Skaggs family

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The Skaggs Family had, in the early part of the twentieth century, a remarkable impact on the growth of merchandising across much of the United States. If one examines the origins of a wide range of grocery and drug store enterprises across the West and Midwest, the Skaggs names is likely to arise. The father was a relatively poor Baptist minister, but he 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, now called chain stores. Their entrepreneurial zeal became a major retailing force resulting in large, well-known retail chains that carried not only the Skaggs name itself, but names like Safeway, Osco, PayLess, Albertsons, Longs Drug Stores, and others.

This account begins around 1887 when Samuel M. Skaggs, with his wife Nancy (E. Long) and two of his brothers and their families, moved from Tennessee to Missouri.[2,8] There Sam tried farming, managed a store and post office in Cato, Missouri. Sometime between 1888 and 1900 he entered the Baptist Ministry and by 1900 settles in Newton County, Missouri. At the time of their move from Tennessee, Sam and Nancy have five children and in Missouri they were to have ten more. Of the first eleven children, nine were still alive in 1900.[2] Of these there were six sons who came to be known by their initials:

Pepper Oscar Skaggs, born January 7, 1881, became O.P.

Aron Sylvester Skaggs, born January 14, 1886, became S.A.

Marion Barton Skaggs, born April 5, 1888, became M.B.

Loronzo L. Skaggs, born May 5, 1891, became L.L.

Samuel Olnie Skaggs, born November 14, 1895, became L.S.

Levi Justin Skaggs, born May 4, 1899, became L.J.

Sometime between 1908 and 1910, Samuel Skaggs brought his family from Missouri to Idaho. As a minister of a small group in a very small frontier town, American Falls, Idaho, he needed additional support for his large family. So, he decided to open a grocery store, but to favorably compete with the few that were 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 much less than his competitors. While the margin would be lower, he would nevertheless avoid the substantial risk of non-payment of accounts. To 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 as practiced by the Skaggs family and to try to track the extensive creation of stores and their ownership transfers, a nearly 100-year chronology is used. In it lies the genesis and design of much of the modern merchandising . The Skaggs family anticipated what customers wanted and so the Skaggs brothers and their merchandising model comprise an important thread in the fabric of the present commercial world. This chronology begins with Sam Skaggs moving his growing family west:

• 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 where he is located as of that year's census.
• 1914 In a totally separate commercial effort Sam Seelig founds a chain of four stores in California called Sam Seelig Grocers. According to Safeway web site, 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." [1] The store was about 18x32 feet. It was located in the original town of American Falls, adjacent to the Union Pacific railroad tracks, and he apparently bought large lots from the rail cars and sold them to the public. That store became Skaggs Store No. 1 and is now beneath the American Falls Reservoir.[3] When the town was relocated between 1923 and 1925, that store was situated at the corner of Ft. Hall and Idaho Street, now housing the Senior Center.[4] Unusual for the time, the Rev. Skaggs had a cash only, no credit policy, which all his sons later adopted. (See [5], [6], and adjacent newspaper ads.)
• 1916 S.M. sells this store to his third son, M.B. (then 29 and a well driller), for $1,088, and moves to eastern Oregon. [7] Though M.B. didn't at first contemplate having multiple stores, he saw his principle of economical buying and quantity distribution going 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, Idaho. This process continues elsewhere to form a grocery store chain that reached 428 stores by 1926. [9] 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 they have orange fronts while M.B. uses odd numbers and uses blue fronts. L.J. goes to work for O.P. in Ogden.

• 1917 Five small grocery chains in the Philadelphia area combine to form American Stores Company. This group would be acquired by a Skaggs enterprise in 1978. [10]
• 1918 L.S. returns from military duty and reenters the grocery business with his brothers.

• 1919 The brothers form a partnership called Skaggs United Stores. In Ogden, Utah L.J. meets and marries Mary Dee, daughter of a Mormon convert from Holland. [11] They work together to open a chain of Pay’n Takit Stores. These would eventually (1928) become part of Safeway.

• 1926 About this time O.P. sells some of his grocery chain to his brothers bringing the total Skaggs United Stores to 428 stores in ten states. This included some of O.P.’s Skaggs 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 co-founder of the Merrill Lynch investment firm in 1914, engineered the merger of Skaggs United Stores and Safeway. M.B. became President of the new company and the stores were initially called Skaggs Safeway. They reverted to just Safeway after about 18 months. Merrill temporarily withdrew from the financial industry in 1930 to help oversee the expansion of the Safeway enterprise. M.B. remained the head until 1934. Also, by this time, one C.J. Call purchased a chain of California food stores from O.P.

• 1928 Mainly through acquiring grocery chains in California, Washington, DC, and Kansas City, Safeway expands to 2020 stores, 855 of which are combination stores with meat markets.[12] Sales in 1929 were $203M. Part of the expansion involved 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 Safeway, residing in Salt Lake City.
• 1931 Safeway stores in the U.S. and Canada now number 3527. This would be the largest number of Safeway stores. [13]
• 1932 L.J. Skaggs opens his first self-service drug store, PayLess Drug, in Tacoma, Washington. The PayLess chain grew throughout the West, but L.J. would sell most of his interests to his brothers and associates. By 1965 three companies would result: one in Washington and Oregon, a 4-store chain in Tacoma, Washington, and one company he would retain in California. [14] L.J.’s California stores, headquartered in Oakland, California, would be sold to the Washington-Oregon chain in 1980 and then to Rite-Aid sometime around 2000.
• 1933 The Skaggs brothers' 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.
• 1936 The Reverend Samuel M. Skaggs dies on 30 October.
• 1937 L.L. Skaggs and Harold Finch found Pay-Less Drug in Rochester, Minnesota. 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, which would grow to approximately 600 stores in 19 states by 2003. [15}
• 1938 Joe Albertson, a district manager for Safeway, enters into partnership with L.S. Skaggs and the latter’s accountant, Tom Cuthbert, and opens first store in Boise, Idaho. M.B.’s son-in-law, with his brother, form Longs Drugs that today has 450 stores in six western states. Coincidently, the brothers, Joe and Tom, had 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 Island. [16]
• 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, Illinois. By 1961 they had 31 stores in six states.
• 1945 C.J. Call (see 1926), with Ira Brown, open the first Sav-on Drug Store in San Bernadino, California. Sav-on Drugs would be acquired by Jewel Companies. who would, in turn be bought by American_Stores, headed by L.S.’s son.
• 1948 Some PayLess Drug Stores change their name to Skaggs Drug Stores.
• 1949 L.S. dies at age 54 and his son, L.S. Skaggs Jr. (“Sam”), takes over his father's role at age 26. At that point there were 11 drug stores with $9.5M sales. L.S. Jr.’s expansion drive was remarkable for by 1978 he had grown that number to 202 stores and 39 super-centers in 21 states with over $1B sales. [8]
• 1950 The M.B. and Estella Skaggs Foundation builds a community hospital just north of Branson, Missouri. (See picture.) [17]

• 1951 Albertson’s opens first combination food and drug store…a 60,000 sq.ft. superstore. [18]
• 1955 Safeway control passes to Robert Magowan, Charles Merrill’s son-in-law, 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. [19]
• 1956 General Electric sues a group of Western retailers for selling its products at below recommended price. Skaggs Companies counter-sues and wins, overturning so-called “fair trade” laws in Utah and other states that prohibited discounting. [20]
• 1961 Jewel Companies acquires the L.L. Skaggs-founded Osco Drug chain.
• 1962 Using the name of the island on which it had been located early in World War II, 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 over the next few years acquires drug chains called Josco, Harts, Cook’s in the South and West, and Katz, which had stores in the Midwest and also owned the non-California operations of L.J. Skaggs’s old PayLess chain. [20]
• 1969 Albertson’s and Skaggs partner to create Skaggs-Albertsons combination stores and over the next few years opened 58 such stores in Oklahoma and the Southeast.
• 1970 L.J. dies. They had set up a large foundation which his wife, Mary, continued to lead. Total grants have exceeded $32M. Queen Elizabeth II named Mary an honorary commander of the Order of the British Empire in 1999 for her philanthropic work in England. [11]
• 1977 Because managing their 1969 venture became difficult and for other financial and legal reasons, Albertson’s and Skaggs separate amicably…both taking equal shares. [18, 20]
• 1978 L.S. Jr., 55, initiates the Skaggs Drug Centers acquisition of American Stores, completing it by the spring of 1979. He keeps 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. [1, 21]
• 1980 Peter Magowan takes over Safeway and through several efficiency moves, makes Safeway the most profitable grocery chain in the country if not the largest. L.J. sells his PayLess Drug Stores of Oakland, California to the Washington-Oregon PayLess stores formed in 1932. Jewel Co. buys Sav-On Drugs of Southern California.
• 1984 In an unfriendly takeover, American Stores acquires Jewel Companies (for $1.1B). One aim was to become the first coast-to-coast drug store chain. Curiously, this purchase added Sav-On Drugs, which Jewel had bought in 1980 and which had its beginning with the partnership of O.P. Skaggs, and also returned the Osco drug chain, which L.L Skaggs had started, to the Skaggs fold. The Skaggs Drug Centers were also converted to Osco Drug Stores. [20, 21] According to an AP wire story by Jennifer Brandlon on 11 Dec. 1984, L.S. Jr. is a private person, a wizard at acquisition, has great enthusiasm for his work, has a management style that pays great attention to detail, and is bare bones…parsimoniously allowing no company cars or credit cards. American has 102,000 employees and after first 9 mo., over $8B revenue. American Stores later grows to 1700 stores in 40 states with $15B in sales.
• 1986 To avoid a hostile takeover by Herbert Haft and family, Safeway agrees to acquisition by Kohlberg, Kravis, Roberts & Co. for $5.3B, taking the company private in the second largest leverage buyout in history. [19] To pay off incurred debt, nearly half of its 2200 stores were sold, including those in England and Australia. Peter Magowan, however, remained CEO until forced out in 1992, but continues as a director until 2005. Magowan, with supporting partners, later purchases the San Francisco Giants.
• 1988 After considerable positioning that moved the purchase price from $45 to $65 per share and opposition from California’s attorney general, American Stores acquires Lucky Stores of Dublin CA. [20] Lucky had started as Peninsula Stores (on the San Francisco Peninsula) in 1931 and had become one of California’s largest chains with operations in both Northern and Southern California. But L.S. Jr. reaches the mandatory retirement age of 65 and steps down as the CEO of American Stores…moving to Chairman. A period of consolidation and debt reduction begins with sell-offs occurring into the 1990s. Its total holding of stores drops from 1,848 in 1990 to 1,695 in 1996 but profits increased over that period nearly $100M. [20]
• 1990 Safeway again goes public and in late 1990 and resumes buying regional chains such as Randalls in Texas, Carrs in Alaska, Dominicks in Illinois, and Vons in Southern California.
• 1992 Albertsons purchases 74 Jewel-Osco combination stores from American Stores.
• 1995 L.S. Skaggs Jr. relinquishes the Chairmanship of American Stores and within two years the company would purchase $550M of his shares, leaving him with insufficient ownership to keep his seat on the board. Thus would end the Skaggs family's leadership in the commercial world.
• 1998 Albertsons acquires Seessels, Smittys, Buttrey, and some Bruno Stores. [18]
• 1999 Albertsons acquires American Stores for $12.7B to become the nation's biggest supermarket chain. [22] Prior to this time, Albertsons was the nation's fourth largest supermarket chain with 994 supermarkets in 25 states, while American Stores Company was the nation's second largest supermarket chain with 802 supermarkets and 773 stand-alone drug stores in 31 states. Lucky Stores change name to Albertsons. 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 imposed future growth restrictions in specified geographic regions. [23]
• 2003 Safeway has approximately 1700 stores across the U.S. and Canada which include 329 Vons stores in Southern California and Nevada, 132 Randall and Tom Thumb stores in Texas, 42 Genuardi’s in the Philadelphia area, and 21 Carr’s stores in Alaska. Albertsons operates over 2500 stores in 38 states.
• 2005 Albertsons, Inc. announces in September that it is considering putting the company up for sale; that the board is exploring strategic alternatives to increase shareholder value. Among the reasons given was increased pressure from Wal-Mart type supercenters. [24]
• 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-based grocery chain 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 Kroger. 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 financial 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 Market. [25]

[edit] Skaggs Foundations

The Skaggs sons were frugal men and wanted to give their customers that same opportunity for frugality through low margins, compensated from a business perspective through wide replication of retail outlets. Also, in the spirit of their minister father or grandfather, they have shared and are still sharing their good fortune through a number of foundations. L.J.'s and M.B.'s foundations were mentioned in the chronology but the largest one is still personally managed by L.S. Jr. (Sam) and his wife Aline. Their ALSAM Foundation has given hundreds of million dollars to education and health research by way of scholarships, the establishment or funding of a wide number of university and research centers, and probably the nation's largest single parochial elementary and secondary complex, located in Salt Lake City.

Skaggs Community Health Center in Branson, MO was named after M.B. and Estella Skaggs; M.B. was a Missouri native who owned a home and game preserve in eastern Taney County. [26]

[edit] Notes and References

1. From the Safeway web site, www.safeway.com, 7 Oct 2003.
2. 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 and the various divestitures and acquisitions in the 1980s and 1990s. 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 http://www.angelfire.com/co3/Skaggs/stories/saga.html. (Accessed 5 Oct 2003.) Another, but not independent account by R. Skaggs can be found at http://archiver.rootsweb.com/th/read/SKAGGS/1997-09/0874716822 (accessed on 9 Oct 2003). Some of the grocery store images were obtained from David Gwynn who operates the following very informative website about the history of grocery supermarkets, www.groceteria.net.
3. http://imnh.isu.edu/digitalatlas/georg/rrt/part6/chp21/152.htm, 14 Nov 2003.
4. Ella Marie Rast, The Whole Dam Story – The Drowning and Rising of a River city in the West, ISBN 1-4033-3732-2, 1st Books Library, 2004.
5. From the 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.)
6. From “Memories of Early Aberdeen” by E.L. Davis, Chapter 3, (Found online at www.geocities.com/dyancey3/edlchip3.htm, on 15 Nov 2003) comes 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."
7. While his reason for moving to Oregon is not known, his wife, Nancy Long Skaggs, passed away shortly thereafter, on 6 November 1917. She and the Reverend are both buried in the American Falls ID cemetery, Sec. D. While still in Oregon, Samuel married Rosa B. Snooks on 22 August 1919 in Baker OR.[8]
8. The Skaggs Story – 1763-1979 – Southern Revolutionary War Soldier to Western Entrepreneur published by the Skaggs Institute of Management, Brigham Young University, 1979.
9. Safeway web site plus http://reynoldsandbrown.com/lofts/history.htm (9 June 2005). This site draws from the City of Oakland’s Historic Resources Inventory dated April 30, 1983.The groceteria web site (Ref _ below] puts the number at 673.
10. American Stores Company History at www.prnewswire.com/cnoc/ASCfactcomphist.html, 24 Apr 2006.
11. The webpage of the L.J. Skaggs and Mary D. Skaggs Foundation at http://www.skaggs.org/html/about.html, 5 Oct 2003.
12. www.groceteria.et/safeway/1920.html. A very informative web site for viewing the history of grocery stores.
13. www.britannica.com/eb/article-9064713, 4 Dec 2005.
14. www.miscmedia.com/6-92.html, 8 Oct 2003.
15. www.jewelosco.com/eCommerceWeb/AboutAlbertsonsAction.do?action=getAlbertsonsFacts, 22 Apr 2006.
16. www.skagwaystores.com/History/History.html, 23 Apr 2006.
17. www.skaggs.net/aboutskaggs/history.htm. 15 Oct 2003.
18. www.albertsons.com/abs_aboutalbertsons/ourhistory/default.asp, 23 Apr 2006.
19. Stice, Stice, Albrecht, and Skousen, Survey of Accounting, South-Western College Publishing, 1st edition, 1998, ISBN 0-538-84617-8.
20. www.fundinguniverse.com/company-histories/American-Stores-Company-Company-History.html, 24 Apr 2006.
21. Los Angeles Times, San Diego County Edition, March 23, 1988.
22. The New York Times, 23 Sep 98.
23. Federal Trade Commission, www.ftc.gov/opa/1999/american.htm, 9 Jan 2006.
24. The Idaho Statesman, 3 Sep 2005.
25. San Jose (CA) Mercury News, 24 Jan 2006.
26. http://www.skaggs.net/body.cfm?id=198