Walgreens Tests Fresh Food

Walgreens is venturing into convenience store territory as it begins to conduct a test of chilled foods at 12 of its stores this fall, feeling out its ability to thrive in the growing fresh foods market, the Wall Street Journal reported.

Walgreen spokeswoman Tiffani Washington confirmed the test noting the fresh food initiative could help the drugstore chain eventually be seen as a “destination for tonight’s meal.”

The food offerings could include sandwiches, fresh cut fruit, soups and wraps, and while the test is reportedly limited to 12 stores, “several people familiar with the matter said the test is likely occurring in about 50 locations in September in the Chicago area,” the Wall Street Journal reported. The sources added Walgreens will likely be selling meals such as chicken Marsala, macaroni and cheese and General Tso’s chicken.

Walgreens reportedly still must sort out refrigeration and distribution issues that will be critical to the programs success.

The move into fresh food comes after lagging front-end sales stemming in part from a downturn in consumer spending, and Walgreens is likely looking to fresh food for a needed sales boost.

The drugstore chain is not alone in its move toward more food offerings. CVS Caremark Corp. (CVS) also is increasing its food selections and working to make stores better fit consumer demand for one-stop shopping.

“Drugstores realize if they’re going to survive in this marketplace, they can’t be one-note songs. They need to have more things to offer consumers,” William Cross, vice president of restaurant and food brand licensing at Broad Street Licensing Group told the Wall Street Journal. Food, he added, especially fresh and private-label packaged foods, are generally seen as a source of growth for drugstores.

Walgreens hired grocery and convenience store veteran Jim Jensen in January as divisional merchandise manager of fresh food. Jensen left Tesco PLC’s Fresh & Easy Neighborhood Market chain, where he held a similar position to the one he assumed at Walgreens. Before that, Jensen worked at convenience chain 7-Eleven as a category manager.

Walgreens also recently acquired New York City drugstore chain Duane Reade in April, which is partly known for its efforts in fresh food. 

Meanwhile, analysts report Walgreens will need to convince customers to view the stores as a meal destination-which could prove challenging if a deli or convenience store is nearby and offering similar items at a competing price. Walgreens has yet to reveal the price point for its food offering. If the company decides to roll out fresh food to all of its roughly 7,500 stores, it will likely face increased costs as it adds refrigeration and signage.

Washington told the Wall Street Journal the company has yet to determine how the test will evolve.

But C-stores should get ready to meet the competition head on.

 

 

 

 

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