Inside This Issue - News
Walgreens ups the ante in food category
February 15th, 2010
DEERFIELD, Ill. – In support of its efforts to add perishable food offerings to many of its stores, Walgreen Co. has hired veteran convenience store executive Jim Jensen to serve as its new divisional merchandise manager of fresh foods.
Jensen comes to Walgreens from Fresh & Easy Markets, the convenience-oriented food chain that is operated in California, Arizona and Nevada by British retailer Tesco PLC. Jensen was Fresh & Easy’s director of fresh foods, and before that he spent 14 years with 7-Eleven Inc.
Walgreens has said that it intends to offer fresh food items and prepared meals at many of its drug stores. The aim is to boost sales and traffic.
“Everyone is time-starved, and we have the most convenient 7,000 locations in the U.S.,” Walgreens vice president of merchandising Bryan Pugh told the Bloomberg news service recently. “They’re on-the-way-home destinations that are easy to get in and out of and will provide a good value.”
Walgreens officials have not announced a timetable for the addition of fresh food offerings to the company’s stores, nor have they spelled out exactly what those offerings will likely include.
The company points out that it still needs to work out product sourcing and distribution issues, and then needs to test the new departments in some markets to see how consumers respond.
Analysts say the move could benefit Walgreens by drawing customers to its stores more frequently and increasing the amount they spend there, but only if the chain can convince shoppers that it is a credible place in which to buy such items as prepared salads, diced- fruit cups, sandwiches or ready-to-bake pizzas.
Walgreens is hardly the only retailer targeting time-starved food shoppers. Many supermarkets have expanded their offerings of prepared and ready-to-cook meals, and Target Corp. recently announced plans to add fresh food departments to many of its conventional discount stores. Gas stations and convenience stores also compete in this space, analysts point out.
At the same time, Walgreens has shown that convenience food and beverage products can work well in its stores. The drug chain is selling private label wines at about 1,500 of its locations, for example, and has found that stores with beer and wine have higher average rings.
Last fall, the chain bulked up its food offerings in two Chicago stores located in communities that are underserved by grocery stores.
That move, which is due to repeated in nine other outlets in the city and may be repeated in other urban locations, came after scanning data for the stores showed that they were selling nearly twice as much milk as other Walgreens outlets, and three times as much bread.