruit and develop Walgreens™ future leaders; and as a workshop to define




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the s tar t of something special 45

and refine the fundamental functions that are the foundation of any sound
business. All these components comprised the formula for success that
Walgreen perfected at his second store before duplicating it all across
Chicago, and then the nation.
The grand experiment almost ended before it started, however, when
Walgreen heard rumors that a drugstore might be moving into a vacant
storefront across the street from his second store. He was concerned
enough to purchase the site of his third store”at Michigan Avenue and
55th Street”as insurance in case the rumors proved true. Walgreen was
relieved to learn that, in fact, the slot across the street from his second
store would be leased by a Chinese restaurant called King Joy Lo; and al-
though Walgreen didn™t care for Chinese food, he was so grateful for the
early break that he made it a point to visit the restaurant regularly to make
sure it stayed afloat.2 Walgreen™s fear, however, had served him well, bring-
ing him a third store and a nice lunch.
In the 1910s, Walgreens™ “world headquarters” was not the million-
square-foot (actually 948,000), nine-building complex in the Chicago sub-
urbs where Walgreens™ executives have worked since 1975, but a wooden
desk and two chairs near the front of Walgreens™ second store.3 It was there
Walgreen concocted the ideas and hired the employees who would make
that sprawling headquarters possible”even necessary”decades later.
Walgreen™s second store featured handsome window displays”which
Walgreen considered so important that he hired an artisan to design them,
despite his shoestring budget”and glass cases filled with cigars, choco-
lates, and free perfume samples, more akin to a jeweler™s display than any-
thing customers expected to see in a drugstore at the time.
In the back of his second store, Walgreen installed two pay telephones
that were cleverly designed to work with special slugs that customers could
only get from the cashier at the front of the store. Thus, to make a simple
phone call, most visitors walked past Walgreens™ entire inventory three
times”to the back of the store to see the phones, to the front counter to
buy the slugs, and to the back again to make their calls”making any num-
ber of impulse purchases along the way.




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46 america™s corner s tore

The most impressive thing customers passed was the soda fountain. It™s
an anachronism today, but 90 years ago it was as unthinkable for a drug-
store to be without a soda fountain as it is today for a major bookstore to
be without a gourmet coffee shop.
Drugstores and soda fountains were first linked in the early nineteenth
century, when pharmacies sold all manner of elixirs (many of them pure
nostrum) and shots of bottled soda water, all purportedly to improve their
customers™ health. It™s hard to fathom today the faith people had in fizzy
water to cure their ills, but it explains why people traveled for hundreds of
miles to visit health spas like Hot Springs, Arkansas. It also explains how
something as bland as bottled seltzer water”a steely, slightly salty drink”
became a staple of drugstores nationwide. While seltzer water can provide
slight relief for indigestion”think Alka-Seltzer”its value might have
been greater as a mainstay of vaudeville comedy.
Drugstore proprietors replaced bottled seltzer water with charged water
and finally in-store soda water dispensers. They stored the bubbly water in
a canister under the counter, then sent it through a tin pipe leading to an
ornate spigot, similar to the systems pubs use today to serve draft beer.
“The soda fountain was a uniquely American phenomenon,” Mark
Pendergrast wrote in his history of Coca-Cola. “With so many new drinks
available [including Coke and Dr. Pepper, created in Texas in 1885], the
soda jerks had to become virtuosos at mixing drinks with grace and speed.
. . . The busy late-nineteenth-century soda fountain first satisfied the
American demand for fast food and drink.”4
Though the soda fountain was popularized in the hot South, Walgreen,
always looking for something to set his stores apart, had a hunch that soda
fountains were the future up north, too, and decided to go all out to make
his the best in the neighborhood. He acquired the space adjoining his sec-
ond store, cut an archway door through the wall to connect the two rooms,
installed eight booths and eight small tables, and spared no expense con-
structing a soda fountain on the far side with a 16-foot-long marble
counter. Silver spigots dispensed the drinks; Tiffany lights illuminated the
scene; and all was reflected in a 12-foot mirror framed in rich, ornately
carved wood. The grand design proved so popular that he duplicated it in



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