NEW YORK — Another piece of chain drugstore history will soon be gone.
Walgreen Co. announced on Monday it will purchase the 76 stores operated by Newark, Del.-based Happy Harry's for undisclosed terms. Happy Harry's, founded in 1962 by its namesake, Harry Levin, was one of the last regional drugstore strongholds left in an industry that has been consolidating since the early Eighties.
"Happy Harry's is one of the strongest regional chains in the drugstore industry with a great following in a market where we have little presence," said Walgreens chairman and chief executive officer Dave Bernauer. Walgreens, however, had already announced plans to enter Delaware and the buy puts that growth into full speed.
Happy Harry's is the nation's 20th largest drug chain by dollar volume, with sales of $480 million. Happy Harry's joins other regionals such as May's, Harco and Revco as chains that have been gobbled up over the past 10 years. With today's emphasis on the big getting bigger, it is virtually impossible for small and midsize retailers to maintain a competitive edge in the market.
Happy Harry's, however, did an admirable job. In its home state of Delaware, the chain controls more than 65 percent of the pharmacy market. That's one reason Happy Harry's was so attractive to Walgreens, a company not known for being as acquisition-minded as competitors such as CVS. "The majority of our growth will continue to be organic. During the last 10 years, we've opened more than 3,800 stores while acquiring and operating fewer than 30 retail drugstores," said a spokesman.
The purchase also extends Walgreens into Maryland and fortifies its position in Pennsylvania and New Jersey. Walgreens gets easy access to growth in this market, thanks to the purchase of Happy Harry's warehouse. For the short term, Walgreens will retain the familiar Happy Harry's logo — with the face of founder Harry smiling — in all stores except eight in Pennsylvania where the Walgreens brand is already established.
Walgreens will also retain the highly regarded son of the founder, Alan Levin, who has served as chairman and ceo. Although Levin's first love is politics, he stepped in when needed to run the chain upon his dad's death. He has served as chairman of the National Association of Chain Drug Stores (and even stepped in to his spot early when another retail acquisition removed the existing chairman) and is frequently called upon as an expert on drugstore retailing.His passion for the business was evident during a new store tour several years ago when he knew customers' names and could recite statistics about virtually every category. And his love of Delaware came through when he bestowed visitors with University of Delaware T-shirts.
Harry Levin opened his first store in 1962 where he was quickly named Happy for his warm personality. The chain has maintained that image. Under the watch of Valerie Cheyney, Happy Harry's has become a beauty destination for its shoppers. From a vendor standpoint, Cheyney has always been willing to test new concepts and provide insight into her consumer. Happy Harry's was always a channel for experimenting with new beauty ideas.
Happy Harry's stores average 10,000 square feet, smaller than Walgreens' 14,500-square-foot footprint. Happy Harry's also pumps out a higher percentage of sales per store in prescriptions than Walgreens' units.
With the pending sale of Happy Harry's, there are few regional powers left in drugstore retailing. The list includes Longs, Duane Reade, Kerr, Discount Drug Mart, USA/Super D, Kinney and Drug Fair.
*** The confectioner company producing Kissables, the candy brand behind a new lip gloss from Lotta Luv, was incorrectly identified in the Critical Mass column on page 7, June 2. Kissables is a product of Hershey's.
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