Friday, February 27, 2009

The Premiere of General Cinema

I’m a fan of the old major-city movie palaces of the 1920’s and 30’s. Those majestic structures with ornate terra cotta facades, soaring marble-clad lobbies, gigantic auditoriums lined with sculptures, and huge stages with curtains that look like they were designed for royalty – you get the idea. In their early days, they often featured a complete, multi-act live show, featuring comedians, dancers and bands followed by a movie program – a newsreel, cartoon (or a Three Stooges or Our Gang two-reeler) and the feature film. “Going to the movies” in major cities in that era would be more accurately be described as “going to the show”. It was easily a 4 to 5 hour long event.

During the depression and war years, hard times forced the cutback and eventual elimination of the live shows, leaving only the movie program portion. Built “for the ages”, the economic model for this type of theatre was pretty much shot by the early 1950’s. Some of the reasons were the same as those behind the closing of downtown variety stores – declining downtowns, increased crime, lousy parking and other negatives. Added to this were factors more directly associated with theater operation - high labor costs (for large usher staffs, curtain operators, etc.) and the enormous maintenance costs of those beautiful old buildings, among other things. By the time I came around, most of these theatres were gone – either torn down, or boarded up, or converted to another use such as a bowling alley. Most that could still be nominally considered “theatres” were showing X-rated or exploitation films.

No, for many of my generation - those of us who began our moviegoing habit in the 60’s, 70’s or very early 80's, “going to the movies” meant pulling up to a white, boxy looking building of simple modern design with the lone word “CINEMA” (occasionally followed by a few roman numerals) as its only identification. They were located next to the mall, or to Korvettes, or whatever the local shopping center might have been. These were the theatres of the General Cinema Corporation.

Though his company would eventually become known as the pioneer of the ever-present “shopping center theatre”, General Cinema’s founder enjoyed earlier success as a proprietor of standard downtown theatres, and later on of drive-in theatres, that pop culture icon of the 40’s and 50’s - an institution which played no small part in the demise of the aforementioned movie palaces. The company that would eventually become General Cinema Corporation was founded by Philip Smith, a Syracuse, New York native, who moved to Boston in 1918 upon being hired to operate the National theatre, a unit of the Keith-Albee-Orpheum (later known as Radio-Keith-Orpheum, or “RKO”) theatre circuit. Smith later leased the theater to operate it on his own, and by 1922 had formed his own company, Smith Theatrical Enterprises. By 1930, Smith was operating some 18 theatres in the New England area.

By the early thirties, as the depression entered its darkest days, Smith was in search of a unique approach to the film exhibition business, something that would set his company apart from the pack, giving it a better chance of surviving those tough years. When Smith learned of the new “outdoor amphitheatre” for automobiles that opened in Camden, New Jersey in 1933, he was intrigued, and closely studied the drive-in concept over the next couple of years. Confident, both in his aptitude for the theatre business and in the potential of the new concept, Smith eventually made the decision to jump in.

Joining forces with financier David Stoneman and his family, Smith started a new company called Mid-West Drive-In Theatres, Inc. This may seem like an ironic name for a Boston-based enterprise, but the fact was that most of their early drive-in theaters were indeed opened in the Midwest, where Smith saw the greatest potential for the business. Mid-West’s first theatres were opened in the Detroit and Cleveland areas in the spring of 1938. The company grew slowly over the next 12 years, constrained (as were other drive-in operators) by the lack of access to first-run motion pictures. A series of lawsuits aimed at the famous ”studio system” – the cartel of studios who owned their own theatres, which included 20th Century Fox, Warner Bros., Paramount and MGM (the Loew’s theatre chain), eventually leveled the playing field for the drive-ins.

In 1950, Mid-West Drive-In, with Phil Smith’s son Richard now a full partner in the business, launched a major expansion drive. At this point there were 14 drive-in theatres in addition to the company’s traditional New England downtown theatres, and the company had footholds in Omaha, Des Moines, Pittsburgh, Gary, Indiana, and Chicago (La Grange, on Route 66) in addition to their established Ohio and Michigan locations. Soon afterward they began opening drive-ins in the northeast for the first time, including three in New Jersey and one in Natick, Massachusetts, near their home turf. More were to come. Bettye Pruitt, author of the book “The Making of Harcourt General”, an excellent history of GCC which serves as the basis for much of the information here, notes that “by 1952, Massachusetts would have the most drive-ins per square mile of any state in the nation”.

By this time, Mid-West was also involved in “drive-ins” of another sort, specifically drive-in restaurants, another institution that was surging in popularity at the time. Their first “Richard’s Drive-In”, named after Richard Smith, Philip’s son, opened adjacent to one of the company’s Detroit area drive-in theatres in 1946. Soon more restaurants would be built in the Detroit, Cleveland and Chicago areas. In Chicago, Richard’s units were opened in Lincolnwood, Wilmette and Evergreen Park, among other locations. Later on, the chain would expand into the northeast, following the company’s theater development. The menu was typical of carhop joints of the time-hamburgers, fries, chicken sandwiches and “frappes”, (which translates to “milkshake” in most areas outside New England). Larry Cultrera’s “Diner Hotline” website has a great article and pictures of some of the Richard’s units. If you haven’t checked out his site, it’s a real gem – a great look at the golden (and present) age of the diner, along with other pre fast food- era restaurants. There were other restaurant ventures as well- Peter Pan Snack Shops, a 7–unit chain that Mid-West would buy and expand to 18 units, Jeff’s Charcoal Broil, named after Phil Smith’s grandson, and the Amy Joy Doughnut and Pancake Houses, an early competitor to Dunkin’ Donuts and Mister Donut in the New England area, named, of course after his granddaughter.

In 1951, Mid-West opened their first shopping center indoor theatre, a move that in retrospect started the company on its destiny. In 1950, plans were announced for an innovative new shopping center, to be opened in Framingham, Massachusetts and known as Middlesex Center. The name was changed to “Shoppers World” prior to its opening, and the new center received considerable coverage in the retail and architectural trade press. Bettye Pruitt quoted Architectural Record on the new shopping center’s design – it was “laid out as a carnival midway, with the main attractions (a theater and a department store) at either end”. The “department store” in this case was the funky, flying-saucer-like Jordan Marsh store. This website has an excellent history of Shoppers World, along with an in-depth look at the original GCC Shoppers World Cinema, with great photos of the original and expanded versions of the theatre. They also appear to have mirrored the defunct GCC website, complete with a listing of the chain’s locations as of 1983 and 1999. The Framingham Cinema’s original business was slow, and as Ms. Pruitt points out in a fascinating anecdote, for a couple of summers, “Smith rented the auditorium to the cartoonists Al Capp (Li’l Abner) and Lee Falk (Mandrake the Magician), who ran a summer theater program in the Boston area, bringing in Hollywood actors such as Mae West, Melvyn Douglas and Marlon Brando to star in their productions”. Within a couple of years, however, the cinema was doing much better, and presumably the cartoonists had to look elsewhere. More importantly, Mid-West began to consider the possibility of opening shopping center theatres on a large scale.

In 1960, the company, now renamed General Drive-In, went public. The restaurants were spun-off as a separate operation, still under the control of the Smith family, allowing the new entity’s business to focus strictly on theatres. For a while, that is – that same year, the company decided to enter another recreation field – as an operator of bowling centers. This was spurred on by a nationwide decline in movie attendance, due in large part to a continued drop in new film releases, from roughly 450 a year in 1948 to only 350 a year in 1960. By 1963, the company owned 15 “Holiday Lanes” bowling centers, mostly in the New England states.

In 1961, General Drive-In suffered two tragic losses – Phil Smith, the company founder, died at age 62 in July, and Morris Lurie, his son-in-law, passed away around the same time. Lurie was largely responsible for running the family’s restaurant businesses. Forced to assume the responsibilities of two other top executives in addition to his own, Richard Smith decided to sell off the restaurant group within the next couple of years, in order to concentrate fully on the company’s shopping center theatre business. When the buyer defaulted on the purchase, Smith continued to operate them for several more years before a suitable new buyer could be found.

The bowling centers proved to be an unhappy venture, due in part to the difficulty the company found in organizing bowling leagues, the lifeblood of any bowling alley, in the New England area, as compared to the more industrial, factory-rich Midwest. Also, “ten-pin” (today’s standard sized bowling pins) bowling was relatively new to the area, and didn’t have the following that locally favored “candlepin” (cylindrical pins) or “duckpin” (short, squatty pins) bowling had. In 1965, GCC began to put the bowling centers up for sale.

The shopping center cinemas were a completely different story, however, and very quickly became the company’s mainstay. At the end of 1961, the company had eight shopping center theatres, including new locations in Pompano Beach, Sarasota, Daytona Beach and Orlando, Florida, and Menlo Park, New Jersey. They also bought the existing Plaza Cinema in Memphis that year. The Chicago, St. Louis and Cleveland markets were entered the following year, and many more followed in quick succession - Northern California (San Mateo’s Hillsdale Mall, the first of many NorCal units), Denver, Detroit, Charlotte, Minneapolis, Dallas, Houston, Akron, Cincinnati and Milwaukee, among other metro areas, by 1966.

While the drive-in business grew steadily – from 26 units in 1963 to 49 in 1968, the shopping center theatres exploded – from only 10 in 1963 to 319 ten years later. In a nod to the obvious, the company changed its name to General Cinema Corporation in 1964.

Interestingly, GCC did not have to invest a great deal of resources to come up with new locations, as was often the case in the history of many great retail chains of the mid-20th century. A number of examples come to mind – from McDonald’s Ray Kroc or Publix’s George Jenkins flying all over in company–owned prop planes, feverishly scouting new locations on which to plant their respective flags, eventually setting up sophisticated market research departments as their businesses grew. Instead, within just a few years, mall and shopping center developers were flocking to the company to offer them prime sites, and as long as the terms were good, the company generally went for it. This was a big reason behind the very wide geographic reach that GCC reached in such a short time. As Ms. Pruitt writes, “Where competitors might carefully research the socio-economic characteristics of potential theater locations, General Cinema left that kind of analysis to others”.

The GCC theatres had a fairly uniform look, designed by architect William Reisman. With their white-painted steel framed and red upholstered seats, they were certainly austere compared to the ornate theatres of years past. The lobbies, as shown in the previous post, did have a nice sense of style, now breathlessly referred to of course as “Mid-Century Modern”. One GCC innovation that permanently changed the industry (for better or worse depending on your point of view) was the “shadowbox” screen. Gone were the theatre curtains (and the projectionists’ union members who operated them) and the stage itself. In their place was a simple white wall with a recessed portion for the screen, somewhat akin to a “tray ceiling” tilted up on its side.

A huge step forward for the company was the introduction of the “twin” cinema, the first of which was opened at the Northshore Shopping Center in Peabody, Massachusetts in 1962. While this obviously enabled a location to show two different pictures at once, it also allowed it to utilize two screens for the same film, with staggered showtimes, in the case of a blockbuster like “The Sound of Music”. Of course, the other big advantage to the twin was the fact that the two auditoriums shared a common lobby, concession area and projection room, minimizing the added incremental operating cost. Soon after the Peabody unit opened, twins followed in Charlotte, NC (the first GCC theatre in the state) and in Fort Lauderdale. In 1966, the first Chicago-area twin (a third theatre was added in 1971) opened at the new Ford City Mall. As time went on, more and more GCC theatres were opened with two or more screens.

As far back as 1962, Time Magazine hailed the shopping center theatre, acknowledging General Drive-In’s (General Cinema’s) leadership role in the trend - “Now the movie theater operators, who have been shuttering one downtown palace after another, have latched on to the shopping center as the place where the people are (or can get to)”. Throughout the 1960’s, an ever-growing percentage of the American public could easily “get to” a General Cinema theatre.

The six artist's renderings above, showing typical GCC exterior configurations, are circa 1964. (The film listed on the marquee in the third photo, “Tunes of Glory” was actually a 1960 release.) Below is an unknown Florida location, in a circa 1963-64 photo, appearing here courtesy of Leon Reed, whose father took the photo during a family vacation. Added bonuses are the Christmas decorations (Christmas in Florida – now we’re talkin'!), the Woolworth’s and Mr. Reed’s Ford wagon and Airstream trailer. I believe the location might be Miami’s Cutler Ridge Shopping Center, but don’t really know for sure.

Monday, February 16, 2009

The General Cinema Experience

“The movies” looked like a great place to be on this icy winter’s night in 1969. For many folks who grew up in the sixties or seventies (or even beyond), these scenes of a General Cinema theatre should be instantly recognizable. Boston-based General Cinema Corporation was the pioneer of the “shopping center theatre” concept. Originally a drive-in operator, General Cinema (called General Drive-In at the time) started the 1960’s with just a handful of shopping center theatres. By the decade’s end, they had over 114 of them, many of them “twins”, with another 37 in development. By 1972, both the concept and the company were dominant forces in American movie exhibition.

Most of my earliest movie memories took place at the Randhurst Cinema, GCC’s second theatre in the Chicago area, right next to the acclaimed Randhurst Center indoor mall. I saw the obligatory Disney flicks and even a few non G-rated movies, such as “The Poseidon Adventure” there. (It was pretty intense for a 9-year old in those days, but I dug it.) At times, the General Cinema “feature presentation” bumper, that mezmerizing combination of syncopation and “kaleidoscopic, crumpled purple cellophane”, seemed as exciting as the movie itself!

The theatre pictured isn’t Randhurst - for one thing, Randhurst was a single screen unit, not a twin, but all the familiar elements are shown – the red, squatty western-style lettering, the red and purple interior d├ęcor, the funky light fixtures, the sparse art gallery. For that matter, even the ice and snow…

Saturday, February 14, 2009

The Kroger Superstores!

In the early 1970’s, Kroger was at the proverbial crossroads. The closing years of the sixties and early years of the seventies had brought about many changes in American life - the most obvious, of course, being political and social in nature. Far less obvious, but sweeping nonetheless, were the changes in the retail business environment. The supermarket industry, in particular, was reeling. There were many factors behind this – inflation, wage and price controls, consumer advocacy (for the first time, a real public focus on nutrition and health), food shortages, strikes and a number of other concerns. On top of this, the age-old battle for marketing and competitive supremacy was becoming more heated than ever.

Throughout 1970 and 1971, Kroger conducted an arduous, in-depth review of every aspect of its operation – company structure, management, manufacturing, merchandising, store locations and design, personnel training, you name it. At the same time, they conducted the most in-depth review to date of their competition in every market – an assessment of their strengths and weaknesses and how Kroger was stacking up against them. Since this was the seventies, you might call it an “I’m OK, You’re OK”-type analysis, referring to a famous pop-psychology book that half of the country seemed to be into at the time. (My mom had the book. Of course, I never read it, but I vaguely remember a parody - in Mad Magazine or somewhere else - called “I’m OK, You’re Nuts!”).

Some results of the study were reassuring – Kroger’s balance sheet was strong, and their distribution centers and manufacturing/private label operations were going great guns, as it were. Most importantly, though, the study revealed Kroger’s problem areas –the things that had to be addressed to ensure Kroger’s survival in what would prove to be a very challenging decade for the industry. They could see clearly now –the rain was gone. They could see all obstacles in their way…

And there were two main obstacles to be dealt with. First, it became clear that Kroger would be better off withdrawing from unprofitable markets that showed little potential for a turnaround, those areas in which Kroger was a clear also-ran. These markets were Chicago (most remaining stores sold to Fisher Foods’ Dominick’s division in 1971), Wisconsin (55 stores statewide - including the remaining 19 Milwaukee units, some of which went to Jewel, in 1971), Minneapolis (most stores sold to Quality Foods, also in ‘71) and Birmingham, which Kroger left in 1972. Also, the number of retail divisions, known as “Kroger Marketing Areas”, was consolidated to 13 from the previous 23.

The other major problem was the state of the stores themselves. Averaging only 16,000 square feet in store size, Kroger found itself falling behind industry standards. The number of food items had proliferated wildly in the 15 years or so that Kroger ‘s stores had been that size, and just as significantly, the smaller stores placed severe limitations on the amount of (very profitable) general merchandise items that could be stocked. As a couple of folks have noted in their comments on this site, Kroger’s produce and service departments (deli, bakery, etc.) left something to be desired. Another issue was the relative blandness of the stores. What may have been “state of the art” or at least above par in the late 50’s was by this time sorely dated. Above all, Kroger's stores were in dire need of a distinctive new image.

They really went for it. Out of this painful process came the “Superstore”, a new concept in every way for Kroger, one which made an immediate and fairly long-lasting impact on the chain’s fortunes. Fondly remembered by many today, the superstores easily ranked among the most attractive stores of the era.

Bursting at the seams with pride in their new stores, Kroger described a typical exterior in 1972 as follows – “The new look starts when you’re several blocks away. A graceful white column topped by a room-sized cube bearing Kroger’s name towers 30 feet high to identify the store.” (If you’ve ever stood at the base of one these signs, as I do when I buy gas at a Kroger near us, you’ll notice it definitely is “room-sized”. Surprisingly so. Many of these signs still exist, long after the age of the superstores has passed.)“As you enter the parking lot, the store comes into view. Bigger. Longer. Often with a SupeRx store as an integrated neighbor. A sharply clean, crisp look. Soaring white arches with almost a Moorish look, silhouetted against smoke brick and blue sky.” (I’m assuming the “sky” part varied, but I was pretty young in 1972!)

Inside were the real delights – “Look around. The first impression is spaciousness and cleanliness. Then a warmer, more friendly look. Then it hits you. The colors. Pulsing and alive, accented with wooden beams. Even the cases have lost their pale pastel tones. Now they’re richly-hued green and gold and bittersweet (I always thought that was a kind of memory, not a color), sparked with walnut-vinyl trim. Bold colors transmit a sense of shopping excitement.”

Then there were the service departments – “The Village Bakery is like a transplant from an English Tudor village with its beams and cross-hatched windows. And if the Viennese tortes,
gesundheit kuchens (I’d probably love ‘em if I knew what they were!) and buttery dinner rolls look particularly good, there’s a reason. They’re made especially for the Village Bakery in local custom bakeries … and in a growing number of areas, in Kroger’s own handcraft bakeries.” “Next door in the delicatessen, a pleasant-faced clerk proffers a sample of salami and calls attention to the delicatessen’s freshly-barbecued ribs, basted with a tangy sauce and broiled to a tantalizing brownness. She stands under a wood-shingle roof, accented with the golden glow of lighted panels. Her stock in trade is prepared foods ready to carry home…”

There’s not a lot I can add to these great descriptions or to what you can see for yourself in the photos, but I would like to point out the great, classic 70’s lighting fixtures – globe lights with red, yellow or smoke-colored plastic domes, and the wood and textured amber glass-framed globes above the checkstands. The textured amber “glass”’ is probably fiberglass-reinforced plastic, a very popular decorative material of the time.

The size range of the superstores, with some exceptions (see the comments on the previous post), was 25,000 to 42,000 square feet. By the end of 1974, with three years of intense superstore construction under its belt, Kroger had opened 300 new stores and converted 250 existing ones into superstores, with an average square footage per unit of 29,000 as opposed to the 1970 average of 16,000. The “converted” stores, as mentioned, were completely redeveloped existing Kroger stores, expanded and refitted with the superstore interior package. The company tended to go with larger stores in booming new suburban shopping areas, such as the 35,616 square foot superstore opened in late 1971 in Goodlettsville (Nashville), Tennessee, located on Two Mile Pike (later renamed Rivergate Parkway after the adjacent mall of the same name), or in upscale areas, such as the Hyde Park section of Cincinnati, where a 42,000 square foot unit opened in 1974.

Kroger’s aggressive approach for the superstore program was fortuitous. Had Kroger delayed the superstore rollout by even a year, the cost would have been far higher, given the unprecedented inflation of the 1973-75 period.

Just as a side note, as if all of this weren’t exciting enough, Kroger decided to enter the amusement business. As trading stamps fell victim to the price wars of the early 70’s, Kroger needed a means to bolster its Top Value Enterprises subsidiary. In May 1972, Top Value entered into a joint venture with Taft Broadcasting, a Cincinnati-based media empire, to form Family Leisure Centers, Inc. Taft was just about to open Kings Island, a theme park located northwest of Cincinnati off of I-71. The first project of the new joint venture was Kings Dominion, a new theme park to be built in Richmond, Virginia. The first phase of the project, Lion Country Safari, “where the people are caged and the animals roam free”, opened in 1973 with the rest of the park following a bit later. In early 1975, Family Leisure Centers purchased a second theme park, Carowinds, located in Charlotte, North Carolina, from an investor group headed by Duke Power. When Kroger sold Top Value in 1978, it retained its interest in Family Leisure for another couple of years, eventually dissolving the partnership with Taft. Kroger did retain majority ownership in Kings Dominion for a period of time after that.

One other area the company dabbled in at this time was that of convenience stores. “Happy Food Stores” was what they were dubbed, complete with a clown mascot, and an experienced executive from Lil’ General stores to head up the venture. Let’s just say that they didn’t exactly live up to their name.

But the real story for Kroger in the seventies was of course, the superstores, and they certainly did live up to their name. Customers responded positively to Kroger’s new stores, as evidenced by record sales increases from 1972 through 1976. Kroger’s competitive position in their midwest and central markets was strengthened, and huge inroads were made in the newer, booming southern markets.

So, for Kroger and their customers, it was a bright, bright, sunshiny day!

The photos, all Kroger annual report publicity shots, from the top: (1) A photo montage from the Cincinnati Hyde Park location, opened in January 1974 (2) an exterior from 1975, location unknown, (3) the checkout from the Mooresville (south suburban Indianapolis), Indiana store, a 1961 store expanded from 16,000 to 29,000 square feet in 1973 (4) and (5) interiors from 1975, unknown location (6) the produce section, big on celery, Mooresville (7) poultry case, Mooresville (8) a family in front of another poultry case, 1976 (Remember those huge gallon milk cartons? I was sure glad when they started putting handles on those things!) (9) meats, unknown, 1976 (10) the “Village Cheese Shop”, Hyde Park (11) Delicatessen, 1976, unknown (12) a more elaborate cheese/wine section, 1976 (13) a pleasant-faced clerk in the bakery area, 1976 (14) bread section, unknown, 1974 (15) greeting card and gift section, including a line of “famous brands” cards that I actually remember, 1976.

Saturday, February 7, 2009

A Tale of Kroger, Old and New

The photographs above depict the Kroger store at the Southland Shopping Center, located on the corner of Westnedge and Milham Avenues in Portage, Michigan. Portage is just south of Kalamazoo, and about 150 miles from Chicago. They were taken by the late John Todd, a Kalamazoo-based commercial photographer who extensively documented the area’s growth over a four decade career.

They date from July 1960, and show the store’s grand opening festivities. As mentioned numerous times on this site, “grand” openings at the time were exactly that. They were true community events, featuring all manner of hullaballoo – dance contests, pony rides, drawings, and of course, giveaways. In this case, as the photos show, the giveaways included dolls for the little girls and an unspecified “Free Baked Good!” for the adults.

The Kroger store appears typical of the era, probably 12,000 – 16,000 square feet in size, with the oft-seen white internally lit letters against a light blue corrugated metal background. The interior shots show the produce area and the prepared foods counter, where one of the chefs (the guy in the party hat) was obviously in the spirit of things.

The Southland Shopping Center featured two Kroger-owned entities, the supermarket and a Top Value Stamps redemption center, located on either side of a Federal Department Store. The Federal stores, 58 of which were in operation in 1961, were owned by Detroit-based Davidson Brothers, Incorporated. They were closed in the 1970’s.

For the next 12 years, this store was Kroger’s standard-bearer in the Portage area. Around 1965 Meijer, a local favorite, opened a “Village Market” store down the street, and would expand it over the years. A modern-day Meijer sits on the same site. In 1972, Jewel-Osco opened a large store in the area (again locating on Westnedge, on what could have easily have been termed “Supermarket Row”), one of a number of stores in Western Michigan cities, which included Benton Harbor and St. Joseph, which that chain would operate.

In February 1973, Kroger rose to the occasion with the opening of a brand-new Superstore (shown in the photos below, which were also taken by Mr. Todd) to replace its original Southland Shopping Center unit. In many cases, Kroger would knock out a wall of an existing store in order to expand the shell for a new superstore. Since the company’s minimum acceptable standard for the superstores was 25,000 square feet (with a maximum size of 42,000 square feet), it was necessary to build a new unit on the end of the shopping center, in this case right next to Kroger’s Top Value redemption center. That year (1973), Kroger created 68 superstores through renovation/expansion of existing stores, while opening 80 new ones. I’m not altogether sure which category this one fits in!

From Kroger’s standpoint, the superstores were revolutionary, facilitating tremendous growth and expansion for Kroger in the newer, rapidly growing Southern markets while shoring up their position in their traditional heartland areas such as Portage.

The 1973 photos appear to be pre-opening shots. Of note are the “Xtra Low Discount Prices” ceiling hangers that can be seen in a couple of them. These were part of a Kroger marketing strategy that appears to have been selectively employed at the time, based on local market conditions. A&P, who also had a store in Portage, was in the midst of its “WEO” campaign, which effectively drained the profits from much of the supermarket industry (and ultimately did very little to help A&P). Also, by this time, grand openings were usually (but thankfully not always) more subdued affairs, heavily focused on price specials and not much else. Nothing against discounts, but I personally still like the idea of a “Free Baked Good!”

The 1960 Kroger location now houses a Barnes and Noble, the 1973 location a Petco and M.C. Sporting Goods. The Federal Department Store is now a JCPenney Home Store.

My sincere thanks to the Portage District Library, and to their resident local historian Steve Rossio, for the use of these photos (and for the accompanying historical background notes) from their John Todd collection.

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.