Glittering Jewel

A decade ago, Jewel Tea Co. consisted of little more than a chain of Chicago-area supermarkets. Then it began branching into other lines and locations. Renamed the Jewel Companies, it has grown into a diverse, sprawling operation that Wall Street analysts now call a "retail conglomerate." Only too happy to shed the food-chain label, Jewel President Donald S. Perkins, 41, prefers to think of his new-look company as a general merchandiser serving "whatever needs the consumer may have."

In addition to operating 371 supermarkets across the U.S., Jewel now serves those needs with some 240 other outlets, ranging from ice-cream parlors and drugstores to huge "family centers" selling food, pharmaceuticals and phonographs. Such diversification has brought Jewel healthy profits while a number of more tradition-bound food chains have lagged. Last year Jewel's rapidly growing, non-supermarket operations yielded 24% of its $1.25 billion in sales, and an even bigger share of its $17.6 million in profits. Currently in the midst of a threeyear, $100 million expansion program, the company is adding new stores at the rate of 90 a year--and few of them are conventional supermarkets.

Exploiting the Traffic. Jewel's expansion began during the mid-1950s under George Clements, 59, Perkins' predecessor as president and now Jewel's chairman. As food chains moved into suburban shopping centers, Clements' chain was among the first to recognize that supermarkets generated heavy traffic for neighboring specialty shops. Figuring that Jewel itself might just as well exploit that traffic, he began setting up separate specialty shops on his stores' premises--bakeries, gourmet delicatessens and cooked-food departments selling such takeout dishes as steak and pizza.

Jewel also began picking up other supermarket chains. It bought Eisner Food Stores (downstate Illinois and Indiana) in 1957, New England-based Star Markets in 1964, and the Buttrey supermarkets in Montana and Idaho two years ago. Moving abroad, it acquired stakes in one supermarket chain in Italy, another in Belgium. Jewel has also sensed a future in smaller food-store operations, is moving rapidly into franchised "convenience" shops and "Chef's Pantry" stores in high-rise apartment buildings.

The most dramatic expansion has come in high-profit, nonfood lines. Unlike other food chains, which are often content to put general merchandise on the grocery shelves, Jewel early chose to diversify in depth by acquiring the Midwestern-based Osco chain of drugstores and Boston's Turn-Style discount stores. Under Jewel, Osco has grown from 30 stores to 133, Turn-Style from four stores to nine. A growing number of these outlets now are situated under the same roof as grocery operations, providing shoppers with one-stop service for everything from canned peas to cameras, drug prescriptions to complete wardrobes.

Like Going to the Bank. Beyond insisting on reasonable prices and courteous service, Jewel's top brass give their underlings remarkably free rein. They have divided Jewel into eleven individual "companies," each of them virtual fiefdoms whose executives receive from headquarters little more than general guidelines. "It's almost like a businessman going to his banker," says one company official. As if to emphasize their autonomy, Jewel's latest annual report contains photographs of 55 such middle-range executives--but none of either Chairman Clements or President Perkins.

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