Walgreen’s Fresh Food, Alcohol Sales Up The Competition

Deerfield, Ill.-based Walgreen Co. is getting into fresh foods and prepared meals to draw “time-starved” customers to its more than 7,000 stores, Business Week reported

The drugstore chain has been talking with foodmakers including Unilever NV, Nestle SA and Sara Lee Corp. about creating private-label and branded products, according to Bryan Pugh, vice president of merchandising.

“Everyone is time-starved and we have the most convenient 7,000 locations in the U.S.,” Pugh said. “They’re on-the-way-home destinations that are easy to get in and out of and will provide a good value.”

Walgreen first must sort out supply and distribution issues and test in some markets before introducing freshly prepared foods such as salads, cut fruits, ready-to-bake pizzas and sandwiches into more stores.

The goal of the program, along with the sale of beer and private-label wine, which the chain recently reinstituted at about 1,500 of its stores, is to boost revenue, after same-store sales declined in November and December.

Walgreen’s has sold more than 200,000 bottles of wine, at $2.99 a bottle, since the line, which includes chardonnay, cabernet, zinfandel and merlot, was introduced this December under the Southern Point name, Pugh said. A $5.99 private label will be offered in April, he said.

Stores carrying beer and wine have higher average sales per person, he said. That purchase alone pushes up sales in a shopper’s grocery cart as much as 60%, he added.

Walgreen “does have a lot of stores, but I don’t see it as being a venue of choice for consumers,” said Bob Goldin, an executive vice president at Technomic Inc., a Chicago-based food industry consulting firm. “It will be hard for them to establish credibility in freshness and variety. I don’t see it as being a big business driver.”

Target, the second-largest U.S. discount store, also is expanding its food offerings in general merchandise stores under the name PFresh. PFresh stores will have fruit, ground meat and other fresh foods, as well as pre-made sandwiches, salads and other prepared meals in the store’s Food Avenue area. Target has 108 PFresh stores and plans to have 350 by year’s end.









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