In 1978, I was asked to rejoin Osco as Executive Vice President of Operations. It was a traumatic time. Was Jewel Companies selling Turn*Style or not? We had to operate Turn*Style as if we would own it forever, but the rumors on the sale never stopped and finally they were proven true.
The consolidation of Turn*Style and Osco after the sale was a difficult time for the people of the business. Many, many excellent people, who did not receive opportunities at Venture Stores or, in the now significantly smaller Osco, had to be asked to leave the business. In my whole business career, this period was one of the most difficult for me as I sat with good people and told them their Jewel and Osco career was over. The fact that we provided good out placement helped, but it was a difficult time for the people that left as well as those who were asked to stay who naturally felt bad for their friends and business associates.
In 1979, Dick Cline was asked to become President of Jewel Companies and I was asked to take his place at Osco as President. Dick gave me some advice for which I am ever grateful. He said, “Dick, the work at Oak Brook never ends, but I would suggest you let others do it and spend most of your time in the stores.” He was correct and I followed that advice my whole Osco career---traveling to most Osco stores over the next ten years. I met our outstanding store management teams and the people who supported them. I saw the pride our District Managers had in their stores and people. I know many of the store teams worked late into the nights the week before our visits to be sure their store reflected the pride of the team. This extra work was appreciated by me, but, most importantly, I am sure it was recognized and appreciated by our customers.
While I was spending significant time traveling our stores, the functions in Oak Brook were capably managed by Ron Grove, Terry Hanson, Don Hoscheit, Bill Jacobs, Haven Ready and many others.
Over the years as we added plan-o-grams, to gain efficiency in the company, the store teams worked diligently to have the store plan-o-grams up to date. At one point we were trying to reduce floor displays in our stores and at one store I complemented the store team because there were no floor displays. When I arrived back at the office, I received a letter (before emails) that it was a good thing that I had not looked in the women’s rest room---it was unusable because that is where all the floor displays were located.
Very early in my store travels when I realized that our store teams had worked so hard to have their stores “just perfect” I decided I needed to do something to personally thank the manager. On each store visit I would make notes about things in that particular store or items the store manager mentioned as we walked the store. When we arrived back at the hotel or home after dinner using my store notes, I would dictate a personal letter to each store manager on a portable dictating machine with plenty of extra tapes. Back at the office, Diane Johansen, my absolutely wonderful and talented ace administrative assistant would take this often garbled dictation and quickly produce letters to send as a thank you to our store teams.
My store travel memories include traveling the Western Region with Jack O’Connell and his team. On one trip with Ron Hass I watched as he carefully installed his radar warning system and then drove at or below the speed limit (few other cars on the road) from Miles City, to Billings, Montana, a very long way. Another memory was renting a car in Boston upon arriving very late in the evening---there are no straight roads in Boston. I saw my hotel, Charter House (in Boston pronounced as if R’s are silent) across the Charles River come closer and then become more distant since I could not find the way to cross the river and get to the hotel (before GPS). Finally got there and the next day met with Dave Maher and his fine Eastern Region team.
When we traveled the Central Region with Tork Fuglestad and his team, it was often by utilizing a small plane we rented from DuPage Airport outside Chicago. We would meet at the airport and Tork would have a dawn to dusk itinerary designed to see as many stores as possible per day. Speaking of planes, Jewel Companies owned a small jet plane that we used occasionally. This plane operated out of an old hanger at Midway Airport in Chicago and Jewel would only charge Osco for the variable cost of operating the plane. Another advantage of this plane is that we could include five or six people on the trip without increasing the cost. We often took buyers and or people from other departments in Oak Brook with us so they could see and understand how their programs or processes impacted our stores and customers. The chief pilot Jewel had hired was a very fastidious guy. He would be doubly sure we were following all the safety procedures. On one trip just before we came back to Chicago he asked if I had ever opened the escape hatch over the wing. I said that I had not. He said that I should do it when we got back to Chicago and I agreed on one condition. He was not to mention this drill to anyone else on the plane. You would be surprised at the size of ten eyes looking at me when as we were taxing off the active runway at Midway Airport, I reached up and pulled the escape hatch into the interior of the plane. That was great fun after a long week visiting stores in the Midwest.
Traveling with Byron Luke and his team in Chicago was far easier from a travel standpoint. However, the Chicago Region had other complications. Most of the Chicago Osco stores were combination stores with Jewel Food Stores. Two different companies and teams operating within the same store with integrated merchandise, when both teams would always like more space or a better display space naturally caused some conflicts. Most of these conflicts would be solved by Byron and his team working with their counterparts at Jewel, but occasionally I might have to be involved. Jim Henson, an outstanding guy who led Jewel Food Stores was a delight to work with and I think Jim and I solved any conflicts for the benefits of our customers. Sometimes, Osco gave and sometimes, Jewel gave, but, I believe our customers always won.
We set tough yearly budgets for ourselves and then worked to beat them. We worked hard and played hard especially at year end meetings, a few of which were held at the Breakers Hotel in Florida where we celebrated an especially good year. Our 50th Osco Anniversary Meeting was at Chicago’s Natural History Museum where we celebrated our anniversary among the long extinct dinosaurs. At one of those annual meetings in 1981, we began giving annual President’s Awards to Osco people who through their career demonstrated ability, dedication and leadership at Osco. Choosing these people started with a list of nominations from all areas of the company. The Executive Committee then discussed their recommendations individually and the committee discussed the merits of each individual. I listened to the discussion by the Executive team of these many outstanding people and then made the final decision that would be revealed at the annual or office meeting. It was the best responsibility I had at Osco. In 1984, Jewel Companies’ Stockholders were offered a significant premium in the stock price by a tender offer from Sam Skaggs and American Stores Company. Unfriendly tender offers were not common at that time, but since it was good for the stockholders, Jewel Company Directors ultimately accepted a revised higher offer. This was another time of much uncertainty. American Stores offered most company operating officers’ contracts to stay with the new company with an “out” after two years. As I thought about my contract, I decided I could not fairly lead Osco unless I committed to stay (no out) which I did and tried to lead others to work positively with American Stores.
Not long after the merger was completed and much to my surprise, Sam Skaggs decided to merge Skaggs Drug Stores and Sav-on Drug Stores into Osco Drug. Since each company had their own merchandising, functional departments along with varying operating policies and in Sav-on’s case a distribution center, the consolidation was a significant time consuming project for everyone involved. Once again, we had to ask people to leave the business as we eliminated duplicate functions in the three operations. But from our experience with the Turn*Style consolidation, we knew it was important to complete all the decisions as quickly as possible so the time of uncertainty was as short as reasonably possible.
Naturally, I started traveling Skaggs and Sav-on stores. I found the same dedicated store teams that I had found in Osco. Skaggs tended to do things differently in every store since they did not use central distribution and merchandising---similar to the original Osco stores where our management teams received bulletins from the merchandise department and made their advertising and buying decisions individually. Sav-on had a distribution center and so there was a more planned centralized merchandise program including plan-o-grams in place.
In my California store travels, I learned one day that California has some practices and laws that I had never encountered in other states. As was normally the case, the stores were looking great and I was enjoying meeting the managers and teams. However, on one store visit, only the Assistant Managers were in the store and everyone seemed to not want to talk about the Manager. Finally when we were in the car driving to the next store, I asked again why the store manager was “out.” The district manager finally said he was out sick. I asked a few more questions and learned that the manager was out on “stress leave.” Having never heard of “stress leave” before, it was explained to me that the Store Manager had been given a poor performance review and that had caused him stress.
According to California law he could have time away from the business while out on “stress.” He would come back after the allowed time “out on stress” and then would have another performance review, once again find a doctor that would sign off on his stress and he would be gone again. More discussion revealed that he had actually moved out of California to be free of “stress.” Maybe his stress ended because his job did.
Fortunately, this story is an exception. All the other managers were engaged with their stores, operating them with pride. Although, there were the natural concerns about the consolidation of the company, most managers just wanted honest answers to their questions. The same was true at Skaggs Drug Stores. “How is this going to work?” Why do we have to buy from a distribution center (DC)? After the explanations of cost advantages most were “on board.” Unfortunately it was a long process to work through the many conflicting SKU’s. The DC concerns were really not any different than the concerns I heard from Osco Managers when we asked them to buy from the Osco DC. It is only natural for people to be concerned about change and particularly when the change involves changing how our managers operate and merchandise their stores.
It was one thing to consolidate the company; it was another to change the names on the stores from Sav-on and Skaggs to Osco. When Sam Skaggs asked us to do that, to say the least, I was very surprised. Taking the owners and CEO’s name off the stores was surprising to me. I sure did not have any problem operating the company under three marketing names especially since there was very little marketing overlap. Also, we did some research and found that one could pronounce the Osco name in Spanish as if you were getting sick and so the Osco name did not seem like a good idea for the Sav-on stores. Anyway, we lost the argument with Sam Skaggs and he finally said “change the name” and since we all have a boss, we did. Later, after we had changed the names, some of the stores were changed again. This process must have made some sign companies very happy.
The three companies, Osco, Sav-on and Skaggs came together reasonably well. We had a fair share of problems, but each year earnings improved and our teams worked well together building a solid, consolidated company.
We had been working for Sam Skaggs and the American Stores Executive team for approximately four years---most of the time I think my relationship was good both with Sam and the other American Stores executives. But in late 1987 and 1988 it was clear to me that my relationship with Sam was becoming strained. I was not sure of the reason. Having worked most of my career for Jewel Companies, I was used to performance appraisal discussions. In fact, Jewel practiced performance and development processes that I have since realized were “world class.” Most people do not go to work planning to do a poor job---people, in my experience want to do a good job. However, I was not receiving poor performance appraisals, but rather the silent treatment. For the first time in my life I was questioning whether I would ultimately be retiring from the company that I had started working for at age sixteen (Jewel Food Stores). As rumors started as to my tenure as President of Osco Drug, I was called to see Sam in California in August of 1988.
Upon arriving I was ushered into a conference room with Sam and other executives including lawyers sitting around a large conference room table. You do not have to be a genius to know what is coming. There was some “small talk.” I did not say much and finally Sam said, “Dick, I want you to resign from the company”. I looked at him and said something like; Sam, you own this business and you are CEO. You have the right to fire me, but I am not resigning. There was quiet in the room as people looked at each other and then there was another request to resign, but I did not say anything. Finally, Sam said, “Okay, you are fired”.
Now it was my turn to make a few comments (you will see I had done some homework for this potential meeting). I said you have the right to fire me for any reason, but now you have a problem. Osco’s sales and earnings have compounded at a rate 20% (sales) per year and 28% (earnings) per year during the last ten years (adjusted for the consolidation of the companies and assuming we made the 1988 budget which we did) and normally the leader of a group of people with that record does not get fired. Sam, I want you to be absolutely sure that it is clear to all that this firing is not for moral and ethical reasons. He said he would be sure to make that clear and he did.
Sam Skaggs and American Stores were fair with my Osco severance. On October 11, 1988 I started work on another business idea with Diane Johansen at a rental office location, but that is another story. My years at Osco were most enjoyable and rewarding as I had the opportunity to work with so many outstanding, talented, hard working people. My thanks to all who made my time with Osco anything but work.