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Bill Jacobs

Osco’s President Wes Christopherson hired me during the Company’s thirtieth anniversary year in 1967. I was privileged at that time to join a team that provided caring sponsorship for new people. I fondly remember George Hilden, Osco’s first Store Manager, personally inviting me to join Osco’s thirtieth anniversary celebration at Pheasant Run in St. Charles, Illinois. Other pioneers of that era included Dick Hilden, Fred Dearborn, Jack Skyles, Lou Frantzen, and Ernie Sawyer among others.

Ernie allowed me the freedom to make mistakes in his Elgin, Illinois store (he affectionately called me “Bad Buy Bill” after a few of these -- at least I thought it was “affectionately”). Among many other young people in the business then were Bryon Luke and John Spurlock. All these people in their unique ways had major impacts on the growth and development of our business that ultimately provided immeasurable opportunities for countless numbers of people for years to come. Sadly, the people I just mentioned are no longer living to witness the continuing fruits of their hard labor.

Even though there were challenges within the drug store business, Osco’s parent Jewel Companies continued to be supportive and patient by providing a steady flow of capital for Osco’s growth in excess of Osco’s internally generated funds. Don Perkins and Wes Christopherson believed in the promise of Osco and its potential synergy with Jewel’s supermarket businesses. In the 1960’s and early 1970’s, the Osco Drug formula of planting large drug stores in central business districts of small to medium sized Midwestern towns proved to be extraordinarily successful. By providing a broad array of general merchandise attractively priced, Osco typically dominated retailing in its markets. Autonomous entrepreneurial store managers with motivated assistant managers and trainees striving to be store managers thereby working back-breaking hours together provided the formula for store profits. However, this use (perhaps abuse?) of human resources could not and did not continue. Competition increased as did outside opportunities for people to pursue successful careers. Osco Drug needed to evolve to stay competitive and to learn to work smart and not just hard.

The roles of store and central office support management needed to change thereby suggesting a change in compensation programs to share the financial rewards based upon achievement of specific objectives in addition to the “bottom line”. The founding system providing a fixed percentage of store profits to store managers and a non-forgiving record keeping of paybacks for draws against future bonuses no longer met the needs of store management and the Company.

New human resources approaches became a critical part of the future innovative work of the company. Store operations people and central office support resources began to work together on a number of business development fronts. The company needed and therefore developed cost effective information systems from which to make merchandising and space allocation decisions. Timely financial reports became essential to plan budgets and track results. Store payroll productivity had to improve to stay competitive thereby inspiring studies on optimum scheduling of people.

Slow inventory turnover tied up valuable financial resources and impaired the ability to achieve return on investment targets. This reality spawned a number of efforts focused on costs of goods sold. Intelligent deal to deal buying/re-buying using central distribution services along with new store ordering and delivery systems lowered the landed cost of merchandise and simultaneously increased inventory turnover. The company discovered other landed cost opportunities with direct importing and private label domestic sources.

Information about specific categories of competitive pricing was required to maintain or enhance Osco’s competitive profile in its markets and its opportunity for increased sales per square foot. Repackaging of pharmaceutical and developing central photo processing plants added to profit opportunities. American Stores later sold Crest Photo at its zenith of profit generation just before the digital revolution changed the photo processing category forever. Store location strategy changed as new opportunities were found in regional malls, food partnerships, neighborhood strip malls, and solo sites. All in all, a cadre of talented and energetic people transformed the company into a consistent profit generating machine. It was extraordinarily gratifying to be part of a team working feverishly to accomplish the transformation of a great business into an even better one. A significant marketing initiative brought attention to Osco Drug and established bedrock for future marketing. In the early era many state boards of pharmacy interpreted standards of pharmacy practice to prevent public disclosure of prescription prices. Oddly, these boards claimed that disclosing prescription prices was a violation of the “gross immorality” clauses of their regulations. Osco took the lead by publicly posting a large number of prescription prices thereby facing enforcement litigation from regulators in several states (e.g., Massachusetts and Illinois).

Osco had the courage to take a substantial risk of going to war on this issue by siding with the consumer. The result was that Osco was put on the map and deservedly earned a reputation for low prescription prices. Consumers never understood why posting prescription prices was “grossly immoral”. Unexpectedly, Osco was aided in its legal battles by new and complex federal regulations issued during President Nixon’s various phases of wage and price controls. Ironically, the federal price control situation at that time was so complex that the Company had to remove liquor from sale in Indiana for an extended period because of irreconcilable federal and state requirements.

Not surprisingly there were a few false starts during the Company’s rapid growth and innovation years. Given the intensity of the talent and its competitive spirit, some setbacks and special challenges were inevitable. Osco Drug and its Jewel Companies’ food store partners sometimes focused more time debating commodity responsibilities and shared cost allocations than joint marketing opportunities.

These frequent disputes often prevented a collaborative approach to achieve optimum combined drug and food results. Years later during the Albertsons era, the Chicagoland market was restructured and the problems of working together effectively seemed to disappear. However, I give more credit to the statesmanship of executives during this latter era rather than the organization change. Also, the assimilation of Republic Lumber and Turn*Style into Osco Drug brought new challenges to support different businesses with one central support team. A “Jewel Marketing Company” comprised of the central support staff was established. With this new “company” came a concept of a “continuum of store types”. This concept failed because few people including customers had any understanding of what that meant.

I am reluctant to list names of the countless talent that was within the Osco/Sav-on organization during these growth and innovation years. There are too many to mention, and I undoubtedly would carelessly overlook some of the most important people. However, I will give special credit and appreciation to Osco’s Presidents Dick Cline and later Dick George who together provided essential leadership as the Company sharpened its marketing and increased its productivity.

The heritage of Osco/Sav-On undoubtedly continues in some form and provides job opportunities for many people despite several changes in ownership and name changes on buildings. However, from the distance of time and geography, I have a feeling that “Camelot” may have faded into distant memory. The original Jewel Companies and Osco Drug businesses enjoyed a special philosophical base that eventually was formalized with the publication of Jewel Concepts. Frank Lunding, author of “Sharing a Business”, George Clements, and Don Perkins all provided the inspiration and leadership continuity to establish this marvelous business culture. Ethical standards were made a fundamental foundation of the business. If an action would be embarrassing if it were to appear as a headline in the Chicago Tribune, then that action was WRONG. Although a strong work ethic was highly valued, the company also understood the importance of families. Other concepts included taking risks, innovation, supporting people, diversification, perseverance (yet understanding a time to finally let go), and other valued tenets. The idea that people should help one another with a particular emphasis that a manager’s primary job was to help and support the people under his/her charge was unique in its day (the “First Assistant” concept). People were considered a critical ASSET of the business.

I miss Osco/Sav-on and regret the circumstances that led to my premature departure in 1985. I will always savor my years with a magnificent company and my association with an incredible team of people.

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