Inside This Issue - News
Walgreens poised to bolster food offerings
July 19th, 2010
DEERFIELD, Ill. – Later this summer Walgreen Co. plans to give its customers a taste of Duane Reade’s successful private label program as it continues to ramp up its food offering.
Beginning in August, Walgreens stores chainwide will offer an initial selection of Duane Reade’s Delish private brand consumables, Walgreens chief executive officer Greg Wasson said in a conference call with analysts about the company’s fiscal 2010 third quarter earnings.
Walgreens declined to provide additional details about the plan. However, a company spokesman noted that Duane Reade’s DR Delish private brand was a key attraction for Walgreens when it announced its acquisition of the 258-store metropolitan New York drug chain in February.
“We believe that this business represents an excellent strategic fit with Walgreens,” Wasson told analysts in the call. “Since the acquisition we are even more excited with our capabilities in urban retailing, loyalty, private brand and beauty.”
Duane Reade launched the upscale DR Delish brand at the end of September with 25 food and beverage items, including juice, tea, trail mix, baked potato crisps, multigrain snacks, brownie snacks and cookies. Since then the retailer has significantly expanded the brand.
The move comes as Walgreens has begun expanding its food and beverage offerings as a way to spur customer visits and boost the shopping basket.
Walgreens has added beer and wine in over 3,600 stores, up from around 1,600 stores as of late January. And Deutsche Bank Securities analyst Bill Dreher noted that Walgreens plans to have beer and wine in 5,000-plus stores by the year’s end.
Walgreens, too, plans to test chilled foods in as many as 12 stores this fall, Dow Jones reported earlier this month. The report cited a Walgreens spokeswoman saying that the retailer may sell such items as sandwiches, fresh cut fruit, soups and wraps. Other sources also indicated that the test may involve about 50 locations in the Chicago area in September, according to Dow Jones.
In January, Walgreens confirmed that it hired a divisional merchandise manager of fresh foods, and published reports said the retailer was looking to roll out a selection of freshly made foods such as salads, sandwiches, cut fruit and pizza. And in early March, Duane Reade opened a 15,000-square-foot store in Manhattan’s Chelsea district in which the food section comprises about 40% of the space, including a greatly expanded fresh food and grocery offering.
Walgreens rival CVS Caremark Corp. also has recently given more emphasis to food. CVS has given more space and a more prominent presentation to food in some stores and has touted “hundreds of new grocery items”and “our newly expanded food selection” in marketing materials.