Revco

RXR. When it was sold, the chain had over 2,500 stores.

History

Revco, originally known as Registered Vitamin Company, was founded in 1956 in Detroit, Michigan by Sidney Dworkin and Bernie Shulman. Dworkin led Revco until 1986 as CEO, and then he served as Chairman until 1987.

Up to 1983, Revco grew tremendously; the chain had over 2,200 stores and over $2.2 billion dollars in sales. The chain then began to stumble. In 1983, its vitamins were blamed for the deaths of 38 infants. In order to prevent a hostile takeover and increase short-term profitability, Dworkin then led the chain into a deal that would seal its fate many years later. Under his leadership, Revco purchased a company called Odd Lots, now known as Big Lots, a closeout retailer. [ [http://findarticles.com/p/articles/mi_m3092/is_v23/ai_3282235 Revco to acquire odd lot for $113.5 million in stock | Discount Store News | Find Articles at BNET.com ] ] Revco's management lost its focus on the drug store portion of its business due to problems with Odd Lots, and earnings tumbled. The chain also began to merchandise items such as televisions, furniture, and other non-core items, and the heavy investment proved to be a failure. [ [http://www.answers.com/topic/revco-d-s-inc Revco D.S., Inc.: Information and Much More from Answers.com ] ]

Bankruptcy

In 1986, Revco was the target of a leveraged buyout. Part of the buyout deal was to reduce costs by closing stores and by reducing inventory to repay debts. This left the company with a shortfall of cash, and suppliers stopped shipping inventory, causing the chain to lose customers. This eventually caused the chain to file for bankruptcy in 1988. Revco was bailed out of bankruptcy by investor Sam Zell, in part to fend off separate takeover attempts by both Eckerd and Rite Aid. [http://findarticles.com/p/articles/mi_m3374/is_n9_v13/ai_10701168 Streamlined Revco struggles to emerge from bankruptcy - Revco Drug Stores Inc - Annual Report Part II - company profile | Drug Store News | Find Articles at BNET.com ] ] [ [http://findarticles.com/p/articles/mi_m3374/is_n2_v14/ai_11861437 Revco Ch.11 saga near end as Rite Aid withdraws bid | Drug Store News | Find Articles at BNET.com ] ] Several Revco locations, primarily in the Detroit, Michigan area, were sold off to Perry Drug Stores in 1990.cite web |url=http://findarticles.com/p/articles/mi_m3374/is_n14_v12/ai_9298805 |title=Perry Drug snaps up 24 more Mich. Revcos |accessdate=2007-11-27 |last=Frederick |first=James |date=1990-06-23 |work=Drug Store News] Revco emerged from bankruptcy, as an independent company, in 1992. [ [http://findarticles.com/p/articles/mi_m4130/is_n1_v21/ai_12538136 The crash of the Revco leveraged buyout: the hypothesis of inadequate capital - Leveraged Buyouts Special Issue | Financial Management (Financial Management Association) | Find Articles at BNET.com ] ]

Emergence from Bankruptcy

Revco's turnaround from bankruptcy was and is often still considered the "model" of a business recovering from bankruptcy. [http://findarticles.com/p/articles/mi_m3374/is_n7_v18/ai_18327222 Revco - chain drugstore - Chain Profile | Drug Store News | Find Articles at BNET.com ] ] The chain closed many underperforming stores (including closing all stores west of the Mississippi River), reduced costs, introduced computerized point-of-sale systems, and introduced a new store design to help increase sales. [http://findarticles.com/p/articles/mi_m3374/is_n4_v17/ai_16743842 POS speeds into stores - point-of-sale system in Revco D.S. Inc. stores - Revco: The Comeback Chain | Drug Store News | Find Articles at BNET.com ] ] The chain shrunk from about 2,200 stores to about 1,500 stores during this period.

The hallmark of the new store designs was the arrangement of the store aisles, which was developed and introduced as the company was emerging from bankruptcy. Half the store had aisles that ran from the front of the store to the back in straight rows. Seasonal merchandise, food, greeting cards, baby supplies, hardware and office supplies were in this half of the store. The other half of the store, the health and beauty sections, had their aisles slanted so customers could see down the aisles as they walked from the front doors to the pharmacy, which was in the back of the store. A very wide main aisle led from the front door to the pharmacy, and this aisle separated the slanted aisles from the "straight aisles". [ [http://findarticles.com/p/articles/mi_m3374/is_n4_v17/ai_16743850 Redesigning Revco: rolling out the new convenience format - store design - Revco: The Comeback Chain | Drug Store News | Find Articles at BNET.com ] ] While many drug stores in the U.S. have variations of this design today, it was a departure at the time from the usual all front-to-back, straight aisles. In Revco's free standing stores, the slanted aisles had an open ceiling above them; the other aisles had a drop ceiling over them . In these stores today, which are now CVS stores, the open ceiling and drop ceiling are still in place (though all the aisles are now aligned in a traditional manner).

The new stores also were decorated in soft blues and greys, had track lighting, and low hanging lights over the greeting cards, all which gave the store a "soft" appearance. Revco introduced strict rules about having no handwritten signs or merchandise displays sitting directly on the floor, which it thought gave the stores a cleaner look. It also required its employees to dress extremely professionally, with men wearing ties. All front-end employees had to wear a navy blue smock.

After emerging from bankruptcy, the chain grew tremendously again, increasing its store count to over 2,500 stores. Part of this growth came from the purchase of over 800 Hook's/SupeRx drug stores in 1994 in the Mid-Atlantic region and Midwest, [ [http://findarticles.com/p/articles/mi_m3374/is_n7_v16/ai_15354469 Revco/HSI merger to create drug powerhouse - Revco D.S. Inc. to acquire Hook-SuperRx Inc | Drug Store News | Find Articles at BNET.com ] ] and Birmingham, Alabama based Big B Drugs in the southeast, which was its last purchase, made in 1996. [http://findarticles.com/p/articles/mi_qn4196/is_19961029/ai_n10293761]

ale of the company

In order to help Zell recover his investment in the company, the company's management was under pressure to sell the company. In 1996, Revco entered into an agreement with Rite Aid to be bought out. [ [http://findarticles.com/p/articles/mi_m3374/is_n20_v13/ai_11538737 Rite Aid bids on Revco | Drug Store News | Find Articles at BNET.com ] ] . The Federal Trade Commission sued to stop the buyout saying that Rite Aid would become a monopoly in many markets because Rite Aid and Revco had many overlapping stores, [ [http://findarticles.com/p/articles/mi_qn4196/is_19960418/ai_n10258241 Find Articles 404 File not found ] ] and Rite Aid withdrew its bid for the company.

The chain was purchased by CVS/pharmacy in June 1997, [ [http://findarticles.com/p/articles/mi_qa3755/is_199702/ai_n8746629 CVS to acquire Revco in stock swap | Weekly Corporate Growth Report | Find Articles at BNET.com ] ] and CVS re-branded or closed all of the 2,552 Revco stores by summer of 1998. [ [http://findarticles.com/p/articles/mi_m3374/is_7_21/ai_54563532 With conversions complete, CVS refocuses on business issues | Drug Store News | Find Articles at BNET.com ] ]

The sale of company can be linked back to Revco's bankruptcy which was caused, indirectly, by the purchase of Odd Lots in 1983.

CEOs

*Sidney Dworkin (1961-1986)
*William Edwards (1986-1987)
*Boake Sells (1987-1992)
*D. Dwayne Hoven (1992-1997, last CEO)

Promotions and discount programs

Revco was well-known for its "A Friend for Life" slogan and senior citizen's discount program, called "Senior Shoppers" (in which customers over 65 received 10% off their purchase every Wednesday). Revco also had a discount program for customers with disabilities (called "Helping Hands") and for baby supplies (called "Baby Bunch").

At the time, it was highly unusual for a chain of Revco's size to offer such discount programs, and the chain was extremely popular with customers because of these programs. Revco may have been well ahead of its time, as its discount programs resembled today's loyalty card programs used by grocery stores and CVS. Revco had customers fill out an information card with their contact information and gave them a card to identify their participation in the discount program (though Revco did not track purchases as many loyalty card programs do today).

Revco used Mary Lou Retton, a U.S. gymnast, as an advertising spokeswoman in the 1990s, who often began commercials by saying, "And another thing...". [ [http://findarticles.com/p/articles/mi_m3374/is_n4_v17/ai_16743852 Rebuilding Revco's
]
]

Ironically, Rite Aid now offers a similar discount program to "Senior Shoppers", called "Living More". This may be attributed to the fact that Rite-Aid's James P. Mastrian, who is the Executive Vice President of Marketing, held the same position at Revco from 1994 to 1997.

Twins Days, a festival honoring the twin brothers who founded the city of Twinsburg, was the brainchild of Charles R. DeHaven, then Revco's Assistant Vice President of Public Relations. DeHaven planned a number of promotional events in 1976 (see Revco Marathon) to commemorate the nation's Bicentennnial. From the small gathering of 37 sets of twins that first year, the festival now attracts thousands from all over the world and makes national headlines every summer. [ [http://www.twinsdays.org/history.html The History and Views of Twins Days ] ]

Prescription Access Link

Revco was one of the first drug store chains in the country to have a centralized pharmacy computer system, which it called Prescription Access Link (PAL). This system allowed each Revco access to any other Revco's prescription information. It highly advertised this system to customers, which allowed a customer to go any Revco to have their prescription refilled without the stores having to call each other on the phone. While this type of system is the norm in drug stores today, it was revolutionary when Revco used it. PAL was introduced to Revco stores during its emergence from bankruptcy.

The Revco Marathon

Revco founded and sponsored a very popular marathon in Cleveland, Ohio, which was often referred to among runners as "The Revco" (its full name was "The Revco Cleveland Marathon and 10K"). The first race took place in 1976 (see Factoids), when jogging/running first became a national fitness craze. Famous Olympic athlete Jesse Owens fired the starting gun at the first race, which started at Western Reserve Academy in Hudson, Ohio, wound its way up Rt. 91 north through Twinsburg and Solon, and eventually ended in Cleveland. This particularly grueling course was changed in later years to begin and end at Cleveland State University. Many famous runners participated over the years, as "The Revco" became an Olympic qualifying event. [ [http://findarticles.com/p/articles/mi_m3374/is_n11_v12/ai_8546216 Revco weekend marked by huge turnout, controversy - Revco D.S. Inc.; Revco-Cleveland Marathon and 10K - column | Drug Store News | Find Articles at BNET.com ] ] After CVS bought Revco, the race became known as the "CVS Marathon and 10K" before CVS dropped its sponsorship in the early 2000s. [ [http://findarticles.com/p/articles/mi_m3374/is_13_20/ai_50277775 CVS agrees to sponsor marathon | Drug Store News | Find Articles at BNET.com ] ] The race is now sponsored by Rite Aid.

References

* [http://www.answers.com/topic/revco-d-s-inc| Revco, D.S.]
* [http://findarticles.com/p/articles/mi_m3374/is_n4_v17/ai_16743834/pg_1|The Rebirth of Revco, D.S.]

Footnotes


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