Receive up to a $100 bonus with your prescription delivery!* Let's Go Get up to $100 to Try NowRx Risk-Free* (844) 466-6979
Blog

What will it take for Walgreens to wake up?

This article was written by Joe Cahill and originally appeared in Crain’s Chicago on Business. View the full article here.

Facing obsolescence in rapidly changing health care and retail markets, the drugstore chain stubbornly clings to a brick-and-mortar strategy at the expense of digitizing the customer experience.

For many Americans, the local Walgreens store used to be the only place to get prescriptions filled, and the most convenient place to buy everything from lightbulbs to laundry detergent.

Not anymore. Nowadays, many people get their prescriptions by mail and buy household sundries from Amazon and other online retailers. Same-day delivery of internet orders makes a trip to the neighborhood drugstore much less convenient. Where does that leave Walgreens’ 9,000-plus U.S. drugstores? Facing obsolescence in rapidly changing health care and retail markets. Financial results at Deerfield-based Walgreens Boots Alliance reveal the fading relevance of a nationwide brick-and-mortar fleet that once cowed competitors. During the recently completed fiscal first quarter, pharmacy sales at stores open at least a year grew by a disappointing 2.5 percent as prescription volumes came in light. Same-store sales of “front-end” merchandise fell 0.5 percent, extending a multiyear string of quarterly declines in a category that has historically generated a big share of Walgreens’ profit. Management attributes front-end sales woes to deemphasizing tobacco sales and purging low-margin merchandise. Still, Walgreens’ operating profit margin shrank to just under 3 percent in the quarter from just above 4 percent a year earlier. Yet CEO Stefano Pessina continues to pursue growth strategies centered on physical stores. A couple of years ago, he paid $4.4 billion to acquire 1,932 locations former Rite Aid locations. He stocked U.S. stores with a line of in-house cosmetics popular in the company’s U.K. outlets. He’s adding in-store clinics in hopes of turning Walgreens stores into “neighborhood health destinations.” Even his partnerships with insurance companies are predicated in part on the expectation that they will drive more customer traffic to stores. It’s not hard to understand why Pessina and his lieutenants may be reluctant to acknowledge the waning value of Walgreens stores. Walgreens has billions invested in brick-and-mortar. For decades, its sprawling network of stores created the heft to dominate markets while steamrolling smaller chains and independent pharmacies. But numbers don’t lie. New technologies and industry transformation have weakened Walgreens stores, whether Pessina accepts it or not. Investors can read the writing on the wall. Over the past year, they’ve sent Walgreens stock down 26 percent, while shares of archrival CVS Health rose 10 percent. CVS reduced its reliance on traditional retail by building an integrated business model comprising a pharmacy benefit manager and a major health insurer. If Pessina doesn’t change course, Walgreens could go the way of other retailers that clung too long to brick-and-mortar. Nearly all the growth in retail is going to Amazon and other online merchants, which offer customers a level of convenience they can’t get from traditional stores. A simple mouse click brings books, clothing, sporting goods, consumer electronics and a vast array of other purchases to the doorstep within a day or less. There’s no reason to think the same approach won’t work in the retail pharmacy business. People don’t particularly enjoy driving to a store to pick up prescriptions. In fact, it’s one of the more-annoying chores of everyday life. Most would jump at the chance to order drugs online for quick delivery. And Amazon has made clear its interest in giving pharmacy customers that chance. A shudder went through the industry a couple of years ago when the online behemoth made its first public move toward offering retail prescriptions. It’s proceeding slowly, as it often does before launching an onslaught. But make no mistake, Walgreens’ business is ripe for digitization. Somebody is going to offer a fully digitized customer experience. Imagine getting a prescription from your doctor, entering it in your smartphone, having a quick online consultation with a pharmacist and getting the drug delivered to your house within hours. There’s nothing far-fetched about that scenario. The big question is who will make it happen on a large scale. And there’s no reason why Walgreens shouldn’t be the one, given its strong reputation as a retail pharmacy. “It’s still a good brand name,” says Erik Gordon, a professor at the University of Michigan’s Ross School of Business. “I would go online and use the brand name.” Read the full article here at Crain’s Chicago on Business.


About NowRx NowRx is an on-demand pharmacy, founded with the goal of using software, artificial intelligence, robotics, and smart logistics to create the best retail pharmacy experience possible. Specializing in free same-day delivery of prescription and over the counter medications, NowRx hand-delivers medications right to your door in hours with its fleet of friendly HIPAA trained drivers. By removing the need to visit the pharmacy, NowRx’s hopes to increase medication adherence and provide a more convenient pharmacy experience for millions of people. Learn more at https://www.nowrx.com/.

Submit a Question

Please enter your question below and a NowRx Pharmacy Team member will respond as soon as possible.

Click to Call (844) 466-6979

Call Toll Free
(844) 466-6979

suggest a new location

NowRx Pharmacy will notify you when we expand our free prescription delivery services to your area

Click to Call (844) 466-6979

Call Toll Free
(844) 466-6979

Learn More About NowRx Pharmacy

Fill out the form below and a member of our pharmacy team will reach out to you within 24 hours. Alternatively you can check out our Frequently Asked Questions page or send us an email at info@nowrx.com.

Click to Call (844) 466-6979

Call Toll Free
(844) 466-6979

NowRx Doctor Feedback Program

Fill out the form below and a member of our pharmacy team will reach out to you within 24 hours to provide details on how to get started.

Click to Call (844) 466-6979

Call Toll Free
(844) 466-6979

Building A Better Pharmacy for
Our Doctors & Patients

Learn Why More Than 4,500 Physicians Trust NowRx!

Make NowRx My Default Pharmacy

Fill out the form and we'll let your Doctor know to fill your next prescription with NowRx.