A Strategic Analysis of Walgreens and the Retail Drugstore Industry

17582 Words 71 Pages
Introduction

Knowing the importance of a strategic vision, every company undertakes a complete analysis periodically. In order to create a strategic plan the parties involved must know every aspect of the industry and the company at hand. The purpose of this paper is to describe and analyze the retail drugstore industry and then focus on Walgreens, the industry leader in terms of sales. As part of the in-depth analysis of Walgreens, its major competitors will also be described and analyzed. The retail drugstore industry consists of all those stores that contain a pharmacy and sell prescription drugs. It also includes businesses that sell prescription drugs online and through the mail. Most retail drugstores also offer other
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Currently, the most frequent users are children under 10 and seniors over the age of 65. The buyers of health and beauty aids also consist of a wide range of users. Younger users tend to buy hair care and hygiene products initially, then add cosmetics and skin care items as they mature. The addition of a wide range of household items, including kitchenware, toys, pet care items, and lawn care items has enhanced the appeal of the drugstore as a one-stop shopping destination, where frequently used items can be picked up while a prescription is being filled. The development of a strategy that focuses on convenience items will further broaden the target market.

The sale of pharmaceuticals is considered to be a recession-proof industry, as medications are a necessity. However, drugstores are impacted by factors such as payment rates offered by third-party providers, prices charged by drug manufacturers, and legislation impacting the extension of drug patents. Obviously, the sale of non-drug items is not recession-proof.

Suppliers: Drugstores obtain their prescription drug products from the drug manufacturers. Drug manufacturers have been accused of discriminatory pricing due to a practice of selling products to HMOs and mail-order houses at prices 40% to 60% under the price charged to community drugstores. The community drugstores have filed a class-action lawsuit in response to this practice. Many drugstores use large wholesalers as

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