Osco Drug and Sav-on Drugs

Osco Drug and Sav-on Drugs
Company type	Pharmacy chains
Industry	Retail pharmacy
Founded	1937 in Rochester, Minnesota (Osco Drug)
Founder	Skaggs family (Osco Drug), Christian J. Call (Sav-on Drugs)
Headquarters	Multiple locations; historical headquarters in Chicago, Illinois and Anaheim, California, United States
Area served	United States (primarily Midwest and California regions)
Products	Pharmacy services, retail drugstore products
Parent	American Stores Company, later Albertsons and SuperValu

Osco Drug and Sav-on Drugs were pharmacy chains based in the United States. Osco Drug originated from the Skaggs family, launching its inaugural outlet in 1937 in Rochester, Minnesota. The Skaggs family expanded their enterprises through various acquisitions, notably American Stores' acquisition of Alpha Beta grocery stores in 1961. In 1979, Skaggs Drug Centers took over American Stores and adopted its name. Sav-on Drugs, operating primarily in California, was acquired by Osco’s parent company in 1980. Both chains subsequently became parts of American Stores, later Albertsons, and ultimately SuperValu before being divested.

Currently, Osco and Sav-on function as pharmacy brands embedded within Albertsons' retail locations. Osco pharmacies are predominantly located inside Jewel stores (under the Jewel-Osco brand) and at Shaw's and Star Market outlets. Sav-on pharmacies mainly serve Acme supermarkets. Albertsons applies the Osco brand in Arizona and Montana, while the Sav-on name is used in markets such as Nevada and Texas.

Origins

In 1915, S.M. Skaggs, a Baptist preacher, established a grocery store in American Falls, Idaho that emphasized affordable pricing. By 1917, O.P. Skaggs had founded a chain of self-service stores before selling western franchises to Christian Call. The Skaggs brothers merged their stores with Sam Seelig’s chain, which evolved into Safeway by 1925. L.J. Skaggs departed Safeway in 1932 and launched the first self-service drugstore in the U.S. in Tacoma, Washington in 1934.

Initial store

Loronzo L. (L.L.) Skaggs, who managed Quality Food in Minnesota, left Safeway to establish a Midwestern chain of self-service drugstores inspired by his brother’s western outlets. The first store opened as "Pay-Less" in Rochester, Minnesota, in 1937 under George Hilden’s management. This location remained operational until it closed in 1987 due to downtown redevelopment.

When expanding into Mason City, Iowa, also in 1937, L.L. discovered that "Payless" was already trademarked there. As a result, he renamed the business "Self-Service Drug, Inc." and incorporated under this title.

Transition to Osco

In 1942, "Self-Service Drug, Inc." was dissolved and replaced by Owners Service Company (Osco), a partnership including L.L. Skaggs, H.B. Finch, Paul Stratton, and George Hilden. That same year, Osco moved its headquarters from Waterloo, Iowa to the Merchandise Mart building located in Chicago, Illinois.

Sav-on Drugs

Founded by Christian J. Call in July 1945 in San Bernardino, Sav-on Drugs quickly rose to become Southern California's second-largest drugstore chain before being acquired by The Jewel Companies in November 1980. Early management featured general manager Ira D. Brown.

The chain grew steadily: its third location launched in Long Beach in 1947; by 1952 it operated ten stores throughout Southern California. Following Christian Call’s death in 1958, his nephew Ronald Call took over leadership and expanded the chain to 54 stores stretching from Santa Maria down to San Diego by the late 1960s.

After Ronald Call passed away in 1968, Ira Brown assumed the presidency. In 1967 Sav-on relocated its headquarters to Marina del Rey and began trading on the New York Stock Exchange (NYSE) under the ticker SVN in November 1972.

By the mid-1970s, Sav-on managed close to 100 locations mostly within California and a few outlets in Houston, Texas. The company pursued growth through acquisitions such as purchasing assets from 15 Pay Less Drug Stores across Southern California in 1978—boosting its total to 127 stores—and prepared for entry into the Las Vegas market.

That same year saw the consolidation of operations with a new warehouse and corporate headquarters established in Anaheim. By August 1980, Sav-on had expanded further to operate 141 stores—130 within California, six across Houston, and five in Las Vegas—and continued opening new branches including its 146th store in Orange (1980) and its 148th store located in South Gate (1981).

During this era, Sav-on’s strategy concentrated on expanding regionally within key markets such as Southern California and select out-of-state locations by leveraging acquisitions and centralizing operations to boost growth and increase market presence prior to its acquisition by Jewel Companies.

The Jewel Companies, Inc.

In 1961, The Jewel Companies, Inc. expanded its reach by purchasing 30 Osco Drug outlets located in six Midwestern states. The following year, Osco shifted its headquarters from Chicago's Merchandise Mart to Melrose Park, Illinois, coinciding with the debut of the first dual-concept "Jewel-Osco" store. These initial combination stores consisted of two distinct retail spaces connected internally, enabling shoppers to access both without stepping outside. January 1962 marked the opening of the inaugural Jewel-Osco Family Center at Chicago's Appleton Plaza Shopping Center.

September 1970 saw the introduction of the first Eisner-Osco Family Center in West Lafayette, Indiana. Osco also pursued growth through collaborations with regional grocery chains: in 1967, the first Osco adjacent to a Buttrey Food store launched in Anaconda, Montana; in 1969, Boise witnessed the opening of the first purpose-built Buttrey-Osco Family Center; and in 1970, the initial Star-Osco Family Center was established in Manchester, New Hampshire. Following its 1964 acquisition of Star Market, Jewel rolled out Osco stores under the "Star-Osco" brand throughout New England.

By 1968, Osco had expanded to 168 locations spanning sixteen states and streamlined its operations by forming Osco Drug, Inc., relocating its headquarters to Franklin Park, Illinois. That same year introduced Jewel Imports, a division tasked with sourcing international products for Osco outlets.

The purchase of Montana-based Buttrey Food Stores in 1966 facilitated Osco's expansion into the Northwest market, with numerous stores rebranded as "Buttrey-Osco." By the early 1980s, Buttrey operated approximately 60 stores covering a broad area from Montana to Idaho.

Beyond Chicago, Osco maintained standalone pharmacy locations. Initially, combined stores often operated with separate hours for Jewel and Osco sections; however, by the early 1980s, internal walls were removed to create integrated stores where Osco managed pharmacy and related departments seamlessly.

To enhance service quality and reduce expenses, Osco collaborated with Kodak to establish Crest Photo Lab in Elgin, Illinois, which began operations in 1971. This lab supported regional outlets and was later supplemented by additional photo labs nationwide. In response to industry shifts towards digital photography and rapid photo processing services, these labs were sold to Kodak’s Qualex division in 1996.

In 1974, Osco moved its headquarters from Franklin Park to a new location at 1818 Swift Drive in Oak Brook, Illinois.

Acquisition of Sav-on Drugs

In November 1980, The Jewel Companies Inc. acquired Sav-on Drugs, Inc., based in Anaheim, California, which operated 150 stores across California, Nevada, and Texas. This acquisition designated Sav-on as Osco’s 'Western Region.'

American Stores Company

In 1984, American Stores Company—owner of chains such as Alpha Beta, Acme Markets, and Skaggs—purchased The Jewel Companies Inc.

American Drug Stores, Inc.

By 1989, American Stores established American Drug Stores, Inc., a subsidiary consolidating its drugstore assets: Osco Drug, Sav-on Drugs, the Osco portion of Jewel-Osco locations, and RxAmerica—a mail-order prescription fulfillment center headquartered in Salt Lake City, Utah.

Sav-on Rebranding and Relaunch

American Stores sought to establish a nationwide pharmacy chain and unify its branding strategy to increase market share and boost private label product sales. Osco Drug was selected as the national brand due to its extensive footprint. In 1985, Skaggs stores were rebranded as Osco, followed by Sav-on locations adopting the Osco name in 1986. Nevertheless, Osco's branding did not connect well with Southern California’s Hispanic consumers, prompting a return to the Sav-on Drugs name by 1989. Although there were speculations that the Osco name had unfavorable Spanish associations, American Stores refuted these claims as the reason for the rebranding reversal.

Sav-on Express, Reliable Drug, Clark Drug

Throughout the early 1990s divestiture period, American Stores strategically expanded its presence through acquisitions aimed at reinforcing key markets:

In early 1992, it acquired 85 CVS outlets from Melville Corporation for $60 million, converting them into Sav-on Drugs and Sav-on Express formats.
Later that year, 30 Thrifty and Rx Plus drugstores located in Arizona and Nevada were purchased.
In 1993, Reliable Drug’s portfolio of 55 stores across Indiana, Illinois, Iowa, Kansas, and Missouri was acquired and rebranded under the Osco Drug banner.
In February 1995, American Stores bought 17 Clark Drug stores in Southern California for approximately $37 million, integrating them into the Sav-on Drugs network.

These carefully targeted acquisitions bolstered American Stores’ market position and competitive strength within regional pharmacy sectors.

Consolidation of Operations

In 1992, American Stores shifted from functioning as a holding company to operating as a centralized organization by consolidating shared services such as procurement, logistics, payroll, and human resources. Between 1992 and 1998, responsibilities previously managed by divisional offices were centralized at the Salt Lake City headquarters. While food divisions continued regional operations, marketing and merchandising teams were relocated from Oak Brook, Illinois to the newly established American Stores Tower in Salt Lake City. Pharmacy operations were moved to Scottsdale, Arizona, with some systems functions remaining in Franklin Park, Illinois. Upon completing pharmacy consolidation in 1998, the Osco headquarters in Oak Brook was sold to Follett Corporation.

Osco Foodmarts

In 1994, American Stores transformed 25 smaller Jewel Food Stores in Chicago into standalone Osco Drug locations. This strategic move aimed to concentrate Jewel on combined store formats while expanding Osco’s footprint amid Walgreens’ increasing market dominance. These new Osco outlets offered an enhanced selection of food and produce items and were branded as "Osco Foodmarts."

Health 'n' Home

To broaden its drugstore portfolio, American Drug Stores introduced the Health 'n' Home concept in November 1995. These home health care superstores covered roughly 28,000 square feet and carried approximately 18,000 product lines. The inaugural store launched in Phoenix, Arizona; by late 1997, the chain had grown to 20 locations across four states.

RxAmerica

In 1998, American Stores’ RxAmerica combined its Pharmacy Benefits Management (PBM) operations with Longs Drug Stores’ Integrated Health Concepts (IHC) division in a joint venture split evenly between both companies. This partnership created a nationwide PBM network encompassing nearly 1,400 pharmacies from Longs and American Stores along with an additional 40,000 pharmacies across the country, serving close to three million patients. Albertsons and Longs maintained equal ownership until Albertsons sold its interest to Longs in 2001.

Albertsons, Inc.

In 1999, Albertsons shifted its drugstore management and general merchandise sourcing from Salt Lake City, Utah to Scottsdale, Arizona, creating what became known as the Albertsons Drug Region.

By 2002, Albertsons divested 84 standalone Osco Drug outlets located in Massachusetts, New Hampshire, and Maine to the Canadian firm Jean Coutu Group, which subsequently rebranded these stores as Brooks Pharmacy. That same year, facing financial difficulties, Albertsons shuttered numerous locations across the country, including all stores in the Des Moines, Iowa metropolitan region.

In March 2005, the Osco brand was reintroduced in New England through Albertsons' Shaw's and Star Market pharmacy operations.

SuperValu, CVS Corporation, and Cerberus

On June 2, 2006, the divestiture of Albertsons resulted in its division into three distinct parts:

CVS Corporation acquired 700 standalone drugstores (Osco Drug and Sav-on Drugs), transitioning them to the CVS Pharmacy brand by 2007.
An investor group led by Cerberus Capital Management—including partners such as Kimco Realty Corporation, Schottenstein Stores Corp., Lubert-Adler Partners, and Klaff Realty—purchased Albertsons locations in Northern California, Colorado, Texas, Oklahoma, Florida, Arizona, and New Mexico, forming Albertsons LLC. A number of these stores were later either sold or closed.
SuperValu took ownership of the Jewel, ACME, Shaw's divisions along with other Albertsons stores not acquired by Cerberus. SuperValu maintained control over the Osco and Sav-on drug trademarks, preserving the pharmacy branding within grocery store settings.

In 2013, SuperValu sold its Albertsons assets to Cerberus, uniting Osco and Sav-On pharmacy operations under Albertsons LLC headquarters in Boise, Idaho, with certain administrative functions supported from Franklin Park, Illinois.

References