Osco Drug

Osco Drug

Type	Pharmacy/Retail
Founded	1937 (Rochester, Minnesota)
Headquarters	Eden Prairie, Minnesota, U.S.
Key people	Jeff Noddle, Chairman and CEO Mike Jackson, President and COO Kevin Tripp, R.Ph, Executive Vice President; President, Retail Midwest
Products	Pharmacy, Liquor, Cosmetics, Health and Beauty Aids, General Merchandise, Snacks, 1 Hour Photo
Parent	SuperValu
Website	OscoPharmacy.com

Osco Drug is a chain of pharmacy stores which today operate as in-store pharmacies under SuperValu Pharmacies. Osco Pharmacy is found in Jewel-Osco, Albertsons, Shaw's and Star Market, while Sav-on Pharmacy is found in Acme and Albertsons. Since 2006, Osco is a wholly owned subsidiary of Supervalu Pharmacies of Eden Prairie, Minnesota-based SuperValu. The company at its height operated Osco Drug, Osco Pharmacy, Sav-on Drugs, and Sav-on Pharmacy.

History

The Skaggs Family – Osco and Savon’s roots

The Osco story starts long before the first Osco was opened. In 1915, S.M. Skaggs, a Baptist minister from Missouri settled in American Falls, Idaho. Prices on all commodities in American Falls were high and Skaggs formulated a plan to overcome the problem. He opened a store himself, totally different from stores of the day. Skaggs reduced prices and offered a cash and carry service with low margins to create high volume. S.M Skaggs had 12 children. The six sons: Pepper Oscar (O.P.), Marion Barton (M.B.), Loronzo L. (L.L), Samuel Olnie (L.S.), Levi Justin (L.J.), and Aron Sylvester (S.A.) helped with the operation of the store. In 1917, O.P Skaggs started his own chain of self-service stores and later sold the franchise in the western states to Christian Call (In 1945 Call would later open the first Sav-on store in San Bernardino, California). In 1919 brothers M.B., L.S., L.L., and L.J. formed a partnership called Skaggs United Stores. This company later became the Safeway grocery chain and was led by M.B. Skaggs. L.J. Skaggs retired from Safeway in 1932 and in 1934 opened the first self-service drugstore in the United States in Tacoma, Washington. He applied the principle of self-service that he had learned in the grocery business to his drugstore.

The first store

Loronzo L. (L.L.) Skaggs owned a controlling stock in a company called Quality Food in Minnesota and subsequently left the Safeway business. L.L. opened a chain of self-service drugstores in the Midwest similar to his brother L.J.’s stores in the west. The first store opened in 1937 in Rochester, Minnesota and was named “Pay-Less” (different from the drug chain Payless founded later in the century), and was managed by George Hilden. The store remained in operation until 1987 and was later closed that year due to redevelopment in downtown Rochester.

In 1937, while in the process of opening a second store in Mason City, Iowa it was learned that another company had already registered the name “Payless” in the state. L.L changed “Payless” to “Self-Service Drug, Inc.” and formed a new corporation.

Name change to Osco

In 1942, the corporation “Self-Service Drug, Inc.” was dissolved and succeeded by "Owners Service Company", a partnership of L.L Skaggs, H.B. Finch, Paul Stratton and George Hilden. From this company 'Osco' was coined. That year Osco moved its headquarters from Waterloo, Iowa to the Merchandise Mart in Chicago, Illinois.

Acquisitions

The Jewel Companies, Inc.

Osco Drug logo.

In 1961, The Jewel Companies, Inc. acquired the 31 Osco Drug stores in six Midwest states. In 1962, Osco's headquarters was moved from Chicago's Merchandise Mart to Melrose Park, Illinois. It was also in that year that the first side-by-side "Jewel-Osco" store opened. The early Jewel-Osco combination (combo) stores were two individual stores, separated by an interior wall (and in some locations, a half-wall), allowing a customer to go back and forth between each store without having to go outside. Osco's merger with Jewel resulted in tremendous growth for Osco. Soon, all of Jewel's subsidiaries would have an Osco Drug. Some Eisner Food Stores locations were rebranded "Eisner-Osco". When Jewel acquired Star Market in 1964, the first Osco Drug in New England was opened, and some were next to Star Market locations and were branded as "Star-Osco". By 1968, Osco grew to 168 stores in sixteen states. During most of the 1960s, Osco operated as two divisions – 'City Osco', comprising the Chicago, Illinois and Chicago suburb stores and 'Country Osco' (all the other Oscos). These two divisions were combined in 1968 and formed Osco Drug, Inc. Also in 1968, Osco's headquarters relocated from Melrose Park, Illinois to Franklin Park, Illinois. Later that year, the Jewel Imports procurement group was established to import a broad range of general merchandise from around the world to sell in Osco stores.

When The Jewel Companies Inc. acquired Buttrey Food Stores in 1966, many of the stores were converted to a combination store format and bannered as "Buttrey-Osco" with common checkout stands but separate store management, all under one roof. By the early 1980s, Buttrey would eventually operate 60 stores in Montana, North Dakota, South Dakota, western Minnesota, Wyoming, eastern Washington, eastern Oregon, Utah, and Idaho. Stores were spread thinly over a 2,000-mile (3,200 km) wide territory.

Outside of Chicagoland, Osco operated as stand alone pharmacies (or free standing stores). In the early years, many of the Jewel and Osco combination stores maintained different operating hours from one another and on certain days such as holidays, one side of the combo store would be open, while the other would be closed. By the early 1980s new and remodeled combo stores had the 'wall' removed and the store became one, and to this day, Osco retains control over drug, general merchandise, pharmacy and liquor departments in the Jewel Osco combo stores.

In the late 1960s, Osco was looking into purchasing or building a photofinishing plant to service its stores. At the time, the company was using outside vendors and the film developing quality and service was not consistent. In 1970 working with Kodak, Osco built a photofinishing lab from scratch in Elgin, Illinois. The facility, Crest Photo Lab opened in 1971 and serviced Osco's Chicagoland, Central and Eastern region stores. The Elgin photo lab expanded several times over the years. As both Osco and its photofinishing market share grew, three more photo plants were added: Alves Photo Service Braintree, Massachusetts in 1980, Rich Photo Lab Salt Lake City, Utah in 1984 and Drewry Photocolor Burbank, California in 1987 renamed to Crest Photo in 1988. The photo labs were sold to Kodak's Qualex photo processing division in 1996 prompted by the emergence of in-store one hour photo labs and digital photography technology.

In 1974, Osco's headquarters were relocated from Franklin Park, Illinois to a new facility at 1818 Swift Drive in Oak Brook, Illinois.

Acquisition of Sav-on Drugs

Sav-on Drugs logo.

In November 1980, The Jewel Companies Inc. purchased Sav-on Drugs, Inc. Sav-on Drugs was headquartered in Anaheim, California and had 150 stores in California, Nevada and Texas. The Sav-on chain became Osco's 'Western Region'.

American Stores Company

In 1984, American Stores Company, which consisted of Alpha Beta food stores in the west, Acme Markets in the east and Skaggs Drug Centers in the Rocky Mountain, southwestern, and northwestern states, acquired The Jewel Companies Inc.

American Drug Stores, Inc.

In 1989, a new subsidiary American Drug Stores, Inc. was formed and consisted of American Stores drugstore holdings of Osco Drug, Sav-on Drugs, the Osco side of the Jewel-Osco food-drug combination stores and RxAmerica. RxAmerica began earlier in 1989 as a mail service prescription fulfillment center with a facility in Salt Lake City, Utah.

Sav-on rebranding and relaunching

American Stores plans to build a coast-to-coast drugstore chain in the United States were underway. The strategy was to build a nationwide network of pharmacies, streamline operations and advertising in order to gain national recognition for the brand, especially for the high-margin private label products. The name Osco Drug was chosen as the national chain banner because of the large number of stores which already had that name and existed in various parts of the United States. The name change was completed for the Skaggs drugstores in 1985 and then for the Sav-on stores in 1986. The name "Osco" did not resonate well with Sav-on's southern California customer base. American Stores eventually made the decision to change the name of the former Sav-on stores back to Sav-on Drugs. Rumors circulated at the time claiming that the reason for the name change back to ‘Sav-on’ was due to "Osco" having the same pronunciation as the Spanish word "asco" (oss-ko) which means "nausea" or "disgust", a considerable factor within southern California’s heavily Hispanic market. Ironically, American Stores' initials were "ASCO". This explanation for the name change was refuted by American Stores. The name change on all stores was completed in 1989 and the Sav-on Drugs brand was re-launched in southern California and Nevada.

Sav-on Express, Reliable Drug, Clark Drug

At the same time that the company was making major divestments in the early 1990s, American Stores also looked for opportunities to make strategic minor acquisitions, ones that would enhance its position in the main markets where it needed to strengthen market share.

• The company's California drugstore operations were enhanced through the early 1992 $60 million purchase of 85 CVS Stores (63 CVS Pharmacy drugstores and the rights to operate 22 CVS health and beauty aid stores) from the Melville Corporation. These stores converted to the Sav-on Drugs and Sav-on Express banners. Later that year, 30 Thrifty and Rx Plus drugstores in Arizona and Nevada were acquired.
• The following year the Midwest region received a boost when Reliable Drug (a 55 unit chain) in Indiana, Illinois, Iowa, Kansas, and Missouri was bought. These stores were soon re-bannered as Osco Drug stores.
• February 1995, American Stores spent about $37 million for 17 Clark Drug stores in southern California, which were then converted to the Sav-on Drugs name.

Consolidation of operations

In 1992, American Stores shifted its strategy from that of a holding company to a centralized operating company. As a result of the decision, common functions among American Stores' operating divisions (procurement, distribution logistics, payroll, human resources, etc.) would be removed from the operating divisions, consolidated and run centrally. From 1992 up through 1998, American Stores consolidated operations and moved responsibilities of their division offices to their headquarters in Salt Lake City, Utah. Although 'American Stores' food divisions retained an operating presence in their geographical locations and other centralized marketing, merchandising and other staff functions were relocated between 1992 and 1998 from Oak Brook, Illinois to Salt Lake City to occupy the then-new American Stores Tower, pharmacy operations were relocated to Scottsdale Arizona with certain pharmacy systems-related resources continuing to operate from the Chicago area after being relocated to 3030 Cullerton Drive in Franklin Park, Illinois, the location that previously served as Osco Drug's divisional headquarters prior to its relocation to its new purpose-built office facilities at 1818 Swift Drive in Oak Brook, Illinois' Windsor Office Park during the early 1970s. After American Drug Stores' move to Salt Lake City, Utah was complete in 1998, Osco's Oak Brook, Illinois 1818 Swift Drive headquarters was sold to the Follett Corporation. Many drug division employees who relocated from Chicago to Salt Lake were subsequently relocated to Scottsdale, Arizona and back the Franklin Park facility following Albertsons' subsequent American Stores acquisition.

Osco Foodmarts

In 1994, American Stores converted 25 Jewel Food Stores in Chicago, Illinois to Osco Drug free standing stores. These older and smaller Jewel stand alone stores were closed so that American Stores could focus on the combination formats only for Jewel and to expand Osco's presence in Chicago as a response to Walgreens increasing market dominance. The Osco stores replacing the Jewel stores contained expanded food and produce presentations and were coined 'Osco Foodmarts'.

Health 'n' Home

To extend its core drugstore business, in November 1995 American Drug Stores launched a new category-killer format called Health 'n' Home, which was a 28,000-square-foot (2,600 m²), 18,000-item home health care superstore. The first Health 'n' Home opened in Phoenix, Arizona, and by late 1997 there were 20 Health 'n' Home stores in four states.

RxAmerica

In 1998 American Stores RxAmerica division and Longs Drug Stores Integrated Health Concepts (IHC) division agreed to merge their Pharmacy Benefits Management (PBM) ventures. Under terms of the joint venture, RxAmerica and its former corporate partner, Geneva Pharmaceuticals, parted ways, and RxAmerica combined with Longs' IHC division in a 50/50 partnership. The alliance created a national PBM of nearly 1,400 Longs and American Stores pharmacy outlets and a nationwide network of 40,000 pharmacies serving some 3 million patients under contract. Longs and Albertsons remained equal partners up though 2001, when Albertsons sold their 50% interest to Longs.

Albertsons, Inc.

A typical freestanding Osco Drug

An Osco Drug before becoming CVS Pharmacy in Missoula, Montana.

During 1999, the drugstore operations division and general merchandise procurement functions were moved from Salt Lake City, Utah to Scottsdale, Arizona operating as Albertsons Drug Region.

In 2002, Albertsons sold its 84 free-standing Osco Drug stores in Massachusetts, New Hampshire and Maine to the Jean Coutu Group, a Canadian drugstore company. Jean Coutu rebranded the acquired Osco stores as Brooks Pharmacy. Also in 2002, Albertsons, due to financial difficulties, closed several of its stores across the country including all stores in the Des Moines, Iowa metro market.

In March 2005, Albertsons re-introduced the Osco brand name to the New England region by way of its Shaw's and Star Market pharmacies.

SuperValu, CVS Corporation, and Cerberus

On June 2, 2006, the sale of Albertsons, Inc. essentially split the company into three parts.

• CVS Corporation purchased the 700 free-standing drug stores (Osco Drug and Sav-on Drugs). By 2007 these stores were rebranded as CVS Pharmacy.

• A Cerberus-led group of investors, (who included Kimco Realty Corporation, Schottenstein Stores Corp., Lubert-Adler Partners, and Klaff Realty) purchased the Albertsons stores in northern California, Colorado, Texas, Oklahoma, Florida, Arizona, and New Mexico forming a new corporation called Albertsons LLC. Many of these stores have since been sold to other grocery chains or closed altogether.

• SuperValu purchased the Jewel, Acme, Shaw's divisions and the remaining Albertsons stores not acquired by Cerberus. Supervalu retains the Osco and Sav-on drug trademarks allowing the pharmacies in their grocery stores to remain branded as Sav-on Pharmacy or Osco Pharmacy.

Both SuperValu and Albertsons LLC use the Albertsons store banner name.

Osco is now run under Supervalu Pharmacies and is based in Eden Prairie, Minnesota. Certain store support functions exist in the Franklin Park, Illinois office.

Alumni information

Osco Drug has an Alumni Club website where membership is open to current employees, retirees and former employees of Osco Drug, Jewel Osco, Sav-on Drugs and affiliated companies - both past and present: Supervalu, Albertsons, American Stores Company, American Drug Stores, Buttrey Food & Drug, Skaggs Drug Centers, Jewel Food Companies, Republic Lumber, Turn*Style, RxAmerica, Health'n'Home.

See also

• Acme Markets for a history of Acme Markets.
• Albertsons for a history of Albertsons.
• Buttrey Food Stores for a history of Buttrey Food Stores.
• Eisner Food Stores for a history of Eisner Food Stores.
• Jewel Food Stores for a history of Jewel Food Stores.
• Star Market for a history of Star Market.

External links

• Osco & Sav-on Pharmacy Homepage