Osco Drug and Sav-on Drugs

Osco Drug and Sav-on Drugs were the names of a pair of chain pharmacies that operated in the United States. Osco Drug was founded by the Skaggs family. Alpha Beta grocery store was purchased by American Stores in 1961. Skaggs Drug Centers bought American Stores in 1979 and assumed the American Stores name. Sav-on Drugs was a California-based pharmacy chain that was acquired by Osco's parent company in 1980. Both Osco and Sav-on stores eventually came under the ownership of American Stores, then Albertsons, and finally SuperValu before the stores were sold off.

The Osco and Sav-on brands survive today as brandings for in-store pharmacies in the Albertsons chain of stores. Osco pharmacies can be found in Jewel stores, which are co-branded Jewel-Osco, as well as in Shaw's and Star Markets. Sav-on pharmacies are found largely in Acme stores. Albertsons stores, depending on the market, feature either brand.

History

Osco Drug logo.

Roots

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 opened a store with 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 a chain of self-service stores, and later sold the franchise in the western states to Christian Call (Call later opened the first Sav-on store in San Bernardino, California in 1945). 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, led by M.B. Skaggs. L.J. Skaggs retired from Safeway in 1932, and in 1934 opened the first self-service drugstore in the US in Tacoma, Washington. He applied the self-service principle to his drugstore.

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 when it closed 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 until 1980.

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 and 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.

After the merger, all of Jewel's subsidiaries soon had an Osco Drug. Some Eisner Food Stores locations were re-branded "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 eventually operated 60 stores in Montana, North and 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 Chicago metropolitan area, 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 seeking to purchase or build a photofinishing plant to service its stores. At the time, the company was using outside vendors, and the film developing quality and service was inconsistent. In 1970 working with Kodak, Osco built a photofinishing lab in Elgin, Illinois. The facility, Crest Photo Lab opened in 1971 and serviced Osco's Chicago, 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 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. which 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 re-branding and relaunching

American Stores had a strategy to build a nationwide network of pharmacies, streamline operations and advertising 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 US. 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. This explanation for the name change was refuted by American Stores.^[1]

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 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 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.
• In 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.) were 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.

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.

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 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 re-branded 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 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.

The SuperValu owned Albertsons stores and the chains it acquired were in turn sold to Cerberus in 2013 and Osco and Sav-On pharmacies moved their operations to the base of Albertsons LLC in Boise, Idaho. Certain store support functions exist in the Franklin Park, Illinois office.

See also

• ACME for a history of ACME.
• 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.

References

External links