User:DavidLevinson/Skaggs Family
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[edit] The Skaggs Family – Root of a Merchandising Empire
- 'A Chronology of Skaggs, Safeway, Albertsons, and Others – [1]'
Image:Mb and store.jpg
Safeway's First President, M.B. Skaggs, and Two Store Images [2]
While not well-known, the family of a relatively poor Baptist minister by the name of Skaggs has had a remarkable impact on the growth of merchandising across the U.S. West and parts of the Midwest. If one examines the origins of a wide range of grocery and drug store chains across the western United States, the Skaggs names is likely to arise. The father and six of his sons, with varying degrees of collaboration, introduced in the early decades of the 20th century, two very important changes in merchandising: the low-margin, cash-and-carry approach to business and the process of rapidly growing a multitude of common outlets, something we now call chain stores.
Samuel Skaggs brought his family from Missouri to Idaho in the early 1900s. As a minister of a small group in a very small frontier town, American Falls, he needed additional support for his large family. He decided to open a grocery store, but to favorably compete with the few already operating, he decided to change their business model from one of credit accounts, which were tailored to the sporadic and seasonal income of farmers, to a cash-only basis. Attracting customers to this simpler arrangement would make sense only if he could sell for less than his competitors. While the margin would be lower, he would nevertheless avoid the substantial risk of non-payment of accounts. To help drive down the wholesale price of the groceries he needed, he would buy them in larger lots than his competitors. In those days large lots were defined by some fraction of a railroad carload and because American Falls was a stop on the Union Pacific Railroad, this afforded Sam Skaggs an opportunity to buy, and thus sell, for less. Perhaps more important to his expansion-oriented sons than to Sam, the savings of large-lot buying would only increase as more stores came on line.
To portray the evolution and impact of this kind of merchandising practiced by the Skaggs family, and to track the extensive creation of stores and their ownership transfers, a brief chronology is used. In it you will find the genesis and design of much of the merchandising we see in this new 21st century. In the Notes are a couple of small insights into the not always favorable reception his cash-only policy fared in frontier Idaho. These feelings are sometimes echoed today by many who view themselves as pawns in an impersonal world of commercial oligopolies. Through our propensity for spending less to have more, we have irrevocably voted out the small merchandiser with our pocketbook. The Skaggs were clearly correct in their notions of what customers wanted and so the Skaggs brothers and their merchandising model comprise an important thread in the fabric of our present commercial world. To see a bit of how that thread developed, this chronology begins with Sam Skaggs moving his growing family westward.
1873 - Samuel M. Skaggs, his wife Nancy (E. Long), and two of his brothers and their families move from Tennessee to Missouri. There S.M. tries farming, manages a store and post office in Cato, Missouri. Sometime between 1888 and 1900 he enters the Baptist Ministry and by 1900 settles in Newton Township. At the time of the move from Tennessee, S.M. and Nancy have five children and in Missouri they were to have ten more. Of the first eleven children, nine are living in 1900. Of these there were six sons who came to be known by their initials:
- Pepper Oscar Skaggs, born 7 Jan 1881, became O.P.
- Aron Sylvester Skaggs, born 14 Jan 1886, became S.A.
- Marion Barton Skaggs, born 5 Apr 1888, became M.B.
- Loronzo L. Skaggs, born 5 May 1891, became L.L.
- Samuel Olnie Skaggs, born 14 Nov 1895, became L.S.
- Levi Justin Skaggs, born 4 May 1899, became L. J.
1907 - S.M. Skaggs leaves Missouri and moves west with his family in search of a better climate. They settle in American Falls, Idaho before 1910 since that is their residence for that year's census.
1914 - Sam Seelig founds a chain of four stores in California called Sam Seelig Grocers. According to a Safeway website, this chain grew to over 322 stores by 1926. In 1925 he renamed them Safeway.
1915 - In April, S.M. opens the Skaggs Cash Store “with his own hands, on rented property, on borrowed money.” The store was about 18x32 feet. It was located in the old town of American Falls, adjacent to the Union Pacific Railroad tracks, and at times he, and later his sons, bought large lots of goods from the railcars and sold them to the public. That store later became Skaggs Store No. 1 and is now beneath the American Falls Reservoir. When the town was relocated between 1923 and 1925, that store became situated at the corner of Ft. Hall and Idaho Street, now housing the Senior Center.[3] Unusual for the time, the Rev. Skaggs had a cash only, no credit policy, which all his sons later adopted. (See [4] and [5] and newspaper ads at the end.)
1916 - S.M. sells this store to his third son, M.B. (then 29 and a well driller) for $1,088, then 29, and moves to eastern Oregon.[6] Though M.B. didn't at first contemplate having multiple stores, his "principle of economical buying and quantity distribution...could go only so far [with] a single store." The following year M.B., with the help of some of his brothers, starts expanding; opening stores in Blackfoot, Rupert, and Burley ID. In the meantime O.P. also starts Skaggs Cash Stores in Idaho Falls, Elko NV, and elsewhere, including California. He numbers his stores with even numbers and orange store fronts while M.B. uses odd numbers and uses blue fronts. L.J. goes to work for O.P. in Ogden.
Rev. Samuel M. Skaggs [7]
1918 - L.S. returns from military duty and reenters the grocery business with his brothers.
1919 - Some of the brothers form a partnership called Skaggs United Stores. In Ogden, L.J. meets and marries Mary Dee, daughter of a Mormon convert from the Netherlands. They work together to open a chain of Pay’n Takit Stores. These would become part of Safeway.
1926 - About this time O.P. is bought out by his brothers, bringing Skaggs United Stores to 428 stores in ten states.[9] (The Groceteria web site puts the number at 673 stores, two of which were in San Francisco.) This included buying just some of O.P.'s Cash Stores in California. (Probably does not include O.P.’s drug stores or all of his California food stores. See below.) This year Charles Merrill, a founder with Lynch of the famed investment firm in 1914, comes west to engineer and underwrite the merger of Skaggs Cash Stores and Safeway. M.B. became President of the new company and the stores are initially called Skaggs Safeway. They revert to just Safeway after about 18 months. Merrill temporarily withdraws from the financial industry in 1930 to help oversee the expansion of the Safeway enterprise. M.B. remains the head until 1934. Also, by this time, one C.J. Call had purchased a chain of California food stores from O.P. In 1945 he, with Ira Brown, would open the first Sav-on Drug Store in San Bernadino CA. Sav-on Drugs would be acquired by Jewel Cos. who would, in turn be bought by American Stores, headed by L.S.’s son.
1928 - Mainly through acquisitions, Safeway expands to 2020 stores, 855 of which are combination stores with meat markets. Sales in 1929 were $203M. Part of the expansion involves Safeway acquiring the Pay’n Takit stores of L.J. that ranged from the mountain states into California, Arizona, and Texas. For many years they were called Safeway Pay’n Takit.
1930 - L.S. is intermountain director for Safeways, residing in Salt Lake City.
1931 - Safeway stores number over 3500. (According to an article at www.findarticles.com.)
1932 - L.J. Skaggs opens first self-service drug store, Pay Less Drug in Tacoma WA. The Pay Less chain grows throughout the West, but L.J. would sell most of his interests to his brothers and associates. By 1965 he would retain only the California Pay Less Stores, which would be sold to Rite-Aid sometime around 2000.
1933 - The Skaggs clan’s cash-only policy helps them weather the depression.
1934 - M.B. retires as head of Safeway. Allen Rosenberg opens Arizona’s first self-service drug store called Thrifty Payless Drugs selling it eight years later (1942) to the L.L. Skaggs chain.
1937 - L.L. Skaggs and Harold Finch found Pay-Less Drug in Rochester MN. It was the Midwest’s first self-service drug store. With the opening of a second store in Mason City, Iowa the following year, the name was changed to Self-Service Drug, Inc. It would later (1942) become Osco Drug.
1938 - Joe Albertson, a district manager for Safeway, enters into partnership with L.S. Skaggs and the latter’s accountant, Tom Cuthbert, and opens his first store in Boise ID. The Skaggs family purchases four drug stores in Utah, Idaho, and Montana. M.B.’s son-in-law and his brother form Longs Drugs that today has 450 stores in six western states. Coincidently, the brothers, Joe and Tom, have the same last name as that of M.B.'s mother, Nancy E. Long.
1939 - L.S. resigns from Safeway to enter the drugstore business. Two associates from Safeway join him and they buy four Pay Less stores from his brother L.J. They were located in Salt Lake, Ogden, Boise, and Great Falls. O.P. sells some stores in Nebraska to Geo. W. Martin whose family operated them until selling them in 1964. In 1959 Martin started a new set of stores in Nebraska called Skagway and several are operating today in Omaha and Grand Isl.
1942 - L.L. Skaggs forms a partnership with three other men and call it the Owners Service Company, hence Osco. The headquarters was then moved from Waterloo, Iowa to the Merchandise Mart in Chicago. By 1961 they had 31 stores in six states.
1948 - Some Pay Less Drug Stores change their name to Skaggs Drug Stores.
1949 - L.S. dies at age 54 and his son, L.S. Jr.("Sam"), takes over his father’s role at age 26. At that point there were 11 stores with $9.5M sales. L.S. Jr.'s expansion drive is remarkable for by 1978 he had grown that number to 202 stores and 39 super-centers with over $1B sales.
1950 - The M.B. and Estella Skaggs Foundation builds a community hospital just north of Branson MO. (See picture.)
1951 - Albertsons opens first combination food and drug store…a 60,000 sq.ft. superstore.
1955 - Safeway control passes to Robert Magowan who continued Safeway expansion to become the second largest grocery chain in the U.S. But by the 1970s it was in financial difficulty and losing market share.
1962 - Using the name of the island on which it had been located early in WWII, a Navy radio receiving station in north San Francisco Bay officially adds Skaggs Island to its name. The island had been named for M.B. when he financially helped the struggling Sonoma Land Co. during the depression of the 1930s. The Navy station was decommissioned in 1993.
1965 - Skaggs Drug Stores incorporates as Skaggs Drug Centers and acquires drug chains called Katz, Josco, Harts, and Cook’s in the South and West.
1969 - Albertson’s and Skaggs partner to create Skaggs-Albertson’s combination stores
1970 - L.J. dies. They had set up a large foundation which his wife, Mary, continues to lead. Total grants have exceeded $32M. Queen Elizabeth named Mary an honorary commander of the Order of the British Empire in 1999 for her philanthropic work in England.
1977 - Albertson’s and Skaggs separate amicably…both taking equal shares.
1978 - L.S. Jr. initiates the Skaggs Drug Centers acquisition of American Stores, keeping the latter name and relocates headquarters to Salt Lake City. American had 785 food stores and 139 drug stores to 241 Skaggs stores. Alpha Beta and Acme food stores were part of American Stores.
1980 - Magowan’s son, Peter takes over Safeway and through several efficiency moves, makes Safeway the most profitable grocery chain in the country if not the largest.
1984 - In an unfriendly takeover, American Stores acquires Jewel Companies (for$1.1B) who had earlier (1980) bought Sav-On Drugs. The aim was to become the first coast-to-coast drug chain. Skaggs Drug Centers were converted to Osco Drug Stores. According to an AP wire story in Dec. 1984, L.S. Jr. is a private person, a wizard at acquisition, has great enthusiam for his work, has a management style that pays great attention to dteail, and is bare bones...parsimoniously allowing no company cars or credit cards. American has 102,000 employees and, after first 9 mos., over $8B revenue. American Stores later grows to 1700 stores in 40 states with sales of $15B.
1986 - To avoid a hostile takeover by the Haft brothers, Safeway agrees to be acquired by Kohlberg, Kravis, Roberts & Co. for $5.3B, taking the company private. To pay off the incurred debt, nearly half of its 2200 stores are sold, including those in England and Australia. Peter Magowan, however, remains CEO until forced out in 1992, but continues as a director until 2005. Magowan, with supporting partners, later purchase the San Francisco Giants.
1988 - American Stores acquires Lucky Stores which had started as Peninsula Stores (San Francisco Peninsula) in 1931 and had become one of California’s largest chains with operations in both Northern and Southern California.
1990 - Safeway again goes public and in the late 1990s resumes buying regional chains including Randall's in Texas, Carr's in Alaska, Dominic's in Illinois, and Von's in Southern California.
1992 - Albertsons purchases 74 Jewel-Osco combination stores from American Stores.
1998 - Albertsons acquires Seessel’s, Smitty’s, Buttrey’s, and some Bruno Stores.
1999 - Albertsons and American Stores merge. Lucky Stores change their name to Albertsons. At the time, Albertsons is the nation's fourth largest supermarket chain with 994 supermarkets in 25 states, while American Stores Company is the nation's second largest supermarket chain with 802 supermarkets and 773 stand-alone drug stores in 31 states. This merger was so large that the Federal Trade Commission (June 22, 1999) required its largest divestiture ever in forcing the sale of 144 of the combine's supermarkets and sites and also imposing future growth restriction in specified geographic regions.
2006 - On January 23, Albertsons made known that it had agreed to be sold for about $17.4B and broken into three parts. A Minnesota grocery chain called Supervalu would buy 1,124 Albertsons stores and in-store pharmacies and with 2,656 stores will become the nation's second largest grocery chain after Krogers. CVS, the nation's largest drug store chain, will purchase about 700 stand-alone Sav-on and Osco drug stores for about $4B. The remaining set of about 655 Albertsons grocery stores will be purchased by a finacial group led by New York-based Cerberus. The Albertsons name will continue. The sale was said to be due to increased competition from "large-box stores" such as Wal-Mart and specialty stores such as Whole Foods Markets.
Notes
1. Because of the Skaggs brothers’ many different commercial interests and their propensity to buy and sell those interests, the following chronology presents a difficult-to-unravel entanglement. As such, it may not be totally correct, but it is close. One confusing example is the various “pay less” names and stores. Apparently, by 1960 some set of Pay Less Drug Stores were divided up into 3 separate companies: one in Oregon and Washington, one in California, and a four-store chain in Tacoma WA.
What is clear, however, is that it is difficult to shop at a grocery or drug store in much of the country that doesn’t have a Skaggs heritage somewhere in its history. An account of the Skaggs family back to the Revolutionary War, as well as the move of some of it west, can be found in “The Skaggs Saga, The Safeway Skaggs Family” at www.angelfire.com/co3/Skaggs/stories/saga.html. Another account by R. Skaggs can be found at archiver.rootsweb.com/th/read/SKAGGS/1997-09/0874716822. Some of the grocery store images were obtained with permission from David Gwynn, who operates the following very informative website about the history of grocery markets, www.groceteria.net. Another important source is a book entitled The Skaggs Story - 1763-1979 - Sothern Revolutionary War Soldier to Western Entrepreneur published by the Skaggs Institute of Management, Brigham Young University, 1979.
2. From the Safeway web site www.safeway.com.
3. A note of clarification about the location of some of the grocery stores in American Falls ID in the late 1930s and the WWII years. According to my brother, Art Nielson, and Ella Marie Rast (conversations in October 2004) there were three: the Skaggs store mentioned above on the northwest corner of Idaho and Ft. Hall, Peterson’s grocery located on the alley behind Skaggs and facing Ft. Hall Ave., and a Safeway store across Ft. Hall from Peterson’s. According to Ella Marie, Skaggs had lower priced merchandise at a lower cost while Safeway had higher quality and therefore more expensive goods. Peterson’s was the only one that still offered charge accounts. Art remembered going to Peterson’s with our parents to deliver eggs or other produce from our farm on Fall Creek.
4. From an Historical Edition of the Power County Press of 10 July 1975 comes this insight into M.B.’s early merchandizing rationale. “In the beginning my plans were not based on the idea of multiple units. I didn’t see that far into my own principle of economic buying and quantity distribution. But before long I realized that we could go only so far in applying those principles to a single store. The only way a merchant in the food business can expand his business is by opening additional stores.” He added, “I wanted to have food stores in other towns; and I wanted each one to be known as a place where customers could spend their money safely and profitably.” When local wholesalers wouldn’t give him a volume discount, he found someone in Portland and, in turn, began opening stores in that area too. (See Skaggs advertisements below.)
5. From “Memories of Early Aberdeen” by E.L. Davis, Chapter 3, (found online at www.geocities.com/dyancey3/edlchip3.htm) come this observation about the new Skaggs’ merchandising philosophy: One day, a man, whose name I cannot remember, asked if I had heard of a new concern in American Falls which was selling things so much cheaper than others in that town or Aberdeen" Just think," he said; cabbage is selling for one and one-half to two cents per pound. Fruit, very cheap because it was being shipped in carload lots, and sold from the car direct." The merchants of American Falls didn't like such actions by strangers, and we were told that they asked for help from the city council. But these fellows didn't care nor quit easily, but kept right on selling cheaply and selling much. I went to American Falls about that time and found that things were about as reported.
To make a long story short, "Skaggs" had come to town, and in a short time Skaggs stores No. 1 and No. 2 were located in American Falls, soon to be followed by such stores in nearby cities - later all over the State. Now Skaggs stores are all over the West, but … Skaggs, Safeways and O.P. Skaggs originated right in our own back yard, or front yard, as you wish it, at American Falls, Idaho, and, as everyone knows, are doing hundreds of millions of dollars per year business, from a start of one small building advertised on the front as "Skaggs Store No. 1."
According to Esther Lehrman Rinner (Email dated 22 July 2004), who was raised in Aberdeen ID (near to American Falls), the Skaggs and Safeway stores “were almost a dirty word for someone in business like my Dad.” He worked in an Aberdeen grocery store whose owner, per normal, offered patrons charge accounts. But, according to Lehrman, they never saw a lot of that money and so when he opened his own grocery store, he adopted the Skaggs cash-and-carry approach and called it Lehrman’s Cash Market. A few reliable customers, however, did pay by the week or month. Importantly, however, Lehrman rejected the “big business” aspects of the chain stores. As with many people today, the Lehrmans lamented the impersonalization of such huge, remotely operated chains. Regrettably, such notions now seem quaint, as American consumers are quite willing to set aside personal acquaintance and service or a cheaper price. Small, local stores increasingly exist only in memory.
6. Nancy Long Skaggs presumably passed away while they lived in Oregon for Samuel remarried in Baker OR to Rosa B. Snooks in August 1919. However, the Reverend and Nancy Skaggs are buried together in the American Falls Cemetery, Sec D.
7. The Skaggs Story – 1763-1979 – Southern Revolutionary War Soldier to Western Entrepreneur published by the Skaggs Institute of Management, Brigham Young University, 1979.
8. www.groceteria.et/safeway/1920.html. A very informative web site for viewing the history of grocery stores.
9. www.reynoldsandbrown.com/lofts/history.htm. This site draws from the City of Oakland’s Historic Resources Inventory dated April 30, 1983.
10. www.skaggs.net/aboutskaggs/history.htm
11. Los Angeles Times, San Diego County Edition, March 23, 1988.
