Wall Drug Store, Inc. History

Company Perspectives:

The Wall Drug Store has been a family owned business since 1931. The philosophy of the Wall Drug Store Management Team has been that the best business deal is one that is good for the people who work for the business, good for those who are served by it and good for the people who own it. Wall Drug Store's vision is to provide exceptional service to our customers, meaningful employment to its staff and profitability to the business. The Wall Drug Management team is committed to sharing our vision with all employees and by doing so, we will maintain a team-oriented environment which will: maintain enthusiasm, reward hard work, dedication and loyalty, provide excellent customer service, and increase our profitability.

Company History:

Wall Drug Store, Inc. is a unique institution in the annals of American business, and its namesake store has become a permanent part of the national landscape. Beginning as a small town pharmacy and sundry outlet, Wall Drug has developed into a 76,000-square-foot western tourist attraction that is visited by up to 20,000 people a day. Visitors flock to Wall Drug from all over the world, due in large part to the unusual advertising methods which the owners have used since the family-run company's inception. Wall Drug specializes in western items, Native American artifacts, fine art, decorative accessories, food and drink, and gifts and collectibles. Other offerings include a restaurant that accommodates over 500 people, a traveler's chapel, and a play area for children. Guests are still treated to free ice water, Wall Drug's original marketing gimmick, and coffee at five cents a cup.

A Small Town with Daily Mass: 1931

Wall Drug began when Ted and Dorothy Hustead, a young married couple looking to settle in a small town somewhere in South Dakota or Nebraska, happened upon Wall, South Dakota. Ted had graduated from pharmacy school in 1929 and had worked steadily for several druggists, ending up in Canova, South Dakota. However, when his father died in 1931, Ted's small inheritance of $3,000 seemed to be the key to realizing the dream he and his wife shared of owning a drugstore.

The couple began searching for available stores. Traveling the countryside in their Ford Model T the Husteads had two particular qualities in mind when it came to selecting a town: they wanted a fairly small town and, being devout Catholics, they wanted to attend mass on a daily basis. The town, therefore, would have to have its own Catholic church. Wall, South Dakota, a town of 326 people at the edge of the Badlands, met the criteria. In December 1931, after prayerful consideration, the Husteads purchased the small local drugstore there.

Business was difficult during the first few years. It was the middle of the Great Depression and money was scarce everywhere, but especially in a place as remote as Wall. The Husteads were not easily discouraged and both agreed to a five-year trial run before moving on. Ted, Dorothy, and their young son, Billy, took up residence in the back of the store where they had made an 'apartment,' by cordoning off the area with a blanket, and tried their best to make Wall Drug a successful venture.

The family hoped that upon the completion of the Mount Rushmore monument to their west, traffic to the town would increase, and so would their presently meager profits. Depending solely on sales from the impoverished citizens of Wall seemed unrealistic; as the national economy improved, tourists with their ready cash might save Wall's struggling business.

The Husteads' strong religious faith had them believing they were in Wall for a reason; they were making friendships, providing medical care, and feeling a part of community life, but they were beginning to have doubts about their ability to eke out a living in such an unassuming town. With the birth in 1936 of their second child, Mary Elizabeth, the doubts increased. The family was beginning to wonder whether their talents and abilities might be better served in another location.

And Ne'er a Drop to Drink: 1936

The summer of 1936 brought inspiration and renewed faith to Dorothy Hustead and her family. One quiet afternoon Dorothy, tired from caring for her newborn daughter, went to lie down for a nap with Billy and the baby. Dorothy related the story years later recalling that she was having a difficult time falling asleep with all of the noise from traffic on route 16A near the store. She began thinking of how to draw all those travelers into the store and was struck by a revolutionary idea.

People were driving along old rural highways in the tremendously hot prairie sun and were thirsty. Wall Drug would offer these travelers free ice water in order to entice them into the store. The idea was a hit, and the store soon became known for its western small town hospitality, retaining that image throughout its history. The Husteads constructed highway signs and placed them along the busy highway. Dorothy developed the slogan, 'Get a soda ... Get a root beer ... Turn next corner ... Just as near ... To Highway 14 ... Free Ice Water ... Wall Drug.' The series of signs inspired visitors from the day they were posted to stop at the 'ice water store.' By the following summer the Husteads employed five additional workers to help run the operation.

Advertising and creative marketing put Wall Drug on the map. Signs were erected in neighboring states to draw traffic to the store and, when those billboards created a sensation, signs were added around the globe. Many signs marked the distance in miles from their location to Wall Drug. The media campaign became so all encompassing that billboards and bumper stickers made Wall Drug a name recognized worldwide. Bill Hustead, Ted and Dorothy's son, joined Wall Drug in 1951 after completing his pharmacy degree. Wall Drug enjoyed moderate success throughout the 1950s, expanding its merchandise and advertising in a grandiose style.

But in 1965, what was to become known as the Lady Bird Johnson Highway Beautification Project, or Highway Beautification Act, threatened the very heart of Wall Drug. Outdoor advertising along the interstate was to be regulated and those billboards that were never awarded permits were to be removed. Wall Drug stood to lose 240 of its 280 road signs under the act. Fortunately for the many small restaurants and hotels that relied on outdoor advertising, funds that were to be used to compensate sign owners ran out in 1983 and the law was never enforced.

In 1974 financial advisors warned Bill Hustead that the future of the drugstore was bleak. The advisors wanted the family to pull their resources out of the company. Instead of taking this recommendation Bill decided to follow the course his parents had taken before him and he launched a huge expansion. With the store expansion came an equally ambitious advertising campaign. Hustead sunk $280,000 into large highway signs just off I-90 and hoped for success. Wall Drug expanded its operations to the south of the original building in 1975 and the following year the Emporium with its doughnut factory, gift shop, and magazine shop, and a new dining room that could seat up to 520 people, were built. According to President Ted H. Hustead, 'The plan was if the drugstore was interesting enough, exciting enough, famous enough, and we could save a few of our signs, we would stay in business.

In 1978 expansion continued to the south of the recently constructed mall. A western wear shop selling hats, boots, and apparel completed the project. Gross sales that year reached an all-time high of $4.4 million and it was looking as if creative marketing and the risk of expansion had paid off.

However, in 1979 there was a dramatic downturn in sales due in large part to the nation's energy crisis, and the subsequent gas shortages, fuel lines, and higher prices. Sales topped off at $3.4 million and the company lost 90 percent of its net income. Fortunately for Wall Drug this slowdown was temporary and by 1980 sales rose to $3.9 million.

In 1991 a notice in the Federal Register announced that states would lose significant highway funds if they were not compliant with the Highway Beautification Act by December 1993. States were expected to use a portion of the funds they were given for highway projects to pay for signs that did not meet federal code. According to an article in Restaurant Business Magazine, 'Overnight the government was talking about spending $428 million to remove an estimated 22,000 illegal and 92,000 non-conforming signs. It was targeting virtually all billboards in rural zones on interstate and federal 'primary' highways.' Rick Hustead estimated that the removal of billboards could potentially reduce Wall Drug's business by 30 to 50 percent.

Bill's sons Ted and Rick, were the third generation of Husteads to run Wall Drug. The store continued to be a family enterprise. Ted H. Hustead took over as president, with Rick as chairman and the brothers' wives managing the art gallery and soda fountain. Ted Hustead explained their unusual marketing style by saying, 'We concentrated on obtaining advertising in strange and different places in hopes of attracting national and international publicity: signs at the canal in Amsterdam, signs on 20 London double-decker buses, in the London underground, in 6,000 Paris bistros, in the railroad stations of Kenya, Africa, ads in the International Herald Tribune. We were seeking publicity! Did it come? You bet.'

Throughout the 1980s stories of Wall Drug appeared in Time, Guideposts, USA Today, People, and other newspapers and magazines; the unusual business was also featured on the Today Show. The company continued to do what it did best&mdash′omote small-town America, and celebrate the enterprising nature of its owners in the face of adversity. The drugstore became identified as a cultural icon, a pharmaceutical 'little engine that could.' America was losing its small towns and main streets to big cities, suburbs, and shopping malls. Wall Drug celebrated the small western town to the extreme.

1931:Ted and Dorothy Hustead buy a small drugstore in Wall, South Dakota.

1936:Dorothy Hustead conceives 'Free Ice Water' campaign.

1951:Bill Hustead, son of the founders, joins the family business.

1965:Highway Beautification Act threatens business.

1975:Store additions to 'the mall' and the south side of the building almost double Wall Drug's square footage; $280,000 is spent on large signs nearby.

1976:Company adds an Emporium and enlarges the Dining Room.

1981:Rick Hustead, grandson of the founders, joins the Wall Drug staff.

1984:Five-shop addition is completed, including a traveler's chapel.

1991:Federal law allows for construction funds to be used to remove billboard advertising that does not conform to zoning codes.

1995:Cofounder Dorothy Hustead dies.

1996:Expansion continues with the 14,000-square-foot Backyard Mall.

1997:Wall Drug removes old wooden Indian.

1999:Ted Hustead dies at age 97; Bill Hustead dies after two-year battle with Lou Gehrig's disease.

In 1995 Wall Drug partially opened its 14,000-square-foot Backyard Mall, completing the opening the following year. The Backyard Mall included more stores devoted to merchandise, a 'skinny' saloon, food shops, and a Wall Drug Outlet store. Some 1,200 photographs dating from 1880-1909 were also put on public display, making it one of the most extensive permanent exhibits of western photographic history.

Facing the Future: 1990s-2001

In the 1990s the store gained the respect of Native Americans when it addressed a store patron's concerns. Wall Drug had always been known for its western atmosphere, and it had displays of all sorts of western-related memorabilia, including Indian encampments and cowboy legends. The owners took pride in paying tribute to the Badlands' rich history of Native American tradition and white settlement in the region, so the Husteads were surprised when one of their displays was criticized as being racist. David Rossetti and Codye Amiotte Jumping Wolf called Wall Drug to say that they were offended by a six-foot tall wooden 'cigar store' Indian they had encountered in the Drugstore Mall.

Rossetti and Jumping Wolf viewed the carving as demeaning and suggested that the representation with its red painted face was a distorted racist caricature of an Indian, and that Wall Drug in displaying it was doing a disservice to the Native American community.

To their credit, the Husteads took the issue seriously and went to the store's entrance to look at the statue. The family wondered what the problem could possibly be with a statue they had displayed for over 30 years without complaint. Bill Hustead had always considered himself a friend of the Native American community and was shocked when he looked at the statue with a new awareness. According to an article in Indian Country Today, 'He (Hustead) really saw the wooden Indian for the first time, it was ugly, he said, and its face was painted red. The family made a unanimous decision to get rid of the statue. Immediately it was hauled away.'

The business gradually evolved into a 22-store complex, built to resemble a small western town. Dorothy Hustead passed away in 1996 but founder Ted maintained a managerial presence at Wall Drug well into his 90s, keeping a close eye on his life's work. Ted Hustead died in 1999 at the age of 97. Bill Hustead passed away later that year after battling Lou Gehrig's disease for several years.

In the new millennium, the legacy of Wall Drug continued, drawing people from all over the world to the small and relatively insignificant town of Wall, South Dakota. Except for the idea of Dorothy Hustead, and the enterprising attitude of the rest of the Hustead family, Wall most likely would have continued to go unnoticed. The family's perseverance, however, had created a household word, and a destination for travelers driving down hot, dusty highways looking for ice water and much, much more.

Further Reading:

• Oleck, Joan, 'Roadside Roadblock,' Restaurant Business Magazine, May 1, 1992, p. 46.
• Quinn, Michelle, 'From Here to Hell,' Marketing News, June 19, 2000, p. 10.
• Schneider-Levy, Barbara, 'The Right Gimmick,' Footwear News, September 21, 1998, p. 19.
• 'Wall Drug Store, Wall, S.D., Removes Offensive Wooden Indian,' Knight-Ridder/Tribune Business News, September 1, 1997 p. 901B0955.
• Wascoe, Dan, Jr., 'From Wall Drug to InVision: Through the Looking Glass,' Star Tribune (Minneapolis), April 12, 1992, p. 4D.
• 'A Watery Success,' Chemist & Druggist, December 30, 2000, p. 22.

Source: International Directory of Company Histories, Vol. 40. St. James Press, 2001.

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