Sunday, February 1, 2009

The SupeRx Files

In the latter years of the 1950’s, Kroger entertained the possibility of operating its own chain of drugstores. Having successfully expanded the company in the postwar era, America’s third largest grocery chain began to consider other avenues to employ their successful merchandising practices, preferably in a way that would complement their existing supermarkets while providing a means to enter new regions. A slow, deliberate process ensued as Kroger sought the ideal entry into the drugstore field.

In late 1960 the right opportunity came, and on November 16, The New York Times announced Kroger’s purchase of Plainfield, New Jersey-based Sav-On Drugs, Inc. (No relation to the west coast Sav-On drug chain.) At the time Sav-On had five stores in New Jersey – Plainfield, Carteret, North Plainfield, Watchung and Springfield and two on Staten Island, New York. All of these stores were well outside of Kroger’s existing market area.

Arguably the major factor in Kroger’s decision was the reputation of Sav-On’s president and founder, James P. Herring. Herring, a 25-year veteran of the drugstore industry at the time, had spent most of his career with the Walgreen Co., where he was a key leader in Walgreen’s successful conversion to self-service in the early 1950’s. In 1954, Herring left Walgreen to start his own company. As head of Kroger’s newly formed “SupeRx” division, Herring’s merchandising and management savvy would more than justify their confidence.

Although only one SupeRx, a Milford, Ohio unit, had been opened by August 1961, plans were unveiled to open 19 more in the following six months. Most of these were slated to be located next door to Kroger stores. In 1962, Kroger entered the drugstore business in Michigan, with the purchase of a single Owl Drug Co. store in Battle Creek. There was a strategic reason for their purchase of the Owl unit, even though four brand new SupeRx’s (Ypsilanti, Mt. Clemens, Saginaw and Plymouth) were stocked up and ready to go. Michigan law at the time mandated that drugstores operating in the state have at least 25% ownership by registered pharmacists, a move designed to protect independent operators against the onslaught of chains. Since Owl had been granted a prior exception to this law, Kroger assumed it would be accorded to them as well. Not so. In September of 1962, the Michigan Board of Pharmacy formally rejected Kroger’s application to operate the SupeRx stores. Not until December 1963, more than a year later, did the impasse end, when the Michigan Supreme Court ruled in Kroger’s favor and the license was granted.

Despite the Michigan debacle, Kroger continued to open SupeRx stores in other markets, and in November 1962, the company acquired the 18-store Gasen’s Drug Stores, Inc., a St. Louis chain. Both Gasen’s and Sav-On would continue to operate under their original names for a few years, while new stores went under the SupeRx banner. At the close of 1962, Kroger had 66 drug stores, and a year later there were nearly double that amount, 119. In addition to the (now 10) Sav-On units in the northeast, there were the 18 Gasen’s units in greater St. Louis and 91 SupeRx stores in the midwest, west and south. Kroger was becoming a national player in the chain drug business.

Throughout the balance of the 1960’s and into the early 1970’s, Kroger’s SupeRx division, as it was formally named in 1969, was an unqualified success. There were 180 stores at the end of 1965, 307 by the end of 1967, 381 in 1969 and 476 at the end of 1972. In 1970, the state-of-the-art SupeRx photo-finishing plant was opened in Cincinnati, bringing this profitable activity in-house in Kroger’s home market. One of the most prominent signs of SupeRx’s success was the ascendancy of division president (and Sav-On founder) James P. Herring to the post of Kroger’s president and chief executive officer in 1970.

When Kroger’s much-heralded Superstore program was launched in the 1970’s, SupeRx stores were a standard part of the package, opening alongside most of the gleaming new superstores, an activity that continued throughout the decade. To coincide with the Superstore openings, heavy emphasis was placed on SupeRx’s decidedly non-pharmaceutical offerings – touting SupeRx as “the place where people go to buy a TV set, a guitar, a grass skirt, a hair dryer or a hank of yarn”, as the company put it in 1972. I hope SupeRx’s buyers didn’t go too heavy into the grass skirts – at least not for the Ohio stores, that is.

With the stress on general merchandise, however, the SupeRx image had begun to blur by the mid 70’s, to the point where the stores “began looking like mini discount stores”, as later stated in Kroger’s 1983 “100th anniversary” pictorial history book. SupeRx’s identity as a pharmacy had receded in the public’s mind, and sales and profits began to slide. A strong effort to re-establish SupeRx’s “drug store” bona fides and sharpen up the marketing focus was undertaken, achieving moderate success.

By the end of the 1970’s SupeRx was back in a buying mode. In 1979, 14 central Florida stores were picked up from Cleveland-based Gray Drug Stores, Inc., bringing SupeRx’s Florida tally to 86 stores out of a companywide total of nearly 500 units. In early 1985, the company made what would be its largest acquisition, winning an intense bidding war with Rite Aid for the prize of Hook Drugs Inc., an Indianapolis concern with 320 drug stores. (SupeRx had 620 units at the time.) Hook had strongly expressed a preference for Kroger’s less intrusive management style over the potentially sweeping changes they anticipated under Rite Aid’s wing. The fact was, by this time, the SupeRx operation was badly in need of an infusion of fresh talent – a stock analyst quoted in the Wall Street Journal sharply put it that the company had “never really put together a focus that the customer has responded to”, and that the key would be to “assimilate the well-run, very profitable Hook operation into a not so well run, marginally profitable SupeRx operation”. Yow.

Indeed, a year and a half later, Kroger made the decision to spin off its SupeRx group. A new company, Hook-SupeRx, was formed to assume 700 of its nearly 900 drugstores, with the balance – mostly stores in Florida (which eventually went to Rite Aid), Alabama and Arizona, put up for sale separately.

Hook-SupeRx would become a public company in 1992, operating stores under the Hook, SupeRx and Brooks banners. (Note: Thanks to Dan for pointing out some additional banners I omitted - SuperXtra Drug World - later just called "Drug World" and Warehouse Drug, formats developed to compete with Phar-Mor and Drug Emporium, two fellow Ohio-based "discount drug warehouse store" chains that experienced rapid growth in the 80's and early 90's and are now both gone. In 1994, Hook-SupeRx operated 19 of these stores, according to an annual report quote provided by an anonymous commenter on this post.) The company struggled, due in large part to the lack of a computerized prescription-trackingsystem that would allow customers to have their orders filled at any of the chain’s stores. Two years later the company was acquired by Twinsburg, Ohio based Revco D.S. Inc., pushing Revco into the number two spot in the nation’s drug store hierarchy, squeaking past Rite Aid but well short of number one Walgreen. The Brooks stores (mostly located in New England) were sold to Jean Coutu, a Canadian firm, which would later merge with Eckerd. Coutu sold the Brooks and Eckerd stores to Rite Aid in 2007.

In 1996, Revco attempted to sell out to Rite Aid, under pressure from its co-chairman and largest investor Sam Zell (of recent Chicago Tribune fame). Because of the heavy degree of overlap between the companies’ market areas, the Federal Trade Commission sued to halt the deal. A year later, Woonsocket, Rhode Island-based CVS Corporation was successful in their attempt to buy Revco, and all stores were converted to the CVS banner.

As far as Kroger is concerned, although the free-standing drug store format has long since gone the way of the dinosaur there, in-store pharmacies (which in many of Kroger's markets would, ironically, use the name "Sav-On") would become, and still are a major part of their business.

The photo above is from 1967, the three below from the following year.

18 comments:

  1. I weep for SupeRX!!! Our family were loyal customers and I often got my all-important issue of "Cracked Mazagine"[sic] there. It was in the same plaza as Publix and the Photomat kiosk located in the center of the parking lot. We didn't use SupeRX's photo developer, probably because my folks could save a nickel at Photmat. I had no idea they were part of Kroger, as that chain wasn't in south Florida.

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  2. In the Columbus area, there were also SupeRx stores co-located with other grocery chains. One location I can think of was adjacent to a Big Star and Zayre store on East Main St. in Whitehall.

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  3. I grew up with Superx in Peoria as a kid. However, I am aware that Kroger used the Superx nameplate for their Florida-based supermarkets in the 80s, as Superx Food & Drugs, which would later become Florida Choice Food & Drugs. We had Kroger/Superx stores back home all my life, so it was nice to see that old logo again. Thanks as usual for your blogs, Dave.

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  4. Thanks for the post...you don't often get to hear too much about SupeRx!

    I grew up with SupeRx towards the tail end of its existence, and it was the one chain drugstore my family went to for photodeveloping, prescriptions, and health and beauty items. In around 1990, give or take, SupeRx adopted a new logo and an oh-so-funky pink and green decor color scheme. One of the Revcos in the area kept the pink SupeRx aisle markers up after conversion, though it was soon replaced with a new store.

    At risk of stating the obvious, all the SupeRxes in my area became Revco in 1994, and most of them became CVS four years later. I never quite warmed up to Revco in the way I did to SupeRx, but that's crying over spilt milk by now. There are still a handful of ex-SupeRx CVS stores around (some of them even still paired with Krogers), although they've been falling by the wayside in the last decade in the push to larger standalone stores with drive-through prescription windows.

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  5. They had a small number of stores that opened near other super market chains elsewhere. There was one in Parma, Ohio next to an independent and, in many cases, the SuperX stayed after a Kroger was closed. This happened after a wave of closings in the Cleveland area around 1971. the store near Big Star might have been intended for Colonial's Galaxie drug chain, which never expanded much beyond Atlanta.

    The tilt toward general merchandise was not unique to SuperX. This was done by competitors like Gray Drug and Cunningham Drug. Chains like Sav-On (which sold lumber in some stores) on the West Coast did this, as well. SuperX inherited old Kroger stores that were replaced by superstores and greenhouses, which gave them larger footprints in later years.

    One problem Kroger had was the patchy coverage of the stores because they co-located with Kroger stores. Where Kroger had expanded little during the 60s (e.g., Chicago), they only had a couple stores. In DC, I don't think they ever opened SuperX stores. In some places, they quit opening new SuperX stores when they rolled out super stores--Cleveland was one of these markets. Cunningham bought their Cleveland stores some time after the super stores began to open. The handwriting seemed to be on the wall when Kroger began opening combo stores some years after their greenhouse roll-out in the 80s. These used the Kroger-SavOn name and eventually just Kroger.

    I always thought the Hooks-SuperX merger was a seque into selling the chain. Hooks overlapped with SuperX in a number of markets and would have helped fill-in some gaps.

    At the end, I was puzzled that they were still in business. Their pricing was not competitive with Revco or even Walgreen. Revco must have had a tough time with some of their stores because they conciously had limited their selections from the beginning and emphasized presecription volume. Also, Revco had just survived a deadly leveraged buyout and was struggling under weak management.

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  6. Thanks for representing Staten Island ever so briefly, Dave! That should make my cousin although the store locations mentioned were a good twenty years before his time.

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  7. The tilt toward general merchandise was not unique to SuperX. This was done by competitors like Gray Drug and Cunningham Drug.

    Don't know if the SupeRx store co-located with Big Star in Columbus was intended for Colonial's drug chain or not. But you mentioned Gray Drug, and I remember many combinations of Kroger stores here co-located with Gray Drug stores. The Big Star SupeRx moved when a superstore was built about 10 blocks to the east. Likewise, construction of the superstores opened up a lot more opportunities for SupeRx to grow in this area, location-wise. At one point, they were the largest in the city.

    The article also fails to mention another oddity. In the 1980's, SupeRx may have begun feeling the pinch from deep-discount drug chains such as Phar-Mor and Drug Emporium in this market. As a response, they converted a few of their locations here to "Super-xtra Drug World" operating out of the same locations, which were typically larger than a regular drug store. The format seemed to have some success as several of the stores were relocated to larger quarters with the name being shortened to "Drug World".

    -Dan

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  8. I can name at least one Superstore that did not open with a SuperRX store. The Still open Packard St. store in Ann Arbor, MI. It opened in March 1973 with an Arbor Drugs next to it which later became a Rite-Aid.
    It may be the design of the center and the VERY small size of this store for a Superstore (10 aisles 18,170 Sq. Ft.) that caused them to bypass it for a SuperRX location. The Kroger now sits alone with the other 23 stores in the center closed, the store itself is set to close in 2011 or 12. I'm inclined to believe that this was one of the smallest superstores around, Dave I hope you get to covering them soon.

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  9. I can name at least one Superstore that did not open with a SuperRX store.
    Come to think of it, even certain superstore combos did not include a SupeRx. Parsons & Livingston had a Revco in the center and one oddity is the Robinwood Ave. store, which was built as a combo superstore/drugstore, yet the drug store was a Rite Aid!

    Here's a picture of the latter:
    http://tinyurl.com/cp8ezn


    The small brown box is the former Rite Aid. The Kroger was demolished and an Ames was constructed at the site. Then it, too, was demolished and a Target was constructed there.

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  10. Here's a blurb about Drug World from a Hook-SupeRx annual report:

    Deep Discount Drug Stores.
    SupeRx has utilized deep discount drug stores as an operational strategy in markets where competitors are utilizing the same concept. At February 28, 1994, SupeRx operated 19 deep discount drug stores under the names of "Drug World" and "Warehouse Drugs." SupeRx places greater emphasis on price competitiveness in these stores. Overall, these stores are characterized by lower gross profit margins but greater sales volume when compared to typical drug stores. Staffing requirements of deep discount drug stores are somewhat higher than those of conventional drug stores due to their higher sales volume and larger size. These stores offer a large selection of very
    competitively priced merchandise. The average store size is approximately 25,000 square feet.

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  11. Kroger didn't seem to partner or co-loacte with Greay drug in Cleveland (Gray's hometown). May be they did it in places where Gray was expanding or both had agreements with the same shopping center developers. Kroger's 1950s expansion in Cleveland came, in part, from a partnership with Jacobs-Visconsi-Jacobs (Eastgate, Westgate, Pleasant Valley, etc.) and they also had a partnership with DeBartolo (Great Lakes Mall, Richmond Mall). In freestanding or small shopping center locations, Kroger didn't seem to have a single drug store partner and they often added a SuperX to an existing 1950s store as was the case at Shore Center in Euclid, Ohio.

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  12. Dexter - I was a big fan of Cracked (and their deliberately misspelled)mazagine as well, and certainly of Mad magazine. Used to get mine from the 7-Eleven. Thanks!

    Anonymous - Thanks for those details. I am surprised to learn how many SupeRx's were paired with grocery chains other than Kroger.

    Jack - Glad it brought back some memories, and thanks for that info on the Florida Choice stores.

    Andrew - Pink and green was the look of the 90's, that's for sure! It looked fresh for about a year, but stuck around a lot longer than that. The new logo you refer to, if I remember right, was kind of a "genericized" version of their original logo, right?

    Anonymous - I agree, SupeRx was by no means the only drug chain to go heavily into general merchandise. And, true, they had a negligible presence in Chicago at best. Thanks for that great info!

    Didi- I thought about your family when I learned about the Staten Island connection!

    Dan - Thanks for bringing that up, I'll make a note on the post. I hadn't seen the "Super Xtra" name before. Thanks!

    q - As far as I know, there were a fair number of Kroger superstores that didn't have SupeRx's riding shotgun, especially in those cases of existing Krogers (located next to other drugstores) that were remodeled into Superstores. I do plan to do a post on them soon, thanks!

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  13. I supposed "genericized" is as good a word to describe the 1990s SupeRx logo as any: Essentially, they reset the typography in Optima and set it inside a box. (For lack of a better image, here's a scan from the 1993 Princeton/Bluefield, WV phone book.)

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  14. SupeRx had a bigger presence in Alabama than in Georgia, and odd juxtoposition given that Kroger had a considerably larger store base in Georgia than Alabama.

    Kroger superstores not paired with SupeRx outnumbered superstores paired with SupeRx in Georgia, even with new builds. The last SupeRx stores built in Georgia were in the very early 80's(80-82) paired with greenhouse stores, resulting in the dual greenhouse shopping centers. Many of the superstores paired with a SupeRx were expanded into the SupeRx in the early 90's, resulting in a superstore exterior and greenhouse interior. College Park, Sandy Springs, Mableton, Griffin, Buckhead, Northlake, and Lake City(Forest Park) come to mind.

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  15. Andrew - That's the one I remember. Our longtime local SupeRx, when we lived in the Nashville area, received the new logo when it was refaced in conjunction with the next door Kroger remodeling/expansion (about 1994 - they removed the "greenhouse look"), but it became a Revco soon after and closed altogether when CVS built a free standing store down the road. Similar story in many places, no doubt.

    Ken - I'm surprised that they had more stores in Alabama, when you consider how huge the Atlanta market is compared to anything else in the region.

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  16. Dave, I din't know you had lived in the Nashville area! I live in Hendersonville,About 15 minutes from Nashville,and I used to live in Madison,about 5 minutes from Nashville. I loved Super X and remember in the 80's and 90's when it was in the same building as Kroger. You could be in Kroger and walk right into Super X,as they shared the same building.

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  17. I also remember the Greenhouse look as well.

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  18. Becki – I lived in the Nashville area from 1988 through 2004, first in Hermitage, later in Gallatin. We loved it there and still have many friends in the area. In the early years we lived there, there were Greenhouse and Superstore-style Kroger stores (many with SuperX next door) everywhere, though most were remodeled during those years. I shopped at the Hendersonville store many times.

    Thanks so much for the comment!

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