One Saturday in 1960, just about seven years after I had joined Jewel, George Clements asked me to meet him at his office. Fred Woerthwein, district manager for a group of Chicagoland food stores, including the Lake Avenue store where I had worked as a trainee, was also called in. I didn’t know what to expect, being asked to come in on a Saturday, and I facetiously told my wife Phyllis that I was probably going to be fired. George told Fred and me that we were both to become vice presidents; I was being named vice president of growth, planning and development; and Fred would be vice president of store operations.
In that Saturday meeting, George told me, “I want you to think about where the business should go, but there’s one specific question I want you to have in the front of your mind. How can we sell more general merchandise without screwing up our food reputation?” Sales of general merchandise in the stores had been increasing at a very fast rate. Even so, other companies around the country were arguably doing a better job than Jewel was at selling general merchandise.
One of our problems was that we had many 10,000 or 15,000 square foot stores, and the more general merchandise we added, the more it interfered with our presentation of traditional food items. So I began to ponder the question and talked to a lot of people in and outside the business. One suggestion that surfaced was that we should be looking at drug stores.
As I explored the drug store business, one of the people I talked to was Bob Patrick, then the buyer for general merchandise and candy in the food stores. I asked him what he knew about drug store chains. “I don’t know much about them,” Bob said, “but there’s one that I hear just ‘chews up’ merchandise. It’s called Osco.” That comment ultimately led to Jewel’s acquisition of Osco. As I worked closely to bring the Jewel and Osco businesses together, the president of Osco, a wonderful man named Paul Stratton, started calling me “Mr. Josco” – a melding of Jewel and Osco – which I considered to be highly complementary.
The leaders of the original Osco organization liked small town “country” stores. They would fill those Osco country stores full of merchandise, undersell everyone else and pay the store manager a base yearly salary of $25,000. Many of those store managers, however, made six-figure bonuses which were calculated annually at inventory time.
Inventories were the managers’ focus because they determined what the profit of the business had been and what the bonuses would be. That affinity for country stores meant that the traditional Osco management initially wanted no part of Chicago so we started what we called “Chicago Osco” as a separate business, taking a handful of people out of the original Osco. One of the things we observed as we started running both drug stores and grocery stores was a surprisingly common pattern of shopping. It seems obvious today, but it was far from conventional wisdom at the time. We realized we could build traffic by having the two stores, Jewel and Osco, together in one location. When the concept of connecting the two arose, everyone was so indoctrinated in the separation between Jewel and Osco that the initial stores maintained a physical separation. The first three Osco stores we opened in Chicago were what we referred to as “side-by-sides.”
The first Jewel-Osco side-by-side on South Archer Avenue in Chicago was the site of my greatest market research experience. I was there with Max Harnden, who had succeeded Paul Stratton as president of Osco. Max, a very conservative man, resisted changing anything about the way Osco stores were run. He and I were visiting these new side-by-side Jewel and Osco stores as they were opening, when a heavyset bohemian woman came up to us and said, “Are you part of management?” “Yes,” we said. “Well,” she said, “these are two wonderful stores. But would you answer just one quest for me?” We smiled and said, “We’ll sure try.” And she literally said, “Who put that f$%#ing wall between these two stores?”
We had talked about doing something like combining food and drugs in a single store, but we had gotten all wound up in jurisdictional and operating problems. Jewel was unionized; Osco wasn’t. Who would have the paper products? Who would have the baby products – departments that were common to both stores? And could anyone run a store that was a combination? There were lots of internal arguments, but that woman’s reaction even got to Max Harnden. From then on, we built combination stores – the first one in Highland Park, one of Chicago’s northern suburbs. Jewel really did pioneer the so-called combination store and it all started with George Clements asking the right question – how we could sell more general merchandise without screwing up food sales – and one honest if foul-mouth.
An excerpt from Don Perkins memoir ‘A Calm Temperament Expectant of Good’