Walgreen’s Rx for Success

In 1901, Charles R. Walgreen depleted his savings and borrowed $2,000 from his father to open his first drugstore in Chicago. Despite working from 7:30 a.m. until 11 p.m., the store showed only negligible profits in its first year.

 

To make his store stand out, Walgreen spruced it up, installing spacious and organized aisles and bright lighting. He also perfected his two-minute stunt. Whenever a customer who lived nearby called to place an order for home delivery, Walgreen would recite the order aloud in slow, measured tones while his assistant rushed to assemble the items. Walgreen would then engage the customer in friendly chitchat while the assistant raced out the door. Invariably, Walgreen was able to keep the conversation going long enough for the assistant to arrive, whereupon the customer would have to put the phone down to answer the door. The two-minute stunt amazed customers, and the word about Walgreen’s efficiency began to spread.

 

Recognizing that consumers wanted high quality for low prices, Walgreen formed a cooperative buying organization in 1911. At the time, most stores sold Gillette razor blades for nearly a dollar; Walgreen offered the same blades for 69 cents – a price so low that customers doubted they were buying the real thing.

 

“Don’t be afraid of anything sold at a Walgreen’s store, for quantity buying permits low prices,” Walgreen wrote in his own tabloid newspaper, which he created as a way to communicate with customers directly.

 

Although many drugstores at the time offered sodas, Walgreen added tables and developed his own brand of ice cream (high in butterfat), which was made by hand in the store’s basement. During the cold winter months, Walgreen enlisted his wife’s help as a cook and began offering hot food, as well.

 

Walgreen insisted on hiring people smarter than he was and gave them free rein. One manager, Ivar “Pop” Coulson, created a promotions powerhouse when he blended milk, powdered malt, chocolate syrup and three scoops of ice cream, topped it with whipped cream and a cherry and served it for 20 cents a glass. Customers (including gangster Al Capone) loved the double-thick chocolate malted.

 

By the Roaring Twenties, Walgreen had opened 20 stores in Chicago, and annual sales were up to $1.55 million. Near the end of the decade, he expanded to Milwaukee, St. Louis and New York City.

 

Walgreen weathered the Depression by advertising, even as other stores were cutting back. Using legendary Chicago Cubs announcer Bob Elson, Walgreen’s was the first drug chain to advertise on the radio. In 1934, Walgreen unveiled the first superstore in Tampa, FL. At 4,000 square feet, it was double the size of a typical Walgreen’s store. Three years later, an air-conditioned, five-story Walgreen’s opened in Miami. It was the largest drugstore in the country.

 

In 1939, Walgreen passed away, leaving his company to his son, Chuck, who ran operations for the next 30 years. With $1.36 billion in sales, Walgreen’s operates 4,800 stores in 45 states and Puerto Rico.

 

– Lisa Gschwandtner