Schwegmann Brothers Giant Supermarkets

Early history The origin of the firm dates to the mid-nineteenth century following the immigration of Garret Schwegmann Sr. from the Saxony region of Germany to New Orleans. After serving in the Union Army during the United States Civil War, Garret Schwegmann Sr. returned to New Orleans where he found employment at the Henke Family Grocery Store. After having married the daughter of the store owner and with a new family, Garret Schwegmann Sr. went into the grocery business for himself. Although the location of the store is in dispute, it may have been located at the corner of Dauphine Street and Almonaster Avenue (then known as Enghein Street). While successful as a grocer, Garret Schwegmann Sr. exited the grocery business and reentered it several times so that he could engage in other pursuits. Because of his interest in opposing price-fixing, Schwegmann pursued a career in local and state politics, which took him away from full time management of Schwegmann Brothers Giant Supermarkets. His political offices included terms in the Louisiana State Legislature and as Public Service Commissioner. In 1978, John G. Schwegmann publicly described the business model for his stores, emphasizing everyday low prices, rapid turnover of inventory, and one-stop shopping. At the same time, he reiterated his commitment to exclusively serving the market of the Greater New Orleans Metropolitan area. He acknowledged the potential leverage that national chains could have. Following his stroke in 1977, John G. Schwegmann withdrew from management of Schwegmann Brothers Giant Supermarkets. John F. Schwegmann John Francis Schwegmann is the son of John G. Schwegmann. He worked for Schwegmann Brothers Giant Supermarkets starting as a young adult, holding a variety of management positions. In 1979, John Francis Schwegmann purchased the grocery store chain from his father John Gerald Schwegmann. He then became the chief executive officer. Later, John F. Schwegmann also became Public Service Commissioner, a role in which his father also served. John F. Schwegmann was chief executive when the firm acquired another grocery store chain, ultimately leading to the financial decline, sale of the firm, and final liquidation. ==Business practices==

With the first store, Schwegmann and his partners emphasized return on investment rather than return on sales, which had been the conventional practice with corner grocery stores. To this end, Schwegmann emphasized low prices to enable high turnover of inventory. While the store was self-service, the store management continued to emphasize customer service, with clerks available in each department. The first store also had a liquor department, selling discounted liquor through self-service. The store maintained a loudspeaker system that announced phone calls for customers, arrivals of customers' taxis, and various merchandising specials. Early in the history of this first store, Schwegmann opened other departments that sold non-grocery goods, including drugs, cosmetics, hardware, sporting goods, housewares, and a snack bar. The initial store had approximately 250 shopping carts. The chain sought to appeal to a culturally and economically diverse range of clientele. As part of their one-stop shopping strategy, the stores included banks, gasoline stations, a travel agency, and provisions for customers to pay utility bills. By 1978, the chain offered approximately 30 private label brands, although they also carried most major national brands. An advertising jingle that Schwegmann Brothers Giant Supermarkets used in the 1980s built on the regional colloquialism in New Orleans English of "making groceries", as opposed to "grocery shopping" or "buying groceries": In the late 1980s, Schwegmann Brothers Giant Supermarkets ran a series of Schwegmann Food Shows, taking place at the Louisiana Superdome, on an annual basis. Attendees typically received a significant number of discount coupons to further encourage shopping at the Schwegmann stores. Schwegmann Brothers Giant Supermarkets published an advertorial at the time stating: Other drug manufacturers besides Eli Lilly challenged Schwegmann Brothers Giant Supermarkets with legal proceedings. These included: Hoffmann-LaRoche, Sterling Drug, Colgate Palmolive, Johnson & Johnson, Bristol-Myers, and Mennen. The fair trade laws governing pharmaceuticals at the time covered branded products. Schwegmann Brothers Giant Supermarkets were thereby obligated to comply with fair trade pricing concerning over-the-counter drugs. Prescription drugs at the time were typically sold with the name of the pharmacy and not branded. Schwegmann Brothers Giant Supermarkets thereby continued to sell at below mandated prices. They further advertised prescription drug prices, which was an uncommon practice in the 1950s in the United States. Schwegmann Brothers Giant Supermarkets received a favorable ruling against fixed prices for prescription drugs in 1956 in a decision by the Louisiana Supreme Court. Bankruptcy In 1978, sales of the ten stores in the chain totaled approximately USD 250 million. In 1995, Schwegmann Brothers Giant Supermarkets acquired the 28 grocery stores in the New Orleans Metropolitan Area of the National Canal Villere Chain, then owned by the National Tea Company. The purchase price was US$150 million, which caused the Schwegmann chain to have cash flow limitations. Their inventory and service quality declined following the acquisition, from which the firm did not recover. In 1997, Schwegmann Brothers Giant Supermarkets was sold to Kohlberg Kravis Roberts & Company, a firm that specialized in returning distressed corporate operations to profitability. Despite the new owner's efforts, Schwegmann Brothers Giant Supermarkets declared bankruptcy in 1999 and permanently ceased operations. ==Legacy==

Schwegmann Brothers Giant Supermarkets had legacy both regionally and in retailing across the United States. The supermarkets in the chain were early prototypes for big box retailers that emerged in the latter part of the 20th century, with broad selections and everyday low pricing. Unlike subsequent big box retailers, the chain's business practices were based on a connection to the local community that was mutually beneficial to the chain's owners and to its customers. ==See also==