A Mass 40th Birthday Party

NEW CASTLE, Del. — At noon last Thursday, Alan Levin, in white shirt and tie, was passing out KitKat bars to shoppers as they entered Happy Harry’s Community Plaza store here. An hour later, he was wandering the aisles of the Wilmington Manor store, with a box of Hershey chocolate bars under his arm. By Tuesday, Levin, the chain’s chairman and chief executive, will have visited all 66 Happy Harry’s stores. How better to celebrate the drugstore chain’s 40th birthday than with candy? Well, there is also an anniversary-sale book that includes 40 beauty coupons and a consumers sweepstakes for a Saturn L200 or a Bahamas vacation.

It turns out 1962 was a big birthday year for mass retailing, particularly the discount sector.

Happy Harry’s Discount Drugs opened its first store on Oct. 2, 1962 in Wilmington, Del., as the Discount Centre. Soon after, a salesman nicknamed its dimpled owner Harry Levin "Happy Harry." And the name stuck.

Along with several other retailers of the era, Happy Harry’s was out to try something new. As Alan Levin (Harry’s son) recalls, Happy Harry’s was the first retailer in Delaware to contest the state’s fair trade laws, which stipulated items must be sold at MSRP, the manufacturer’s suggested retail price. "This was when discounting really began. There were entrepreneurs like my father, who said ‘I could buy this for 50 cents, why do I have to sell it for $1? Why can’t I sell it for 83 cents?"

He’s right. "Happy Harry" Levin, who died in 1986, was not alone in challenging retail convention. In 1962, in markets around the country, discount retailers were sprouting like dandelions. Wal-Mart opened in Rogers, Ark., Target in Roseville, Minn., Rite Aid began as Thrif D Discount Center in Scranton, Pa., Kmart started out in Garden City, Mich., and ShopKo in Green Bay, Wis. Kohl’s was also born that year. In 40 years, the concept of offering consumers branded products at discounted prices has only grown. Wal-Mart is not only the world’s largest retailer, but now the world’s largest company, surpassing General Motors."There was a great movement. America was coming out of the Fifties. The baby boom was in full bloom and people were moving more toward self-service," said Levin, who was seven when Happy Harry’s was founded. He remembers his father’s low pricing drew a slew of lawsuits. "We got sued by basically every company we were selling product for — Jean Naté, Revlon, Gillette," said Levin, ticking off a few. Customers learned of the battles because the legal papers were displayed at the register. "Consumers thought, ‘this guy was willing to take a shot for the consumer,’" he said.

Professor David Szymanski, director of the Center for Retailing Studies at Texas A&M, points to the now-defunct Korvettes as an early discounter that helped lay the groundwork for the rush to the format in the early Sixties.Discounting, which operates on the premise that lower markups will be made up in volume, became a viable retail concept due to a confluence of social and economic factors. "There was a move to the suburbs and it now made economic sense — strip malls and plazas came into vogue," said Szymanski.

Today, Happy Harry’s has something else that sets it apart. Unlike the other aforementioned 40-year-old discounters, it remains private and family-owned. It’s unlikely that Wal-Mart’s Tom Coughlin or Kmart’s Jim Adamson will be handing out birthday treats. Store employees, let alone shoppers, would probably not know who they are.

But because of the heightened competition brought on by industry consolidation, maintaining a personal touch is crucial for Happy Harry’s. "We will not compete with Wal-Mart or Target on price, but we can compete on service," said Levin. To level the field a little, Happy Harry’s, along with several other independent drugstore chains, formed a buying consortium three years ago, which has helped.

But, "by far," said Levin, "service is the most important thing. There is no other reason to come to us…because you can get this stuff anywhere."

Store employees go through a one-day training session before starting. After that there is continual on-the-job training, said Levin. Its beauty departments have beauty advisers.And Happy Harry’s continues to grow. The company added 20 new stores since 2000, and has another 15 on board for the coming two years. It now operates in Delaware, Maryland, Pennsylvania and New Jersey. Sales for fiscal 2001 reached $343 million, up 17 percent. Comp-store sales rose 11 percent. Happy Harry stores average 11,000 square feet and sales per door averaged $6.6 million last year.

"This year [sales] will be substantially more," said Levin. "We know we will break the $400 million mark — how far we break it, I am not sure."

Looking to the future, Happy Harry’s intends to remain independent, said Levin. "We aren’t building a bunker and we won’t be a national chain, but we will be a hell of a strong regional."