Ferguson, James
Charles R. Walgreen was born in Galesburg, Illinois before moving to Dixon Illinois. At
age sixteen, Walgreen had his first experience working at Horton's Drugstore. His
experience was a failure. He realized that his potential and future were in a larger city.
Walgreens was founded in 1901 in Chicago's south side. He bought the store from his
employer and leading pharmacist, Isaac W. Blood. Even though Walgreen became very
knowledgeable while working for Blood, he thought the store was similar to the other
fifteen hundred drugstores in the Chicago area. He wanted innovation, selection, fairness,
and the ultimate customer satisfaction. Walgreen accomplished this by changing the store
layout, products, pricing, and service. Having a bright, spacious store with products
customers wanted at a reasonable price made Walgreens famous. Customer service,
consideration of their wants, and valuing the customer made their customers loyal.
Through innovation, Walgreens became a leading trend setter.
The "Two Minute Drill" had non-prescription items delivered with incredible speed to
local customers. This began the transformation of the average drugstore. When Walgreen
opened his second store in 1909, a new way to outshine competition was derived from a
popular trend. "Soda Fountains" served numerous cold creations. But they could only be
enjoyed in the summers. During the winters the soda fountains would temporarily
shutdown. They ended up taking valuable space from the floor. "Why not serve hot food
during cold weather?" this question sparked an integral part of Walgreens' layout. It also
established a critical part of the revenue stream year round instead of only during the
warm seasons. Soon breakfast, lunch, and dinner were served throughout every soda
fountain in Walgreens until the 1980's. When the ninth store opened in 1916, the stores
incorporated to form Walgreens Corporation. By 1920, there were twenty strong
Walgreens Drugstores throughout the greater Chicago area. Practicing what he preached,
Walgreen's innovation, selection, fairness, and ultimate customer satisfaction laid
foundation for a nation wide drugstore chain. 1922 brought the creation of the malted
milkshake. Before, there was only a malted milk beverage. This innovation led way for
the phenomenal growth that would take place that decade. In 1929, Walgreens' stores
reached five hundred twenty-five. The stores spread to New York, Florida, and other
major markets making Walgreens not only a place to shop but a social hotspot. In 1927,
Walgreens went public. While the Great Depression affected the economy as well as
other businesses, Walgreens persevered. Thriving on its foundation and innovative
thinking, Walgreens strived to reach new heights. Having consistent sales growth each
year allowed Walgreens to be able to tremendously advertise; by having the biggest
advertisers in Chicago and other parts of the country as well as being the first drugstore to
advertise on the radio wit legendary Chicago Cubs announcer Bob Elson the "voice" of
Walgreens, invest in state-of-the-art buildings for their growing research and
manufacturing laboratory with additional space to manufacture its popular candy line,
and create foundations such as the Charles R Walgreen Foundation for the Study of
American Institutions during this period. As Walgreens emerged from the Great
Depression victorious in 1939, Charles R Walgreen, Sr. died at the age of sixty-six. He
left his company in superb condition. Walgreen also shaped and prepared his son Charles
Walgreen Jr. to take over and lead Walgreens into the future.
Today, Walgreens' headquarters is located in Deerfield, Illinois, just north of Chicago
where it was founded. There are over sixty-five hundred stores across the country and
Puerto Rico that serve five million three hundred thousand people daily. Leading the
chain drugstore industry in sales and profit, Walgreens serves over twenty thousand
products through their twenty-four hour a day stores, one hour photo shops, and drivethru pharmacies. Walgreens' completion is CVS and Rite Aid which respectively have
one half and one third of sales. This wide range of products started in 1950 when the
transition to self-service drugstores began. Even though the expansion brought more
products than ever before, more employees were needed to be hired because of the stores'
size. This allowed Walgreens to raise the level of their customer service which is the face
of the company.
Looking deeper into the company, Walgreens likes to promote from within. It is an
internal strength that most of the people who work in the corporate office began working
in the retail side of the company first. Being exposed to the many different areas of the
business is beneficial. Knowing all the aspects of a salesperson, pharmacist, and manager
develops a strong basis and understanding when reaching a new position. If a person, by
chance, does make it to the corporate offices without rising through the ranks, they are
sure to participate in all developmental aspects of the company. Development of the
operations people is very critical. They need to understand the strong segments of the
company. Each region of the country is given to a senior Vice President in the operations
department. The next two lower levels are the operations vice president and the district
managers who are responsible for roughly 250 and 25 stores respectively. The same
organizational structure applies to the pharmaceutical side of the store. Store managers'
jobs are to maintain a sense of family throughout the store. It is key for the store
managers to bridge the gap concerning employees, merchandising, and customer service
to the operations executives. Another strength is Walgreens' technology. Their innovation
led to many of today's standards such as non-English prescription drug labels and childresistant prescription containers. Through a partnership with Hewett Packard and its
Snapfish technology, Walgreens developed a convenient, innovative, technological,
system that allows photos to be uploaded at a personal computer and printed at a
Walgreens location. Finally, Walgreens has made a name for itself. It leads the nation's
drugstores in sales, earnings growth, same store sales increases, prescription drug market
share, and prescription sales per store. Walgreens has established itself as a known and
trusted brand name across the country.
A weakness that Walgreens suffers is two fold. Even though they grow through
acquisitions, they prefer to start from the ground up. This ultimately slows their growth
rate. Also, when moving into a new market, the run the risk of driving mom and pop
shops out of business. This could have a negative effect on the community. Another
weakness is large discounters such as Wal-Mart and Target. They are able to cut generic
prescription drugs' price because they can make up for the loss in other categories. Being
Walgreens is not the low-cost leader, they are unable to compete in price. They face
competition from these large discounters. Finally, Walgreens is getting away from its
basis. They are getting caught up in the other aspects of the store. Walgreens is forgetting
about their top product. Prescription drugs are being covered up by impulse buys and
seasonal items. Instead of making an in and out experience, the customer tends to browse.
Therefore, the customer may begin looking elsewhere for a convenient purchase.
Looking outside Walgreens lays many opportunities. A major opportunity is the
American population. The Baby Boomer generation is getting older. There will be a
greater market to target. The aging generation will have difficulties adjusting to the size
of supercenters. They will begin looking for the convenience of a name they trust.
Another opportunity would be to increase the amount of generic drugs Walgreens carries.
Appealing to Baby Boomers who want a name brand from a store they can trust. This
will satisfy the thriftiest shopper. Finally, opportunity lies in the international market.
Every store will soon have a pharmacy. Some open twenty-four hours a day. International
markets provide a great opportunity to expand and find a new customer base.
There are numerous threats that Walgreens should be concerned with. Not only are large
discounters competing with Walgreens for customers, regular grocery stores are too. It
will be very tempting for a customer to fill their prescription while grocery shopping.
Walgreens cannot compete with how many different products grocery store as well as
discounter stores carry. Another threat is the aging of the Baby Boomer. They do provide
a growing market, but at the same time will the economy support it? A lot of Medicaid
might be cut because of the vast number. The next threat would be internet shoppers.
Many countries sell prescription medicines online at a dramatically cheaper price than in
the United States. Finally, there is a major shortage in pharmacist. There are simply not
enough to go around. Pharmacists are the main core of Walgreens companies. This will
leave Walgreens understaffed in their most critical area. This will be very detrimental to
the company's customer convenience.
The reason I chose this company is because I read about the success of the company in a
book a couple of years ago. The book was called Good to Great. The book Good to Great
relates to Walgreens because the company was classified as having a hedgehog concept.
This is why the company is amongst the top twenty-five ever created. It knew that its
niche was conveniently giving prescription drugs to customers with great customer
service. However, as time went on, Walgreens went further away from this concept. They
started to focus customers to other parts of their store. It made customers browse, but it
also drove them away. The book was written in 2001. Walgreens needs to get back to
their hedgehog concept first. Secondly, they need to focus on drawing customers to the
other parts of their store.
When talking to employees at different Walgreens around the bay area, they were
somewhat reluctant to give any of the company’s information away. After explaining my
project and what I needed from them, the employees seemed to lighten up a little. People
working at Walgreens actually say it is like a family. Sure they have certain employees
come and go, but there are those who stay and form bonds amongst each other. These
employees usually stay for a couple of years before either leaving the company or
moving up to a higher position within the company. A certain employee that is in a
higher position says, “The longer you are with the company, the more the company takes
care of you. If you work hard, they will reward you. If you do your best for them, they
will make sure you are taken care of.” This seems to follow what the company has
always been about. What you put into the job is exactly what you get out of it.
At times, the future may not seem bright for Walgreens. According to those who notice
they did not meet their quarterly expectations. This is not a concern for the company.
They are focused on long-term growth as oppose to short term profit. Their commitment
to patience allows for their long-term strategy to be implemented. While opening at least
one new store each day, hopes of reaching seven thousand stores by 2010 looks very
feasible for the company. Acquisitions of Take Care Health will put clinics in Walgreens
stores across the country. These clinics bring everyday healthcare to your neighborhood
drugstore. Establishing an aggressive strategy to grow but carefully consider Grade A
real estate and high-tech excellence allows Walgreens to keep a positive cash flow.
Creating the new generation of distribution centers will create efficient as well as
responsive supply chains. Getting back to the tradition that Walgreen set himself such as;
innovation, selection, fairness, and the ultimate customer satisfaction. Walgreens' future
can be unparallel to any other drugstore.