Which is the Best? Walgreens vs. CVS

CVS is a company that has been around for over fifty years and focuses on filling the needs of an older population looking to get their medication and other essentials all in a one-stop shop. A very similar business in this niche is Walgreens. Through evaluation of both sets of financial statements from each company, the investor can make a better educated decision on whether or not to invest in stock at CVS.

Walgreen Co. (Walgreens) and its subsidiaries operate a drugstore chain in the United States. “The Company provides its customers with multichannel access to consumer goods and services, and pharmacy, health and wellness services in communities across America” (Walgreen Company). The firm currently operates two mail-order facilities and has 7,752 retail drug stores located across all 50 US states, Guam, Puerto Rico, and the District of Columbia (Walgreens). Prescription drugs account

Walgreens offers a variety of products and services. Based on the economic times, price increases due to increase in wages,

Walgreens has attempted to build satisfaction, value, and loyalty for their customers by remembering that loyal customers are at the heart of their business, and thus rely on a customer-on-top business model. To do this, Walgreens has learned the talent of listening and responding to their customers in the following ways: (1) to respond to the busy lives of their customers, Walgreens allowed them to fill prescriptions at different stores and offered them the drive-thru pharmacy; (2) customers who spoke other languages complained about the labels, and Walgreens responded by printing labels in more than 10 different languages; and (3) when customers with eyesight problems could not read the labels, Walgreens offered printed labels with larger font sizes so that customers could more easily read the bigger text (Berenbaum, n.d., para. 19).

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'.

Walgreen’s drugstore was located in Barrett’s Hotel at Cottage Grove and Bowen Ave on Chicago’s Southside. The neighborhood was prospering but Walgreen’s wasn’t. Mr. Walgreen decided to add brighter lights, expand the aisles (since the other pharmacies were dull and cramped), and add variety like pots and pans (unheard of in a drugstore. The quality of Walgreen’s pharmaceutical compounds met the very highest standards of purity and freshness. Efficiency was increased. But the most dramatic change Mr. Walgreen instituted was a lever of service and personal attention unequaled by virtually any other pharmacy in Chicago. And this was exemplified by Walgreen’s famous “Two Minute Drill” (Walgreen, n.d., p. 3).

According to CVS pharmacy they now offer more than 1,100 Minute Clinic locations inside CVS Pharmacy and Target stores in 33 states. We have expanded services to include diagnosis and treatment of minor illnesses, injuries and skin conditions; administration of vaccinations, injections, health screenings and physicals; and monitoring for chronic conditions.

At present Walgreens appears to be operating in a Horizontal Integration strategy demonstrated through its merger with Boots Alliance and a reported inquiry to purchase Rite-Aid. (Nichols, 2015) Market Penetration is another strategy which Walgreens is presently operating within. Their change in strategy to focus on the customer and improve customer service and relationships is one strategy that is being used to penetrate a market with vast competition that needs a differentiator to remain on top.

Walgreens’ principal activity is to operate a chain of retail drugstores that sells prescription and nonprescription drugs. The company also carries additional product lines like general merchandise including cosmetics, food, beverages and photofinishing. Walgreens is one of the fastest growing retailers in the United States and led the chain drugstore industry in retail sales and profits last year.

Both CVS Corporation and Walgreen Company operate retail drug stores in the United States. In addition to having pharmacies and selling prescription and non-prescription drugs both retailers also sell general merchandise. This includes items like beauty and cosmetic products, convenience foods, household items and film & photofinishing services.

Walgreens on the other hand only focuses on one inventory method. Walgreens uses the Last- In, First-Out (LIFO) method for the entire business. In the LIFO method items bought last are sold first, which also means that the items still in stock are the oldest ones. Walgreens focuses in the method because it limits lower of cost or market approach, but not better than weighted average cost. Basically they

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.

One of these opportunities is to add more health clinics to various locations. CVS is the only competitor that offers these services so they are gaining the entire market share in this area. This would also bring in more prescriptions for Walgreens if patients use the clinic then turn around and fill their prescription at the same time. Walgreens can take after their competitor and stop selling tobacco products to better align themselves with their vision and mission statements. Another opportunity is to expand their private label brand. This can increase their profit margin on certain products if they are producing them. Since Walgreens is the first pharmacy expanding into a global market, they have a huge opportunity of expanding their business and gaining different suppliers. Walgreens will be able to reach different suppliers and customers that their competitors are not able to. The last opportunity that Walgreens is facing is an aging population. Walgreens need to get a head start on capturing the baby boomers business. “U.S. health care spending is expected to grow from 17 percent of gross domestic product to 20 percent by 2020, driven by an aging population and health care reform, which is expected to bring 30 million more people into the system” (“Walgreens outline,” 2014, para. 5). There are 30 million people that Walgreens can potentially capture as loyal customers before

In 2017, Walgreens Boots Alliance Company directly is affected by its competitors and how those competitors do business; the purchasing of Rite Aid from Walgreen for started is only the beginning (Walgreens finally buys Rite Aid stores in a diminished deal, 2017). September 19). One should consider any type of merger or acquisition of properties is only a small part of how the operation is affected and their effects on consumer services and the procurement of those desire products (Business Insider, Essentials, 2018). Furthermore, as a manager for Walgreens begins to transform a Rite Store leaves room for a lot of unanswered question from consumers, as to how will their old insurance provider make the switch with the Walgreens providers in

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).