Walgreen Co. is planning to roll out fresh foods and prepared meals in all its stores. Bryan Pugh, vice president of merchandising, told Bloomberg News, "Everyone 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?
Is Walgreens' plan to introduce fresh foods and prepared meals a good or bad move?