Isaac Katz

Author: 
Kansas City Public Library
  • Date of Birth: March 8, 1879
  • Place of Birth: Husiatin, Russia (present-day Ukraine) 
  • Claim to Fame: founder, Katz Drug Co.
  • Also Known As: "Ike" Katz
  • Business Slogan: "Katz pays the tax"
  • Spouse: Minnie Baranov
  • Date of Death: November 9, 1956
  • Final Resting Place: Rose Hill Cemetery
     

Isaac "Ike" Katz, who would go on to found the Katz Drug Co. in Kansas City and become a pioneer in the modern pharmacy business, was born in the town of Husiatin in western Ukraine (then a part of Russia) on March 8, 1879. Ike Katz brought customers into his drug stores with a unique business model, where customers could fill prescriptions, shop for groceries, buy appliances, and even purchase exotic pets such as monkeys or baby alligators; all at cut-rate prices. At its peak in the 1950s and 1960s, the company boasted 65 retail locations spread across seven states.

Isaac Katz
Isaac Katz. Courtesy of the Missouri Valley Special Collections.

Katz emigrated from Ukraine in 1892 with his family to St. Paul, Minnesota, at the age of 13. The family struggled to make ends meet in their new home, making it necessary for Ike to drop out of school while still a teenager to earn a living. He sold newspapers on the Great Northern railroad, where he struggled to overcome a foot injury sustained in a school baseball game. In addition to newspapers, Katz sold souvenirs, postcards, blankets, and straw mats to weary passengers. When the journeys were over, Katz collected the discarded mats and resold them to new customers. He gleaned key principles of business management from these experiences, especially the value of salesmanship and the importance of carrying merchandise that appealed to his customers' desires.

In his early 20s, Katz left the railroads, and considered using his $300 in savings for a surgery in Chicago to repair his debilitating foot injury. As fate turned out, the surgeon was out of town, but Katz luckily met his future wife, Minnie Baranov. He used his money for the marriage, and never did have a foot surgery. (His foot continued to bother him for the rest of his life.) On the advice of a friend, named Charley Kieferstein, Katz came to Kansas City to search for a new line of work. He opened a fruit stand on Union Avenue in the West Bottoms and made a successful living. Ike's younger brother, Mike Katz, joined him and opened his own fruit stand nearby.

Two major events, both completely out of the Katz brothers' control, led them almost by accident into the drug business. First, in 1914, the new Union Station opened south of downtown, replacing the old Union Depot in the West Bottoms. The city's railroad traffic and related commerce flowed to the new location. The Katz brothers left the West Bottoms and jointly opened two cigar stores nearer to Union Station. One was in the Argyle Building at 12th and McGee, and the other was at 8th and Grand. For three years, the brothers worked 19-hour days and struggled to keep their business afloat.

The second event pushed the Katz brothers into converting their cigar store in the Argyle building into a drug store. The United States entered World War I in 1917. The federal government placed the economy on a wartime footing, which included the mandated 6 p.m. closing of all stores – except drug stores. To keep his shop open in the evening, Katz immediately located and hired a pharmacist and a stocked small supply of medicines. Purely by coincidence, the Argyle building housed several doctors' offices. Their patients found it convenient to fill their prescriptions at the new Katz drug store.

Perhaps more so than pharmaceuticals, however, the Katz store brought in new customers through the clever marketing and pricing of cigarettes, which had become more expensive due in part to the imposition of a wartime tax. Fortunately, Ike had purchased a large supply of cigarettes shortly before prices rose. Katz Drug could now sell these cheaper than its competitors. Ike's clever sense of marketing came into play when he realized that customers resented paying the new tax on cigarettes, so he used his price advantage to proclaim, "Katz pays the tax," and sell the merchandise at pre-tax price levels.

During the 1920s, the Katz Drug Co. expanded into a chain of stores that served as a model for the modern drug store. Advertising campaigns, a wide variety of novelty merchandise and staple goods, and low prices kept customers coming through the doors. Besides filling prescriptions, customers could stock up on groceries and household supplies, and buy more exotic items, including pet alligators and monkeys.

The business model made the Katz Drug Co. one of the most profitable of its type in the world. In 1934, in the midst of the Great Depression, the Katz brothers opened their first building outside the central business district, at Main Street and Westport Road. The building was the first major commission for architect Clarence Kivett (a nephew of Ike and Mike), and when it opened it was the largest drug store in the world at 20,000 square feet. The store hosted 29 cash registers, parking assistance, air conditioning, and the company's trademark sign with a large black cat wearing a bow tie. The logo was of course a play on the name Katz.

In the 1950s, Ike's son, Earl, took over the management of the business. The company's sales volume reached $100 million annually by 1971, when it merged with Skaggs Drug Cos. In 1985, Skaggs merged with American Drug Stores, and the stores were re-named Osco. Finally, in 2006, CVS/pharmacy bought out Osco and closed the historic store at Main Street and Westport Road. Currently the building is on the Kansas City Register of Historic Places and is currently used as a studio space for artists. Its unique art deco clock tower remains a familiar sight in Westport.

Although the Katz brand has disappeared, Ike Katz left his mark on Kansas City history. Ike was generous through the years to many people and organizations. Among the beneficiaries of his generosity were the Menorah hospital, the Keneseth Israel Beth Sholom Synagogue, the Kansas City Art Institute, and the Kansas City Philharmonic. In exchange for a generous donation to the latter, Ike Katz received an annual "Katz concert" put on by the orchestra for his family, employees, and friends. Less happily, Ike had to pay a $100,000 ransom in 1929 to rescue his brother Mike from kidnappers. On a smaller level of giving, friends and casual acquaintances long remembered the free merchandise samples that Ike Katz famously handed out from the custom-made large pockets in his suits.

His greatest contributions, however, came from his entrepreneurship in the pharmacy business. Katz pioneered the business model combining pharmacy, grocery, and general store services that is still in use by the major drug store chains. In the years since 1956, when he died at the age of 77, this accomplishment has not diminished.

Acknowledgement: 

A previous version of this article appears on kchistory.org: http://kchistory.org/week-kansas-city-history/katz-cradle

KANSAS CITY PUBLIC LIBRARY | DIGITAL HISTORY
Civil War on the Western Border: The Missouri-Kansas Conflict,1855-1865.
The Pendergast Years, Kansas City in the Jazz Age & Great Depression.
KC History, Missouri Valley Special Collections at the Kansas City Public Library.