TheSkaggs Family, starting from a small frontier town in southernIdaho, came to have an important impact onmerchandising across much of theUnited States. During most of the 20th century, the Skaggs name was prominent on hundreds of stores throughout the West andMidwest.
The origins of a wide range of thesegrocery anddrug store enterprises can be traced to this one Skaggs family. The father in the family was aBaptistminister and had moved west for a better climate. He had a large family; to supplement his income he opened a grocery store. He and six of his sons, with varying degrees of collaboration, introduced in the early 20th century two important changes in merchandising: the low-margin, cash-and-carry approach to business, and rapidly growing a multitude of common outlets, now calledchain stores. Their entrepreneurial interests became a major retailing force resulting in large, retail chains that carried not only the Skaggs name itself, but names likeSafeway,Osco,PayLess,Albertsons,Longs Drug Stores, Katz and others.
Circa 1887Samuel M. Skaggs, with his wife Nancy (E. Long) and two of his brothers and their families, moved fromTennessee toMissouri.[2,8] There Sam tried farming and managed a store and post office inCato, Missouri. Between 1888 and 1900 he entered theBaptist Ministry and by 1900 settled inNewton County, Missouri. At the time of their move from Tennessee, Sam and Nancy had five children; in Missouri they had 10 more. Of the first 11 children, 9 were alive in 1900.[a]Of these there were six sons who came to be known by their initials:
Between 1908 and 1910, Samuel Skaggs brought his family fromMissouri toIdaho. As a minister of a small group in a smallfrontier town,American Falls, Idaho, he needed additional support for his large family. He opened a small grocery store, but to compete with the few that were already operating, he changed its business model from one of credit accounts, which were tailored to the sporadic and seasonal income of farmers, to a cash-only basis. Attracting customers to this simpler arrangement would make sense if he could sell for much less than his competitors. While the margin would be lower, he avoided the risk of non-payment of accounts. To drive down thewholesale price of the groceries he sold, he bought them in larger lots than competitors. In those days large lots were defined by some fraction of a railroad carload, and because American Falls was a stop on theUnion Pacific Railroad, this afforded Sam Skaggs an opportunity to buy and sell for less. Perhaps more important to his expansion-oriented sons than to Sam, the savings of large-lot buying increased as more stores came on line.
To portray the evolution and impact of the merchandising practiced by Skaggs and to track the creation of stores and their ownership transfers, a nearly 100-yearchronology is used. In it lies the genesis of much of the modern merchandising. The Skaggs family anticipated what customers wanted, so the Skaggs brothers and their merchandising model comprise a thread in the fabric of the present commercial world. This chronology begins with Sam Skaggs moving his growing family west:
Timeline of events in the history of the Skaggs family
1907 S.M. Skaggs leaves Missouri and moves west with his family in search of a better climate. They settle in American Falls, Idaho before 1910 where he is located in that year's census.
1914 In a separate commercial effort Sam Seelig founds a chain of four stores in California called Sam Seelig Grocers. According to the Safeway web site, this chain grew to over 322 stores by 1926. In 1925 he renamed them Safeway.
1915 In April, S. M. opens the Skaggs Cash Store "with his own hands, on rented property, on borrowed money."[4] The store was about 18x32 feet. It was located in the original town of American Falls, adjacent to theUnion Pacific railroad tracks, and he apparently bought large lots from the rail cars and sold them to the public. That store became Skaggs Store No. 1 and is now beneath the American Falls Reservoir.[5] When the town was relocated between 1923 and 1925, that store was situated at the corner of Ft. Hall and Idaho Street, now housing the Senior Center.[6] Unusual for the time, the Rev. Skaggs had a cash only, no credit policy, which all his sons later adopted.[b][c] (See adjacent newspaper ads.)
1917 Five small grocery chains in the Philadelphia area combine to formAmerican Stores Company. This group would be acquired by a Skaggs enterprise in 1978.[9]
1937L.L. Skaggs and Harold Finch found Pay-Less Drug inRochester, Minnesota. It was the Midwest's first self-service drug store. With the opening of a second store in Mason City, Iowa the following year, the name was changed to Self-Service Drug, Inc. It would later (1942) becomeOsco Drug, which would grow to approximately 600 stores in 19 states by 2003.[13]
1949 Death ofL.S. at age 54. His son,L.S. Skaggs Jr. (“Sam”), takes over his father's role at age 26. At that point there were 11 drug stores with $9.5M sales. L.S. Jr.’s expansion drive was remarkable for by 1978 he had grown that number to 202 stores and 39 super-centers in 21 states with over $1B sales.[7]
1950 The M.B. and Estella Skaggs Foundation builds a community hospital just north ofBranson, Missouri.[15]
1951 Albertson’s opens first combination food and drug store, a 60,000 sq ft (5,600 m2) superstore.[16]
1955 Safeway control passes toRobert Magowan,Charles Merrill’s son-in-law, who continued Safeway expansion to become the second largest grocery chain in the U.S. But by the 1970s it was in financial difficulty and losing market share.[17]
1956General Electric sues a group of Western retailers for selling its products at below recommended price. Skaggs Companies counter-sues and wins, overturning so-called “fair trade” laws in Utah and other states that prohibited discounting.[18]
1965 Skaggs Drug Stores incorporates as Skaggs Drug Centers and over the next few years acquires drug chains called Josco, Harts, Cook's in the South and West, and Katz, which had stores in the Midwest and also owned the non-California operations ofL.J. Skaggs's old PayLess chain.[18]
1969Albertson's and Skaggs partner to create Skaggs-Albertsons combination stores and over the next few years opened 58 such stores in Oklahoma and the Southeast.
1977 Because managing their 1969 venture became difficult and for other financial and legal reasons, Albertson's and Skaggs separate amicably...both taking equal shares.[16][18]
1978 L.S. Jr., 55, initiates theSkaggs Companies Inc. (formerly Skaggs Drug Centers) acquisition of American Stores, completing it by the spring of 1979. He keeps the latter name and relocates headquarters toSalt Lake City. American had 785 food stores and 139 drug stores to 241 Skaggs stores.Alpha Beta and Acme food stores were part of American Stores.[4][19]
1980Peter Magowan takes over Safeway and through several efficiency moves, makes Safeway the most profitable grocery chain in the country if not the largest. L.J. sells hisPayLess Drug Stores of Oakland, California to the Washington-Oregon PayLess stores formed in 1932. Jewel Co. buys Sav-On Drugs of Southern California.
1984 In a hostile takeover, American Stores acquired Jewel Companies (for $1.1B). One aim was to become the first coast-to-coast drug store chain. Curiously, this purchase added Sav-On Drugs, which Jewel had bought in 1980 and which had its beginning with the partnership ofO.P. Skaggs, and also returned the Osco drug chain, which L.L Skaggs had started, to the Skaggs fold. The Skaggs Drug Centers were also converted to Osco Drug Stores.[18][19] According to anAssociated Presswire story by Jennifer Brandlon on 11 Dec. 1984,[20] L.S. Jr. is "a private person, a wizard atacquisition, has great enthusiasm for his work, has a management style that pays great attention to detail, and is bare bones…parsimoniously allowing no company cars or credit cards." American has 102,000 employees and after the first nine months of the year, over $8B revenue. American Stores later grew to 1700 stores in 40 states with $15 billion in sales.
1986 To avoid a hostile takeover byHerbert Haft and family,Safeway agreed to acquisition byKohlberg, Kravis, Roberts & Co. for $5.3B, taking the company private in the second largest leverage buyout in history.[17] To pay off incurred debt, nearly half of its 2200 stores were sold, including those in England and Australia. Peter Magowan remained CEO until forced out in 1992, but continued as a director until 2005. Magowan, with supporting partners, later purchases theSan Francisco Giants.
1988 After considerable positioning that moved the purchase price from $45 to $65 per share and opposition from California's attorney general, American Stores acquiresLucky Stores of Dublin CA. [20] Lucky had started asPeninsula Stores (on the San Francisco Peninsula) in 1931 and had become one of California's largest chains with operations in Northern and Southern California. But L.S. Jr. reached the mandatory retirement age of 65 and stepped down as CEO of American Stores; ...moving to Chairman. A period of consolidation and debt reduction begins with sell-offs occurring into the 1990s. Its total holding of stores drops from 1,848 in 1990 to 1,695 in 1996 but profits increased over that period nearly $100M.[18]
1990 Safeway again goes public and in late 1990 and resumes buying regional chains such asRandalls in Texas,Carrs in Alaska,Dominick's in Illinois, andVons in Southern California.
1992 Albertsons purchases 74Jewel-Osco combination stores from American Stores.
1995 L.S. Skaggs Jr. relinquishes the Chairmanship of American Stores, and within two years the company purchased $550 million of his shares, leaving him with insufficient ownership to keep his seat on the board. Thus ended the Skaggs family's leadership in the commercial world.
1998 Albertsons acquires Seessels, Smittys, Buttrey, and some Bruno Stores.[16]
1999 Albertsons acquires American Stores for $12.7B to become the nation's biggest supermarket chain.[21] Prior to this, Albertsons was the nation's fourth largest supermarket chain with 994 supermarkets in 25 states, while American Stores Company was the nation's second largest supermarket chain with 802 supermarkets and 773 stand-alone drug stores in 31 states. Lucky Stores change name to Albertsons. This merger was so large that the Federal Trade Commission (June 22, 1999) required its largest divestiture ever in forcing the sale of 144 of the combine's supermarkets and sites and also imposed future growth restrictions in specified geographic regions.[22]
2003 Safeway has approximately 1700 stores across the US and Canada which include 329 Vons stores in Southern California and Nevada, 132 Randall and Tom Thumb stores in Texas, 42 Genuardi's in the Philadelphia area, and 21 Carr's stores in Alaska. Albertsons operates over 2500 stores in 38 states.
2005 Albertsons, Inc. announced in September that it is considering putting the company up for sale; that the board is exploring strategic alternatives to increase shareholder value. Among the reasons given was increased pressure from Wal-Mart type supercenters.[23]
2006 On January 23, Albertsons made known that it had agreed to be sold for about $17.4B and broken into three parts. A Minnesota-based grocery chainSupervalu would buy 1,124 Albertsons stores and in-store pharmacies and with 2,656 stores will become the nation's second largest grocery chain afterKroger.CVS, the nation's largest drug store chain, will purchase about 700 stand-aloneSav-on and Osco drug stores for about $4B. The remaining set of about 655 Albertsons grocery stores will be purchased by a financial group led by New York-based Cerberus. The Albertsons name will continue. The sale was said to be due to increased competition from "large-box stores" such asWal-Mart and specialty stores such asWhole Foods Market.[24]
2009 - Death of Mary Skaggs in Santa Rosa, California on October 2, age 109 years and 8 months.
2013 - Albertsons is split from SuperValu along with the former ASC properties (Jewel-Osco, Acme, and Shaws/Star) and sold to Albertsons LLC/Cerebus.
The Skaggs sons were frugal men and wanted to give their customers that same opportunity for frugality through low margins, compensated from a business perspective through wide replication of retail outlets. In the spirit of their minister father or grandfather, they have shared and are still sharing their good fortune through a number of foundations.
Their ALSAM Foundation has given hundreds of millions of dollars to education and health research in the form of scholarships, the establishment or funding of a number of university and research centers, and probably the nation's largest single parochial elementary and secondary complex, located in Draper, Utah. Called the Skaggs Catholic Center, which contains Juan Diego Catholic High School, St. John the Baptist Middle School, St. John the Baptist Elementary School and Guardian Angel Daycare. All four of these facilities are on the same 53-acre (210,000 m2) Skaggs Catholic Center.[25] Other notable gifts from the ALSAM Foundation include $100 million for the creation of The Skaggs Center for Chemical Biology atThe Scripps Research Institute—one of the largest gifts ever made to medical research.[26]
^Because of the Skaggs brothers' many different commercial interests and their propensity to buy and sell those interests, the following chronology presents a difficult-to-unravel entanglement. As such, it may not be totally correct, but is close. One confusing example is the various “pay less” names and stores and the various divestitures and acquisitions in the 1980s and 1990s. What is clear is that it is difficult to shop at a grocery or drug store in much of the country that doesn't have a Skaggs heritage in its history. An account of the Skaggs family back to the Revolutionary War, as well as the move of some of it west, can be found in “The Skaggs Saga”[1] Another, but not independent, account by R. Skaggs[2] Some of the grocery store images were obtained from David Gwynn[3]
^From “Memories of Early Aberdeen” by E.L. Davis, Chapter 3, (Found online at www.geocities.com/dyancey3/edlchip3.htm, on 15 Nov 2003) comes this observation about the new Skaggs’ merchandising philosophy: "One day, a man, whose name I cannot remember, asked if I had heard of a new concern in American Falls which was selling things so much cheaper than others in that town or Aberdeen.'Just think,' he said; 'cabbage is selling for one and one-half to two cents per pound. Fruit, very cheap because it was being shipped in carload lots, and sold from the car direct.' The merchants of American Falls didn't like such actions by strangers, and we were told that they asked for help from the city council. But these fellows didn't care nor quit easily, but kept right on selling cheaply and selling much. I went to American Falls about that time and found that things were about as reported. To make a long story short, 'Skaggs' had come to town, and in a short time Skaggs stores No. 1 and No. 2 were located in American Falls, soon to be followed by such stores in nearby cities - later all over the State. Now Skaggs stores are all over the West, but … Skaggs, Safeways andO.P. Skaggs originated right in our own back yard, or front yard, as you wish it, at American Falls, Idaho, and, as everyone knows, are doing hundreds of millions of dollars per year business, from a start of one small building advertised on the front as Skaggs Store No. 1."
^While his reason for moving to Oregon is not known, his wife, Nancy Long Skaggs, died shortly thereafter, on 6 November 1917. She and the Reverend are both buried in the American Falls ID cemetery, Sec. D. While still in Oregon, Samuel married Rosa B. Snooks on 22 August 1919 in Baker OR.[7]
^Safeway web site plus[8] This site draws from the City of Oakland’s Historic Resources Inventory dated April 30, 1983.The groceteria web site[3] puts the number at 673.
^Ella Marie Rast (2004).The Whole Dam Story – The Drowning and Rising of a River city in the West. 1st Books Library.ISBN978-1-4033-3732-0.
^abThe Skaggs Story – 1763-1979 – Southern Revolutionary War Soldier to Western Entrepreneur. Skaggs Institute of Management, Brigham Young University. 1979.