Leading retail pharmacy chain Walgreen Co. (WAG) has recently undertaken an innovative initiative to enhance its sales and distribution by launching Web Pickup service across Chicago. The program will enable customers to shop online at Walgreens.com and pick up the placed orders at the Walgreen stores within an hour. The non-prescription items will be available online through the service.
The service is already available at 27 Walgreen stores in California. However, the company has chosen Chicago for the first full market roll out of the Web Pickup program. Presently, Web Pickup is available at 300 locations in the Chicago metropolitan area. The full market roll out across 480 locations is expected to be completed by August, 2011.
Walgreen offers pharmacy benefit management (PBM), mail service, home care and specialty pharmacy services through its Walgreen Health Services division. The company’s pharmacy sales are expected to accelerate due to the ageing population and the continued development of innovative drugs that improve the quality of life.
Moreover, in order to enhance customer experience, Walgreen has adopted a strategy of Customer-Centric Retailing (CCR), which refers to developing store formats, pricing, promotions, and vendor relationships.
The company is working toward establishing itself as a leading provider of pharmacy, and health and wellness solutions. The company has made continuous efforts over the last few years to align its assets with core strategies. Further, generic introductions continue to boost the number of prescriptions filled.
We are encouraged by Walgreen’s recent strategic decisions, including the sale of the PBM business and the acquisition of drugstore.com. Moreover, the company has made satisfactory progress with respect to the CCR rollout and in meeting the targeted savings under the rewiring initiative. The company witnessed traffic growth of approximately 50% over the last two years. Thus, new program development and emphasizing on customers convenience should prove beneficial for the company going forward .
However, Walgreen has been impacted over the past few quarters by high unemployment levels and lower discretionary spending. Moreover, we are concerned about the company’s recent decision of not renewing its contract with pharmacy benefit manager Express Scripts (ESRX). Currently, we remain ‘Neutral’ on Walgreen.
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