Walgreen Exploring the Sale of Prepared Meals and Fresh Foods
By Tom Ryan
Walgreen Co. is planning to roll out fresh foods and prepared
meals in all its stores. Bryan Pugh, vice president of merchandising, told Bloomberg
is time-starved, and we have the most convenient 7,000 locations in the U.S.
They’re on-the-way-home destinations that are easy to get in and out of and
will provide a good value.”
Details of the program were sketchy, including
when it would launch. Mr. Pugh noted that Walgreens must examine supply
and distribution issues and conduct tests in some markets before introducing
freshly prepared foods such as salads, cut fruits, ready-to-bake pizzas and
sandwiches into more stores.
But Mr. Pugh said the drugstore chain has been
in talks with food manufacturers, mentioning Unilever, Nestle and Sara Lee,
about creating private-label and branded products for the initiative. A new
director of fresh foods will also join Walgreens in several weeks, although
Mr. Pugh declined to identify the person.
“We won’t get our customer every day on the way home, but if we could get
50 percent of our customers one day a week on the way home, that would do wonders
for our sales,” Mr. Pugh said.
The test follows some success resulting from
an increased focus on wine and beer sales. Walgreens began selling private-label
wines, including chardonnay, cabernet, zinfandel and merlot, at about 1,500
locations in December. More than 200,000 bottles at $2.99 each have been sold
under the Southern Point name, Mr. Pugh said. A $5.99 private label wine will
be offered in April, he said.
Mr. Pugh said stores carrying beer and wine have
higher average sales per person. That purchase alone pushes a shopper’s average
basket size as much as 60 percent, he said.
Prior to joining Walgreens, Mr.
Pugh was with Tesco USA’s Fresh & Easy
Neighborhood Markets, where he designed the Fresh & Easy store operations
model and launched the chain on the West Coast. He joined Walgreens as vice
president of store format development in January 2009 and became head merchant
in March 2009.
Discussion Questions: What do you
think of Walgreens’ exploration of fresh foods and prepared meals? What would
they have to do to make such a move a success? How would you compare the challenge
to efforts in c-stores and small format grocery stores?