EXCLUSIVEBRANDSOURCING RETAILER/WHOLESALER ...

EB Identities: Walgreens (OTC drugs, vitamins, health & beauty items), Nice! (grocery and
household products), W (flagship brand covering commodity items, personal care), good &
deLISH (premium foods, snacks, beverages), Finest Nutrition (vitamins and supplements),
PetShoppe (pet supplies), Studio 35 Beauty (cotton balls, personal care, professional beauty tools,
hair dryers, etc.), Living Solutions (general merchandise), ology (laundry detergent, fabric
softener, household cleaners, CFL bulbs, paper products, personal care, etc.--all free from harmful
chemical), Prevail (department store quality beauty care items at Duane Reade)
EB skus: 2,500+
Profile: Following an excellent fiscal 2011 performance, Walgreens stumbled in this fiscal period,
owing to a weak US economy and a disruption of its Express Script agreement (rewritten in
September as a multiyear contract). Net earnings fell by 21.6% to $2.1 billion. Its core business,
prescription sales, traditionally taking 65% of total sale in recent years, dipped to a 63% share in
fiscal 2012. Walgreens’ retail prescription market share is now at 18.7%. Nevertheless, prospects
for heightened growth are evident from a number of its different initiatives, such as its rollout of
Well Experience format--now in 350 stores, and the completion of its three-year plan to refresh
some 5,000 Walgreens stores in its chain with a “customer-centric retailing” strategy. Walgreens
also has a number of pilot formats being tested, especially in its flagship stores located in a few
major US cities. The flagship store in Chicago, for example, orchestrates a format strategy of five
sections: pharmacy, take care clinic, LOOK boutique, upmarket (café+wine+cheese+humidor),
and eat well (fresh convenience foods and bakery items). Walgreens also is redesigning its
pharmacy area into more of a service-oriented environment that encourages interaction between
the pharmacist and customers, visiting Walgreens for vaccinations, health tests, physicals and
treatments, etc. One pilot store format program, called Well at Walgreens, opens services to the
customer and in some stores includes a Take Care Clinic. In markets, which are ill served by
stores with fruits, vegetables and other staples, Walgreens is filling in the vacuum with a “food
oasis” store format, featuring fresh fruits and vegetables, etc. Also auspicious for its future,
Walgreens has been beefing up its private brands initiative. In 2011, it rolled out its Nice! brand
400-item range. This has since spread across multiple product categories in dry groceries, frozen
foods, beverages, nonfood groceries, etc. After Walgreens acquired the Duane Reade drugstore
chain in New York City, its DR deLISH premium range of food and beverages was adopted by
Walgreens as the good & deLISH brand. It is now spreading across numerous product categories
as well. Inspired by the Well at Walgreens pilot format program, the company is now phasing in a
Well at Walgreens private brand into its OTC products, where well-being is built right into the
brand identity. Another of its new brands, ‘ology,’ introduced in November 2012, covers baby
care, personal care, and household cleaners, all promoted as free from harmful chemicals, and
carrying a “well being” trademark under its logo. Walgreens also has an emerging range of general
merchandise products, all under its Living Solutions brand, covering numerous items: bar-ware
sets, wine goblets, pub glasses, wine racks, coffee pod racks, bottle openers, kitchen towels,
cooking strainers, light bulbs, shoe organizers, clothes hangers, adhesives, tool sets, hammers,
screwdrivers, paint brushes, extension cords, irons, toaster ovens, blenders, coffee makers, fans,
lint removers, blankets, pillows, and on and on. To better position itself as a multichannel retailer
for health and daily needs, Walgreens in June 2011 acquired drugstore.com for $398 million.
(That business has two sister sites as well: Beauty.com and VisionDirect.com.) In January 2011,
the retailer launched an exclusive BORA skin care collection (27 products developed by celebrity
esthetician for the Hollywood stars, Scott Vincent-Borba). Walgreens also has become more
marketing oriented, having launched in February 2011, its first national TV ad campaign on behalf
of its Walgreens brand of health and wellness products. It was the first time the retailer went
beyond newspaper circulars and in-store signage to advertise its own brand. In November 2012,
the company launched a bi-annual “magazine,” called “W Happy And Healthy,” earmarked as an
insert in Sunday newspapers, as a 28-page glossy publication chockfull of mostly Walgreens