It’s Only Business, Nothing Personal, in Chicago Pharmacy Battle

Discussion
Jul 08, 2005
George Anderson

By George Anderson


The plot line reads like some crime family drama taken from Chicago in the 1920s.


One outfit, the strongest in city, is beset by internal conflict and seeks to sort out its own mess to avoid being seen as weak in the street and to prevent competitors from moving in on its business.


Another, sensing that the time may be ripe to gain some new territory, wastes no time trying to take advantage of its rival’s perceived vulnerability.


In yet another twist, a smaller gang sits back to wait and see what happens between its two larger rivals.


The story described above is not one about Murder Incorporated or a battle of Mafioso families. It is, however, a dramatic summary of the very real and modern day battle for pharmacy share taking place in the Chicagoland market.


As the story begins, Walgreens pharmacists who cite working conditions and staffing practices that put the welfare of patients at risk as their major gripes, threaten and then go out on strike. In total, about 1,200 pharmacists at 400 Walgreens in Illinois and northwest Indiana are involved.


John Heinbockel, an analyst for Goldman Sachs, calls the decision to strike, “a surprisingly aggressive move” adding “both sides have way too much to lose and too little to gain in a work stoppage.”


Next, Walgreens’ rival, Jewel-Osco, runs what a spokesperson tells the Chicago Tribune is “a special ad” to alert area consumers that its pharmacists are on the job at 200 or so drugstores in the market and 28 of those are 24/7 operations. The ads provide contact phone numbers for customers who may need assistance.


As Osco gets ready to move in, dissent pops up among the ranks of the strikers. Up to 200 of the Walgreens pharmacists, according to the Chicago Sun-Times, belonging to the National Pharmacists Association, resign from the union rather than go out on strike.


The story has one more possible twist. CVS, a relatively new entrant in the Chicago market (Walgreens is the market leader with a 54 percent share), plans nothing special in light of the strike at Walgreens.


“We don’t believe the current circumstances of any competitor require any special plans on our part,” said CVS spokesman Todd Andrews.


Moderator’s Comment: What do you make of what’s going on in the Chicago retail pharmacy business?
George Anderson – Moderator

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10 Comments on "It’s Only Business, Nothing Personal, in Chicago Pharmacy Battle"


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Mark Burr
Guest
15 years 7 months ago
No one wins in if there is a strike, regardless of whether you are “The Pharmacy” or not. In this situation, these purchases are in most cases not option purchases. Therefore, someone will be getting them. If consumers are harmed, Walgreens, not the pharmacists, will pay the price. There is also the reality of plan restrictions that require purchases at only certain pharmacies. In this case, if yours requires a purchase at Walgreens or limits purchases from CVS or Osco, Walgreens could be further harmed by extremely disgruntled consumers. This is a far different case than that of a supermarket strike or strike by another retailer. Consumers dramatically inconvenienced by the strike for drugs that are critically needed could react much differently than those inconvenienced to shop at another supermarket for optional purchases. I would think there is a tremendous amount at stake here for Walgreens. Creating another instant source for your prescriptions is not a simple task based on today’s restrictions and conditions. Their position as “The Pharmacy” could change quickly, if it hasn’t… Read more »
Giacinta Shidler
Guest
Giacinta Shidler
15 years 7 months ago

I see no one has mentioned Target or Wal-Mart yet. There are other players in town for pharmacies. With Target’s recent publicity about their user-friendly, easier to read prescription bottles, I just might try them for my next prescription.

Joseph Peter
Guest
Joseph Peter
15 years 7 months ago

Scanner,

You are missing the point though. We have not had any complaints about our service during this strike. It’s actually been quite transparent to the customer minus the negative “freaking out” news coverage.

David Livingston
Guest
15 years 7 months ago

I agree with omnisuperstore – Walgreens is the Wal-Mart of the drug store industry. CVS and Osco are not anywhere close to Walgreens’ levels. What goes around will come around. Walgreens can afford a strike. Osco and CVS know they will not fare as well, so when the labor issues hit them, they know Walgreens has the capability to crush them.

The pharmacists are like airline pilots, professional sports players, and movie stars. Often their boss makes less money than they do. They are the rainmakers and they are in a position to call the shots. I predict more pharmacists will try to exercise their muscle in other areas as well to cash in on the boom in the prescription drug craze that has swept the country.

John Hennessy
Guest
John Hennessy
15 years 7 months ago

There are customers in Chicago who need prescriptions filled. There is labor chaos at Walgreens. The decision by CVS to do nothing in light of this situation is irresponsible. The prompt marketing response of Osco is outstanding.

Osco is correctly on the offensive. They are certainly taking advantage of the labor challenges at Walgreens, but they are also taking care of customers.

Osco’s proactive message of being available is the right choice. They are highlighting their strength without disparaging their competitor. It’s a great example of positive opportunism.

If I’m a pharmacy customer in Chicago, Osco is the winner here. Osco is telling me that they are ready to deliver reliable and accurate medications. CVS?

Jim Wisuri
Guest
Jim Wisuri
15 years 7 months ago

The weather forecast is for the upper 80s and the low 90s in the next few days for the Chicago metro area. And 90s in Chicago in July generally means muggy weather, which isn’t conducive to long hours on the picket lines.

My guess is somewhere around Monday or Tuesday the heat will get to the negotiators for both sides.

The longer-term forecast: more of the same in terms of market share.

Walgreens has aggressively scooped the premier high-traffic corner locations throughout the Chicago area. CVS came in a couple of years ago and tried to do the same, but Walgreens had too much of a head start.

The folks who prefer to do their pharmacy business while they take care of grocery shopping will remain with Jewel-Osco.

Dave Wendland
Guest
15 years 7 months ago

There are certainly two sides to every coin, but it appears that the pharmacists themselves (and their union) are claiming overwork and concern over public health, while Walgreens’ management is trying to contain rising costs.

I can’t imagine that this is good for either side. Given the current state of the market: pharmacist shortage and encroaching competition, Walgreens simply cannot win. In other words, it opens a window of opportunity that many (not just Osco/Jewel) will attempt to sneak through. On the other hand, pharmacists who are striking may see other pharmacists cross the line to join Walgreens – one of the dominant retail pharmacy forces in this country.

A bigger concern may be a shift away from community-based pharmacy to mail order operations … if the value of the retail pharmacist is no longer a point of difference among consumers, then more patients will flock to alternatives with their prescriptions. This will hurt many more pharmacies than just Walgreens.

Mark Burr
Guest
15 years 7 months ago

Omni –

I hope that to be the case, however, as I understand from news reports, the duration is one day – correct? The strike began technically Thursday or yesterday. So it’s hard to gauge the response yet.

With only 100 to 120 pharmacists of 1,200 breaking ranks, it’s impossible by any measure to maintain their service levels and consumer satisfaction.

I, too, am very fond of their operation. I am impressed with them as a company and they are the clear leader. However, a prolonged dispute can’t possibly result in anything but disappointed consumers. In the end, no one will benefit.

I admire your passion for your company!

Joseph Peter
Guest
Joseph Peter
15 years 7 months ago
Walgreens is THE pharmacy in the United States, the pharmacy that all of the pharmacies duplicate or observe in order to serve their customers better. Walgreens is based in the Chicago area and Osco is no longer based here in the Chicago area, so only Walgreens understands what Chicago customers really want and how to handle situations, such as this strike and how it will affect Chicagoans. The only Oscos that really draw traffic are the ones that are connected to a Jewel store. Driving around the Chicago suburbs, compare parking lots at freestanding Oscos and also CVS stores to that of a Walgreens and, in most cases, the Walgreens parking lot will be packed with cars while the others have just a few cars. Osco has let their store design and remodeling program dwindle and their stores are dowdy and dark, while Walgreens are bright, inviting and airy. CVS has entered the market, but most of their stores are dead as well….the main reason is that they do not have the variety of SKUs… Read more »
Sheryl ODonnell
Guest
Sheryl ODonnell
15 years 7 months ago
Well the strike is nearing the start of its third week. Funny – you never hear about it any more. Yet, over 50% of the pharmacy workers have resigned from the union and returned to work. The call for the work stoppage was acted on too quickly by the union. The union is using safety as an issue in the media, although this is not an issue that is even being discussed as part of the contract negotiations. Many members resent the claim that they are careless at work because of time constraints. It puts a dark cloud over them, when in fact they are the best in the industry. I have seen no difference in most stores. As a matter of fact, most people are unaware that the strike continues. They continue to shop at Walgreens as they are continually improving. Osco, of course, would try to drum up business from this strike – they forget they are the only other drug chain in the area with a union. This could be happening to… Read more »
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