Walgreens Corporation's History

I. Walgreens Corporation's History and Mission Statement

Established over a century ago, Walgreens has since grown into a national corporation with over 8,489 stores (Walgreens Corporation, 2013). Today, they are the first largest drugstore chain in the nation before CVS, Rite Aid, and Wal-Mart. Walgreens serves more than 6.3 million customers daily and fills 784 million prescriptions every year (Walgreens Corporation, 2013). Priding itself on innovation and technology, Walgreens was the first drug store chain to use child resistant prescription containers and the first drugstore chain to use satellite technology to connect its pharmacy systems (Walgreens Corporation, 2013).

Walgreens first began in Chicago in 1901 when pharmacist Charles R. Walgreen purchased a drugstore where he had once worked. A second store opened in 1909, and seven years later nine stores were incorporated to form Walgreens Corporation. Walgreens Co. became a public corporation in 1927, and by 1953 it was the country's leading self-service retailer (Walgreens Corporation, 2013). Walgreens now operates in 50 states, the District of Columbia and Puerto Rico.

The company has long been committed to customer convenience. To promote their policy of convenience, Walgreens Pharmacies are located in high traffic areas. Walgreens offers items and services beyond those of a typical drugstore. These services include drive-thru pharmacies and one-hour photo services, and many stores are open 24 hours a day.

The company's continual growth has resulted in consistently increasing sales and earnings. Walgreen averages a 19% increase in their sales from year to year, and it looks like this statistic will remain constant for the years to come. The 2012 fourth quarter sales increase 9.4 percent to record $15.9 billion; fiscal 2012 sales reach record $73.4 billion. Gross profit margin for quarter improves 70 basis points versus 2012 fourth quarter. Cash flow from operations for the quarter total $925 million; $3.7 billion for fiscal 2012. (Walgreens Corporation, 2013)

Walgreens Co. mission statement is "To be the most trusted, convenient multichannel provider and advisor of innovative pharmacy, health and wellness solutions, and consumer goods and services in communities across America. A destination where health and happiness come together to help people get well, stay well and live well" (Walgreens Corporation, 2013).

II. Organizational Strengths and Weaknesses

STRENGTHS

1. According to Tran (2011), as the nation's leading drugstore in sales, earnings growth, same-store sales increases, prescription drug market share, and prescription sales per store, and first on the list of Global Most Admired Companies in the food and drugstore category, Walgreens' position as the market leader is perhaps its greatest strength. A national presence, Walgreens has established itself as a known and trusted brand name across the country.

Consequently, the Walgreens name carries considerable brand equity as a nationwide retailer known for quality and convenience. In fact, Walgreens has positioned itself as the drugstore offering the most convenience. As such, Walgreens offers drive-thru pharmacies in over 80% of its stores, and nearly 30% of stores are open 24 hours a day (Walgreens Corporation, 2013). Furthermore, while other competitive strategies can usually be copied over time, location advantages cannot. These superior locations offer Walgreens long-term sustainable competitive advantage. The company strives to offer a merchandise mix in line with this focus, providing customers with one-stop shopping for not only prescription drugs, but also over-the-counter-drugs, health care products, grocery selections, gifts, holiday and seasonal items, and one-hour photo developing.

2. As a market leader Walgreens is also committed to leading the way in innovation and technology. In 1968 Walgreens was the first to use child-resistant prescription containers. In 1981 Walgreens began taking steps to become the first drugstore chain to have its pharmacies linked by satellite.

The successful implementation of technology in both the store and supply chain is a real strength for the Walgreens Company. They have successfully implemented the use of radio frequency identification (RFID) throughout its chain of stores. RFID allows Walgreens to monitor the impact of sales from specific displays. Also, with the implementation of Snapfish, a customer can upload photos at their home computer and then have them printed at a Walgreens location (Demery, 2010). Presently, eighty percent of their stores have been equipped with digital labs to accommodate this service.

Adding to that, Walgreens also offers the service of in-store medical clinics. According to Walgreens Corporation (2013), as of 2009, in a partnership with Take Care Health Systems, the company has opened more than twenty in-store clinics in Kansas City and St Louis with more projected to open once subsequent partnerships are finalized with InterFit Health's RediClinic and Pinnacle Health system in other areas across the country. These in-store clinics are conveniently located across from the Walgreens pharmacy offering customers a diagnoses and treatment inside the store. These services allow Walgreens to promote a strong brand image of both service and personal attention within the healthcare industry.

WEAKNESS

1. While Walgreens is the current market leader, the company's greatest weakness may be its inability to set itself apart from competitors based upon price. Wal-Mart's supply of many generic prescription drugs for only $4, later matched by Target, exemplifies the impact of large discounters.

While a large company, Walgreens is not the low-cost leader in the industry and faces serious competition from discounters, who are willing to accept lower margins on prescription drugs because they can make up for lost profit in other categories. Walgreens probably will not match these prices, meaning that Walgreens has chosen not to compete on price in its most important category. Since, Walgreens cannot compete against discounters on price, the company has failed to fully exploit its main advantage over these retailers, its ability to provide convenience to its customers.

2. While the company is increasing the presence of 24-hour locations and drive-thru facilities, the interior layout of a Walgreens store does not always reflect its commitment to convenience. For example, Walgreens stores in Salem, Oregon, appear crowded with merchandise, an atmosphere that is contrary to the clean image of fast service that Walgreens would like to portray. There, upon entering a Walgreens store, one encounters aisles