Inside This Issue - News
Walgreens provides a 'food oasis'
October 26th, 2009
CHICAGO – Walgreen Co. has become an oasis in the “food desert” here.
The chain has bulked up its food offerings in two Chicago stores to meet the needs of residents underserved by grocers, and it plans to do the same in nine other outlets in the city, mostly on the south side.
If the units succeed, Walgreens could bring the format to other urban cores.
The chain developed the concept based on scanning data showing that inner-city Chicago stores were selling much more food than other units. These stores’ milk sales were almost double those at other Walgreens locations, while bread sales were triple.
“It was telling us that people were shopping us like a grocery store,” says vice president of merchandising Bryan Pugh.
The data confirmed the observation of Chicago-based researcher Mari Gallagher, who helped bring more attention to the issue of food deserts here and in other cities after studying food availability. Food deserts are described as neighborhoods with little or no sources of fresh or otherwise healthy foods within two miles.
“Clearly, there are many, many Chicagoans who don’t have access to healthy foods,” says Gallagher. “We have been very interested in and appreciative of Walgreens’ response. We see their response as very positive.”
Gallagher spoke this summer at a meeting on the food desert stores that Walgreens held at its headquarters with 30 suppliers.
Bolstering the chain’s food offerings was not easy with its current supply chain, says Pugh. Walgreens is using a wholesale grocery distribution point and “asking suppliers to work this endeavor with us as a trial,” Pugh adds. “If we’re able to unlock the trial, then potentially we’ll all be in a place where we can benefit from better sales and much bigger business.”
The converted stores have up to 500 extra food and beverage SKUs, including frozen and refrigerated foods and juices. Perishables are limited to shelf-stable foods such as potatoes, carrots and apples. Space was created by reducing greeting card and seasonal offerings. All told, about 1,000 square feet was picked up for groceries.
Over-the-counter medicines were not cut back because the stores do well with them.
Food desert stores may also get Take Care clinics, notes Pugh, because the walk-in care and associated screenings would complement the units’ positioning as nutrition boosters. The goal, he says, is to “maximize the whole box and be integral to the community.”
The outlets will be marketed with local flyers, Pugh says, noting that each unit has more than 12,000 households within two miles. People shop the converted stores more often than conventional drug stores, viewing them more as convenience stores than drug stores, he points out. “There just are not a lot of alternatives for groceries in those areas,” he says.
The remaining nine Chicago food desert stores will be launched between January and March. Pending successful results, Walgreens could convert units in other cities. The stores are typically in inner cities that supermarket operators have abandoned.
“You might have dollar store competition, but you wouldn’t have mass or food stores,” Pugh says.