Posts Tagged 'Walgreens'

Was dropping tobacco a mistake at CVS?

CVS garnered a lot of publicity a few years ago when it stopped selling cigarettes and related smoking products. More recently, the giant pharmacy chain is making a bigger push into “wellness” categories, at the same time that its comp sales show some softness. Here’s my take, from a recent RetailWire discussion:

The comp-sales problem at CVS seems unrelated to their decision three years ago to drop tobacco products. It was the right decision then, and the “healthy” brand positioning makes sense. CVS is not operating in a vacuum, but is competing against Walgreens — which seems at times more interested in being the neighborhood C-store than in selling health-related products.

The trick now for CVS is to build on its tactical steps and brand equity to grow its topline sales.

CVS vs. Walgreens: Who’s easier to shop?

Upon reading a RetailWire discussion about new store merchandising initiatives at CVS, I weighed in with some recent observations of my own:

Given a switch of insurers last January, I’m shopping less at Walgreens and more at CVS. I’ve always had a problem with the navigation issue at Walgreens: It’s just as difficult to find things in my newly remodeled neighborhood store as it was before. And the overassortment of categories having nothing to do with health and wellness may be good for Walgreens’ position as the “neighborhood convenience store,” but it certainly doesn’t help the customer figure things out.

The competing CVS is noticeably easier to shop, with wider aisles and better directional and product signage. If the company takes its execution to the next level — as reported — it could be part of a broader competitive advantage over Walgreens.

Location strategy: Why it still matters

“Location, location, location” is one of the oldest cliches in the retail business, but with more than a grain of truth. With traditional definitions of places to shop breaking down, is location still an important factor? In the context of Ulta cosmetics stores, I argue (on RetailWire) that it absolutely is:

I agree with George Anderson’s premise — that choice of location for a brick-and-mortar store is more important than ever. It’s always been true that the type of location reinforces a store’s brand image and competitive posture: For example, Apple always seemed to choose the “right malls” in a given market, and Walgreen’s model is built in part on a convenience strategy.

But the question of “what’s the right kind of shopping environment” is more complex than ever, and it’s not just triggered by the growth of omnichannel. Most metro areas have at least one secondary or even “zombie” mall; at the same time, consumers are drawn to newer formats like off-price/outlet malls and lifestyle centers. So Ulta is a good example of a retailer deciding strategically not to lock itself into the traditional mindset of “we have to be located just in regional malls.”

Walgreens and RiteAid: The big get bigger

From a recent RetailWire discussion, here’s my comment on the proposed acquisition of RiteAid by Walgreens. The drive to consolidate has never been stronger, and it makes particular sense in an industry wrestling with cost control issues:

Consolidation in the pharmacy industry parallels the same trend among health insurers — not to mention just about every other industry you can think of, from brewers to airlines. Whether the combined Walgreens/RiteAid company can develop more pricing leverage from pharmaceutical suppliers is a different question, even though their store count now far exceeds CVS. Unless I’m mistaken, CVS (through its Caremark subsidiary) is a bigger player in the “pharmacy benefits” side of the industry, so Walgreens still has an opportunity to become a more vertical company in the future.

Changing the Duane Reade nameplate

Walgreens acquired the Duane Reade chain (powerful in New York City) a few years ago and appears to be on a slow transition to its own brand name. I agree with other RetailWire panelists that this is a good idea as long as it’s carefully executed:

I agree with my colleagesĀ on this one. As long as the transition is thoughtful and gradual (starting, perhaps, with the use of the Walgreens name in pharmacy packaging), it can be successful. It’s the same sort of challenge Macy’s faced when it changed several May nameplates (especially Marshall Fields) to its own. In that case, the change happened so quickly that it raised consumers’ ire more than necessary…but in the long term it proved to be a wise move. When you have a national brand identity, you might as well leverage it in perhaps your biggest market.

What defines a “local” retailer?

A recent RetailWire panel discussion focused on a recent study of how consumers define “local” retailers. I found the study to be overly generalized, without considering the size of the market or the type of store. Here’s my take:

The BrightLocal study appears to generalize based on a small sample size of 800 respondents. The definition of “local” will vary greatly from market to market: Surely a New Yorker’s definition is far different from a consumer who lives in a sprawling market where long drive times are the norm. (Think L.A., Dallas and many others.) And the definition of “local” also depends on the type of store: Consumers may be able to drive 20 miles to the nearest Costco store but only a few blocks to the closest Walgreens or Starbucks.

It would take far more data to convince me that 17 minutes is somehow a “magic number.”

Which new concept should Walmart support? Why not both?

RetailWire panelists weighed in on the question of whether Walmart should expand its “Express” or “Neighborhood Market” concept faster. I see this as a false choice, since both small-format stores have specific niches to fill and different real estate opportunities:

There is room for both concepts in the Walmart portfolio. The “Neighborhood Market” concept provides viable competition to conventional grocers, without the bells and whistles (and site planning issues) associated with a full-blown supercenter. The “Market” that I shopped most recently was clean, well-organized and well-stocked with fresh meat and produce, in an area somewhat underserved by traditional supermarkets. It’s certainly a viable alternative to Aldi.

Without knowing about sales results or profitability metrics (leases in high-traffic urban locations, etc.), the “Express” idea is just as compelling. If Walmart pursues anything close to a saturation strategy in cities like New York or Chicago, it’s not just the dollar stores who should worry…it’s Walgreens, too.