Walgreens Foodservice Future

Published in CSP Daily News

Drug store chain clarifies vision for sushi, onsite preparation as concept champions depart

By  Angel Abcede, Senior Editor/Content Development Coordinator

DEERFIELD, Ill. -- Though publicly standing by its foray into onsite preparation of sushi and other upscale meals, drug store giant Walgreens recently endured the departure of two of the concept's biggest internal champions, leaving some industry observers to question if that level of foodservice will survive.

Last month, Joseph Magnacca, executive vice president and president of daily living products and solutions for Walgreens, left the company and took on the role of CEO at Fort Worth, Texas-based RadioShack Corp. Magnacca was president of Duane Reade, a New York City-based chain that originated many of the high-end foodservice concepts Walgreens adopted with its transformation. Walgreens acquired Duane Reade in 2010.

Soon after news of Magnacca's departure, Michael De Fazio, one of the architects behind the new Duane Reade stores who also worked on the Walgreens adoption, followed suit, joining RadioShack as its senior vice president of store concepts.

While scarcely addressing the departures at its last investor call, Greg Wasson, president and CEO of Walgreens, said, "As far as the change in the leadership, certainly our strategy has not changed [and] will not change. We feel very good with our … format."

But Jim Fisher, CEO of IMST Corp., Houston, has seen the scenario play out before, citing how Atlanta-based Home Depot's foray into c-stores took a quick turn south when its leadership changed. "You'll see things flash out as quickly as they flash in," Fisher said of the life expectancy of new concepts when corporations switch leadership. "If you don't have 130% commitment, then you don't … allow it to morph into what it could be. Obviously, it's the vision of a few and not the commitment of many."

With Deerfield, Ill.-based Walgreens foodservice transformation being so dramatic, Fisher and other industry consultants believe it is natural to consider the vitality of the concept going forward minus its biggest champions.

Walgreens officials said such talk is "rumors and speculation that aren't based on any facts or actual decisions."

Backing Wasson's assertions, Michael Polzin, part of the corporate communications team at Walgreens, made distinctions between its "flagship" stores--which tend to be grander in design and earmarked for high-traffic, urban sites--and its "Well Experience" locations, which focus more on the side of a "revamped pharmacy and health care experience, and a number of new product selections."

He responded to CSP Daily News by making several clarifications:

*Extent of certain foodservice programs. Regarding the placement of services such as fresh sushi, fresh baked goods, frozen yogurt, etc., those are all elements that Walgreens has placed in its flagship stores, "but there never was any intention of rolling out these services beyond those flagship stores to our new Well Experience stores." And while Walgreens has rolled out things like packaged sushi to Well Experience and other locations, it never intended to have sushi chefs at stores beyond its flagships. 

*Prepackaged proprietary expansion. Its "Nice!" and "Delish" lines will continue rollout.

*"Food Oasis" growth. Its initiative to open more "food oasis" sections in stores that are located in so-called "food deserts," or neighborhoods lacking accessible places to buy healthy food and produce, will also continue expansion.

In addition, Walgreens is planning new flagship stores, with locations opening up in the next two months in Boston and San Francisco.

In the end, the question for the c-store channel as it expands into foodservice is what impact Walgreens' efforts will have in that growing category. "I haven't seen anything fresh at any Walgreens anywhere but in urban centers," Fisher of IMST said. "To say what impact it had on fresh food in c-stores, I don't think it's had any."

With fiscal 2012 sales of $72 billion, Deerfield, Ill.-based Walgreens provides more than six million customers goods pharmacy, health and wellness services and advice in communities across America. Walgreens scope of pharmacy services includes retail, specialty, infusion, medical facility and mail service, along with respiratory services. The company operates 8,071 drugstores in all 50 states, the District of Columbia and Puerto Rico. Take Care Health Systems is a Walgreens subsidiary that is one of the largest managers of worksite health and wellness centers and in-store clinics, with more than 700 locations throughout the country.

By Angel Abcede, Senior Editor/Content Development Coordinator
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