Walgreen, Charles

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Walgreen, Charles

(1873-1939)
Walgreens

Overview

Charles Walgreen,Sr., often referred to as the father of the modern drug store, founded a chain of drug stores that would outsell all other drug store chains regardless of size. He built an empire which, up until 1998, was overseen by a Walgreen descendent.

Personal Life

On a farm near Galesburg, Illinois, Charles Rudolph Walgreen was born October 9, 1873 to Charles Walgreen and Ellen (Olson) Walgreen. Both his parents were natives of Sweden. His father later moved his family to Dixon, Illinois. After working as a bookkeeper for a time, he went to work in a Dixon shoe factory for $4 a week. An industrial accident cost him part of a finger on his left hand, and the doctor who treated him persuaded him to become a druggist's apprentice. Walgreen remained there until, at the age of 20, he then borrowed $20 from his sister, Clementine, and moved to the big city of Chicago. While there, he worked in drugstores and studied pharmacy in his free time. These were financially difficult times for Walgreen. At one point he only had five cents to his name. Instead of frugally counting the pennies, he instead went out and bought a 2-cent newspaper and threw the remainder in the Chicago River in hopes that it would bring him good luck. In 1897 he became a registered pharmacist.

When the war with Spain broke out in 1898, Walgreen signed up in the Illinois National Guard and was shipped off to Cuba. According to Walgreen's Online, "Malaria, yellow fever and typhoid were rampant there at the time, and he fell victim to their effects. The doctor, at one point, took his pulse and told the orderly, 'This solider is as good as dead'." At that point, he was listed as a casualty, and the news reported his death, albeit premature.

In 1902 Walgreen married Myrtle R. Norton of Normal, Illinois. They had two children, Charlotte Ruth and Charles R. Walgreen, Jr., who became a registered pharmacist in Michigan in 1928. In 1935, Walgreen withdrew his wife's niece from the University of Chicago, publicly charging that she was being indoctrinated with un-American teachings. A full scale investigation of the university by a committee of the Illinois legislature found the allegations to be without merit. Ultimately, Walgreen gave the university $550,000 in 1937 for the establishment of the Charles R. Walgreen Foundation for the Study of American Institutions. An aviation enthusiast, Walgreen also donated the Dixon Municipal Airport to his home town. He was an active Mason and loyal Republican. Walgreen, Jr. succeeded his father as president, when the senior Walgreen died of cancer in Chicago on December 11, 1939. Walgreen was buried in Dixon.

Career Details

After serving in the Spanish-American War, Walgreen returned to Chicago, and worked at a small neighborhood drugstore owned by Isaac W. Blood. In June 1901, he purchased Blood's store for $6,000 with the help of $2,000 he borrowed from his father. In 1909, when another of his former employers retired, Walgreen acquired his store and organized C.R. Walgreen and Company. This store was critical to his success, as it was one of the busiest and most important drugstores on Chicago's south side.

Occasionally, he added additional stores whose management he turned over to young men he had trained. According to the Walgreen history, "There wasn't much to distinguish his store from any other drugstore in Chicago — at least not at first. Most passerbys probably didn't even notice that the store had changed hands, unless they looked up at the small, gold-lettered sign over the doorway: C.R. Walgreen, R. Ph. . By 1916 there were seven stores, and by 1927, the number had grown to 110. The rapid expansion has often been attributed to Walgreen's policy of reinvesting a large part of the earnings back into the business.

Walgreen also attempted to distinguish his stores from other drugstores of the day. He installed eye-catching displays and attractively merchandised windows — a direct departure from the drab, lifeless stores people had become accustomed to. Another first, was to make his own line of drug products, which enabled him to ensure the highest quality at a low price.

Social and Economic Impact

Walgreen believed that the traditional drug store chains had become outdated, and that consumers wanted more. He popularized the lunch counter in connection with the soda fountain. The familiar malted milk as a fountain item was reportedly first introduced in one of his stores in the early 1920s. The fountain came about when he leased an adjacent empty building, cut an arc through it and installed a fountain against the far wall. He made his own brand of ice cream. This was a big hit in the hot summer months but, Walgreen wondered, what to do when the cold winter months set in. He decided to sell hot soup and sandwiches, which kept the room active and profitable year-round. The fountain was the main attraction for customers, as were the milkshakes. "Customers stood three and four deep around the soda fountain to buy the double-rich chocolate malted milk, which was thickened with home-made ice cream and flavored by bittersweet chocolate, according to Walgreens' history."

Chronology: Charles Walgreen

1873: Born.

1893: Began serious study of pharmacy.

1901: Purchased Mr. Blood's store for $6,000.

1909: Purchased key drugstore in Chicago.

1916: Merged seven stores into the Walgreen Company.

1929: Walgreen chain had grown to 397 stores.

1933: Paid stock dividends for the first time.

1934: Operated more than 500 stores throughout the United States.

1939: Retired as company president.

1939: Died.

Most significant is that his company pioneered the development of much of the modern equipment now in use. Walgreen's clean, well-lit stores, were a contrast to the typical dark, dingy store of the turn of the century. Walgreen opened the first of what has often been referred to as the "super-drug stores" in 1934 in Tampa, Florida. It has been described as the "first of the modern, open stores, with the merchandise taken out of the traditional showcases and placed on open display counters where customers could see, touch it, and buy it."

Walgreen set a goal to make better products than anybody else and to sell them cheaper. As he built his chain, Walgreen became a household word in Chicago during the 1920s. Even through the Depression, Walgreen managed to keep his empire afloat. Surprisingly, in 1933 he boosted his advertising budget to $1 million, and for a time the stock paid a dividend. That same year, Walgreens helped celebrate Chicago's spectacular Century of Progress by opening four stores on the fair-grounds. These stores experimented with advanced fixture design, new lighting techniques and colors—ideas that helped modernize drugstore layout and design.

Walgreen brought his son into the business early on, to ensure that the legacy would continue. In 1929, Walgreen Jr. was assisting in the procurement of branch warehouses and manufacturing plants throughout the country, and from 1930 to 1932, he was assistant to the director of purchasing and in charge of all sundries buying. In this position he developed many new lines of merchandise.

Social and Economic Impact

When Walgreen Jr., at the age of 33, succeeded his father in 1939, there were 494 stores in 215 cities in 37 states, with about 12,000 employees. Earnings grew from $439,110 in 1924 to $2.9 million in 1939, and the net worth grew from $85,700 in 1916 to $24.2 million in 1939. He joined the company in 1925 at the age of 19 as a drug apprentice. Under Walgreen Jr., the chain crossed the U.S. border and ventured into Mexico and Puerto Rico. By 1946 sales had grown to $141 million with 17,500 employees. Walgreens was the first to fully embrace the self-service concept in the 1950s and 1960s, and among the first retailers to computerize and automate its warehouses.

His son, Charles R. Walgreen III, who joined the company in 1952 as a stock boy, took the helm in 1971, when he was elected president and chief executive officer (CEO). He retired at age 62 in January of 1998. The grandson of the founding Walgreen was succeeded by L. Daniel Jorndt, a non member of the Walgreen family. The grandson continues as chairman as the board, overseeing all board meetings.

Through succeeding generations, Walgreen's vision has continued to expand. Walgreens is ranked as one of the nation's most successful corporations and one of its most admired. In September of 1997 the company announced its 22nd consecutive year of record sales and earnings. Walgreens has been listed among Fortune's "Most Admired Corporations in America" for the past four years and is one of only 35 companies listed in all four editions of The 100 Best Stocks to Own in America by Gene Walden. During the grandson's tenure, Walgreens grew from 618 stores and $800 million in sales in 1971 to become the largest drugstore chain in the United States, with 2,268 stores and $12 billion in sales in 1996. For 20 consecutive years, Walgreens has increased its sales and earning each quarter. Walgreens stores are located in 34 states and Puerto Rico, with the largest concentration in Florida, Illinois, and Texas.

Walgreen was an innovator in merchandising, adding many lines of goods to his stores in addition to the stock of pharmaceuticals. His legacy endures in the growing drugstore chain that has flourished under each succeeding generation.