The Outsider’s Perspective at Bartell Drugs

Brian Unmacht, the first non-Bartell to run Bartell Drugs, knows his mission is to keep the family-owned business relevant in the face of stiff competition.
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Brian Unmacht spent six years working at his father’s drugstore company and, after college, 27 years at REI, before becoming only the fourth CEO in Bartell Drugs’ 126-year history. Now he’s intent on using local partnerships to make Bartell a strong competitor to the national drugstore chains. 

FAMILY: My father had been an executive at the Bon Marché. In the 1970s, he formed his own chain of small drugstores in rural areas. I spent six years in high school and college working for my dad and eventually managed one of his stores. We were a $20 million business and I computerized the record keeping and did the finances and everything. It was a sort of love/hate thing because you could never separate the business from the family. But I appreciate having had a chance to work with my dad. In 1980, 19 percent interest rates and the recession did us in. We had loyal customers, but customers still went for price and selection when grocery stores started competing with us.

TRAVEL: After college, I spent a year backpacking in Nepal and Pakistan and skiing in Europe. When I returned, I had no money, so I went to work for REI. They had seven stores and a catalog and were beginning to expand beyond the Northwest. I managed the Tempe store in Arizona, opened the Chicago store and then worked on the store in Japan as vice president of international. That was an exciting time.

RETAIL: In the ’80s, it was Walmart that dramatically changed retail as it sourced overseas. In the last 15 years, it’s been Amazon. You’re always going to have disrupters. It comes down to how do you keep yourself relevant? In the recession of 2009, the number of paddling and canoe shops in the country dropped to 1,500 from 2,500. With fewer distribution points, vendors like North Face were trying to increase web sales. At REI, our value proposition was to provide expertise and credibility. North Face would give REI an exclusive for a certain time because of that. It was a win-win.

BARTELL DRUGS: I’ve come full circle. Now I am back in the drugstore space. We are up against $120 billion retailers like Walgreens and CVS. How do we find unique products and services that they can’t carry in their 8,000 stores? We offer assortments of local candy like Theo or Seattle Chocolates. We partnered with Snoqualmie Ice Cream to sell our own brand. At our Bellevue store, we offer scooped ice cream. If you go to Fourth and Madison downtown, we have a partnership with Caffé Vita for the espresso, and with other local vendors for sandwiches and other food offerings.

BEER: Bartell always sold beer but it tended to be Budweiser and Heineken. We put in a beverage buyer who had a passion around craft beer and empowered him to form partnerships. Now we have a partnership with Two Beers Brewing Co. to do a Tangerine IPA limited run. Last year, we did Bartell Spring Elixir with Fremont Brewing. We have 150 partnerships with other locally owned firms.

FAMILY BUSINESS: There have only been three top executives [before me] at Bartell’s over 126 years and they were all named George Bartell. Being family owned, we’re part of the community and take the long view. I tell employees that’s not enough to be relevant. There are a lot of family-owned businesses that fail. 

OUTSIDER: The family put together an outside board five years ago to get a wider point of view and I was put on the board. The family recognized there was going to be a gap before the five cousins in the fourth generation were ready to manage the company. That’s why they brought me in as the first outside manager. With revenues of $500 million and growing, management was also getting more challenging. Evelyn Merrill, the oldest of the cousins, is senior marketing manager. She has a lot of good ideas and is challenging the third generation in terms of her view of the brand.

STORES: We have 62 stores. We are talking about adding two to three stores a year. Today, we’re primarily in King and Snohomish counties, but I want to look at Whatcom [County], Bellingham, Poulsbo, Bainbridge Island and potentially farther south. With the Walgreen/Rite Aid merger, some Rite Aid stores will probably be divested. If the right stores came on the market, we would be interested. The Greater Seattle area is still booming, and with more density there is room to put a lot more drugstores in convenient places. 

HEALTH CARE: We do flu shots now, but we are looking at providing other immunizations as well as testing for strep throat or flu so that you don’t need to go to your primary care doctor every time. Because of our concentration of stores in Greater Seattle, our share of the pharmacy business is right up there with Walgreens. It’s important that we have that scale to work with the insurance plans. We had a pilot program to have Group Health clinics in 25 of our locations, and Kaiser [which is acquiring Group Health] seems interested in continuing the concept.

COST OF DOING BUSINESS: I worry that in five years, if Seattle’s not booming anymore, what does it mean if you’ve raised the fixed cost [by raising the minimum wage]? But I worry less about the minimum wage than the growing congestion issue. I have 2,000 employees who live all over the Puget Sound region. We have to move freight around. Congestion is a bigger and bigger issue. 

EXECUTIVE Q+A RESPONSES HAVE BEEN EDITED AND CONDENSED.

Executive Q+A: Seattle Mayor Ed Murray

Executive Q+A: Seattle Mayor Ed Murray

He wants the city's strong-mayor system to have a more robust organizational structure.
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Under Ed Murray, Seattle has become recognized nationally for promoting progressive policies like the $15 minimum wage, but he also sees the need for more centralization in the mayor’s office to implement better controls over the city’s large bureaucracy.
 
EARLY YEARS: My father was a logger. Two of my uncles died in logging accidents. Later, Dad worked for Bethlehem Steel. He went to business school and ended up on the business side of the Port Blakely Companies and finally worked at the state Department of Natural Resources. As a large Catholic family, we sometimes struggled financially. I had paper routes, washed dishes and even picked blueberries — a job I hated — for clothes and to pay for dental work. In college, I worked full time so I could get insurance.
 
POLITICS: I’ve wanted to be in politics since I was 5, when John F. Kennedy was running for president. There was so much excitement. We stayed up later [on election night] and in the morning, we ran into my parents’ room and jumped on the bed to find out who was elected. There is this natural interest in politics among the Irish in America. I have cousins who’ve been elected mayor in the New Jersey and New York areas.
 
DRIVE: When you grow up where food doesn’t come easy, it’s almost a double fear that you will end up destitute. When you have opportunities like I’ve had in life, you absolutely want to spend every moment making it work. I’m driven and I look for people who are driven. At times, I’ve had to dial back the way I drive others. 
 
MAYOR’S OFFICE: This city has a strong-mayor system. Unlike in Boston or New York, I don’t have to [get city council approval] to raise the minimum wage or do a [child care] program. But we have a fairly small mayor’s office compared to other large cities. I’m responsible for 14,000 city employees in 28 different departments, including Seattle City Light and Seattle Public Utilities, but I have little ability to do independent oversight. We don’t have the controls that the governor’s office has with the Office of Financial Management. For the day-to-day administration, we need another level of centralization so, for example, we can build projects on time and on budget. We’re looking at ways to use statistics to measure performance. How do we monitor construction in real time to catch problems early?
 
BIG CITY: In my first two years in office, Seattle went from the 20th to the 18th largest city [in the United States]. That [growth] creates challenges. I’ve brought in some of the most innovative people in the country to work in the mayor’s office, to be directors of departments to take us to that next level. I focused on folks who’ve come from big cities because we don’t have a lot of depth when it comes to big cities.
 
PROUDEST ACHIEVEMENT: The fact that we have been able to pass five ballot measures in two years to really catch this city up on transportation, parks and bus service. Maybe our pre-K [early learning] program will be, in the end, the most significant. If we get this right, we will radically change the outcome for those young people.
 
BUSINESS REGULATION: I worry about the impacts on the smallest businesses in the city. In a city that is rapidly changing, their situation is the most precarious. We need to do a better job on how we engage and assist them. That’s why I brought in Brian Surratt as director of the Office of Economic Development. But many of the things we have done, we have done with with business. Business was there on pre-K and transportation. If we don’t have a transit system that works, business doesn’t work. Even on minimum wage, business is not happy, but we created a model of phasing it in that has become a model around the country. With the housing levy, developers for the first time agreed with low-income-housing advocates to accept a requirement to build or pay for affordable housing in exchange for increased density in our urban villages. This has been a collaborative process. I do worry at times that some on the council don’t understand that most businesses operate on the margin. I do worry that there could be a piling-on effect without understanding the full implications of that. But business needs to do a better job of articulating what they want and not simply what they are against.
 
BUDGET: We have to be really sensitive to levy fatigue because we have a really regressive tax system that leaves us few choices other than property taxes. Having said that, the housing levy did pass by 70 percent. That was the fifth levy I had sent out in two years. I do need to add that Seattle’s tax burden is less than some of our suburban cities. Still, there are real risks here. On every budget speech I give, I remind the council that a lot of increased revenue we have received is off of construction that will ultimately slow down. We are keeping a high reserve to prepare for worse times.  
 
HOMELESSNESS: The first year I was in office was the last year of the 10-year plan to end homelessness. The city identified and built every unit it said it needed to end homelessness and yet the problem is worse. We need to be innovative about finding new ways to deal with homelessness. But the myth that Seattle can solve this problem hurts the homeless. Seattleites are pointing at each other for a problem that only the nation and state can help us solve. We’ve stepped up big time, but there is this issue of income inequality, and the massive heroin epidemic in this country while the government is retreating from its responsibilities. We are number 47 in what we spend on mental illness in this state. What disappoints me is the folks in Seattle don’t realize that towns up and down the West Coast all have homeless crises. That’s an area I have to own a failure — not being able to create a dialogue to create a bigger movement.
 
TAKE 5: GET TO KNOW ED MURRAY
 
HERO: “When I was 13 or 14 and Wes Uhlman was elected mayor at 34, I read an article in the Seattle P-I that showed a picture of him on the balcony of the old City Hall. That’s when I wanted to be mayor.
 
FAVORITE VACATION: Visiting the Washington coast with his husband, Michael Shiosaki.
 
A LIFE IN POLITICS: Murray once confided to reporter Joel Connelly: “In 18 years, I have never been on a vacation where we haven’t been interrupted by some legislative crisis or some controversy in the media.”
 
TRUTH TELLER. “The biggest myth is that we have a large tax burden. We are the 18th-largest city [in the country], but in terms of tax burden, we are something like the 50th.”
 
GO, PILOTS. Murray was born in Aberdeen in 1955 and grew up in West Seattle and Lacey. He has a sociology degree from the University of Portland.
 
EXECUTIVE Q+A RESPONSES HAVE BEEN EDITED AND CONDENSED.