Walgreens Horizontal Integration Strategy

Placed within an industry being pressured by reimbursement rates, plagued by market saturation, and in constant fear of government legislation, Walgreens is trying to pursue new avenues to promote company growth. In order to promote market share growth in New York, Walgreens acquired the drugstore chain Duane Reade in 2010 (WAG to Acquire NY Institution Duane Reade, 2010). Walgreens also recently expanded their online presence in May of 2011 with the acquisition of drugstore.com (Walgreens Co.). While Walgreens also focuses on traditional organic store growth, these actions exemplify their large focus on promoting company growth through new avenues.

1. The grocery industry is a commoditized industry, which makes it difficult for grocers to sustain through differentiation. Buyer power is high and thus, cost leadership and operational efficiencies are critical. There is fierce competition amongst various grocery stores, with the main players such as Loblaw and A&P holding multi-banner stores in various market segments. Traditional grocery stores also lose some of their market share to drug stores, convenience stores and other retailers who have entered the industry. Threat of substitutes from fast-food and take- away outlets is not as prevalent, since many grocery stores have started stocking ready-to-eat meals and have deli services available for consumers. Competitive

the benefits of a multichannel strategy” (p. 13). Walgreen’s image is about creating value and making shopping either for consumer goods or prescription drugs more convenient.

The second significant change for Walgreens in recent history is the purchase of Drugstore.com, a leading online retail pharmacy, in 2011 for the sum of $409 million. In addition, subsidiary companies of Drugstore.com were also purchased (Beauty.com, SkinStore.com, and VisionDirect.com). 4 Analysts have debated whether the recent acquisition should remain as a stand alone business or whether it should be integrated into the Walgreens business. Proponents of the integration argue that a consistent brand experience which extends from physical stores into the digital web will increase consumer loyalty. Proponents of leaving the online venture as a stand alone entity argue that integration of Drugstore.com into Walgreen’s will open up debate on pricing may diminish the consumer loyalty from Drugstore.com, thus negating the potential increase in sales. Walgreens has made it clear that it intends to leave the newly acquired online businesses as stand alone entities. 5

From 2002 to 2005, Walgreens reported a compounded annual growth rate of 10.1%, growing to $42.2 billion in total revenues. This strong revenue growth was primary driven by organic expansion through new store openings. Since 2002, Walgreens has added 1070 net new stores (22% increase) while CVS has added 1,384 net new stores (25% increase), of which 86%, or 1200 of CVS' store additions, were due to the 2004 acquisition of Eckerd. As a result, although CVS reported an impressive 21% increase in sales from 2004 to 2005 compared to Walgreens 12.5% (a decline from 15.3% in 2003 to 2004), it was primarily due to CVS experiencing the full effect of the mid-2004 acquisition of the 1200 Eckerd stores. Table 3 shows the year-over-year comparison of Walgreens total revenues to CVS'.

Walgreens is also mainly funded by store sales so the company sees long-term potential for about 13,000 U.S. stores. Additionally, the company long-term-expansion strategies are entering new markets, and improving customer service, investing heavily in technology enhancements that improve pharmacy efficiency and reduce costs.

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

This paper will discuss the kroger company’s strategy and competitive advantage. It will also discuss competition and strategy from rival company Walmart. Research will show whether Kroger uses an offensive or defensive strategic approach to business practices. It will discuss mergers and acquisitions of The Kroger Company (Bethel University, 2017).

The competitive prices, countless discount opportunities, and friendly employees keep customers loyal to Walgreens even if they are not making frequent visits to the pharmacy department. This paper seeks to analyze the different components of the drug store industry and the aspects of the marketing strategy of the Walgreens Company that have kept it a strong competitor for so many years.

CVS Pharmacy is the retail division of CVS Caremark. It is also one of the largest Pharmacy Retail Chains in the country and operates more than 7,400 stores domestically. Although the retail pharmaceutical division of this corporation accounts for a significant amount of this company’s success, CVS Caremark focuses more on its corporate strategy to compete with other industry rivals such as Walgreens and Rite Aid. Considering CVS Caremark is the result of the 2007 merger of CVS and Caremark Rx, this analysis will begin with a brief history and the merger of these corporations, its current performance, strategic posture, and the strategic managers of this organization.

A firm’s strategic business plan should consist of its mission, future direction, performance targets and strategy. Walgreens’ corporate strategy, as reflected in its mission statement1, is to provide the most convenient access to healthcare services and consumer goods in America15. To help facilitate this, the company employs such things as online sales, online prescription refill capabilities, offers community health care clinics and monitors the effectiveness of in-store displays to improve customer’s shopping experiences. 12 million people visit its website monthly 15.

This preliminary strategic assessment of Walgreens will describe the company’s current corporate strategy and business model. Walgreens’ acquisitions and mergers will be examined as well as the company’s globalization and competitive frame. A brief overview of how the company is performing and its cost-based business strategy will also be examined. This is the first of four reports that make up the strategic assessment for Walgreens.

We would like to thank you so much for all the hard work that you all have been doing. As Walgreens still continue being one of the top largest retail pharmacy in the United States. Our goal and vision has always been; to be America's most loved pharmacy-led health, wellbeing and beauty retailer and to champion everyone’s right to be happy and healthy and that also include our employees. With that being said we really appreciate your loyalty and the excellent work that you continue to do despite our current predicament.

Page Contact Information .............................................................................................................3 I. Walgreens Overview ........................................................................................................4 II. Strengths..........................................................................................................................5 III. Weaknesses ....................................................................................................................7 IV. Opportunities

According to the article published by Booz & Company, Walgreen, an American Pharmacy store chain implemented a huge structural and design change in order to sustain in the modern business environment. Observing competitive landscape change with new rivals and online players like Amazon and significant changes in healthcare sector, Walgreen decided to change its old expansion policy “Seven by 10 plan” (i.e. 7000 stores by 2010) to ‘improving the customer experience’ policy. In order to implement new strategy they had to move from centralization to decentralization, from tall structure to flatter structure, from authoritative leadership to engaged leadership (Orvis, M.2017).