A look at the events that shaped 2014

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Which events were most significant for chain drug retailing in 2014? As usual, that is not an easy question to answer.

cdr-filler-opinion-750In many ways, 2014 was a remarkable year for the chain drug industry, one in which the character of the business was changed, probably irrevocably. The industry assumed a global character for perhaps the first time. It took on a healthier bent in terms of industry emphasis. It saw several of its leaders depart, some of whom will be missed in industry terms. Finally, it saw some dramatic turnarounds, one of which shocked, surprised and, frankly, delighted industry observers who had become accustomed to viewing chain drug retailing as a competition between two major companies. Today, there are three.

Certainly the most dramatic event of 2014 was the announcement last fall that the merger between Walgreens and Alliance Boots, which was initially announced just two years ago, will shortly be completed. This is a groundbreaking event, transforming chain drug retailing into a global business in a very real sense. Though Walgreens Boots Alliance will remain a U.S.-based corporation, many of its most exciting components will be operating in Europe and Asia. More to the point, what happens in other parts of the world may well happen here in short order, as those happenings relate to Walgreens Boots ­Alliance.

As a sidelight to this merger, the U.S. wholesale drug business began a significant move toward consolidation, as Walgreens formed a partnership with AmerisourceBergen and, not to be outdone, CVS Health moved to align itself with Cardinal Health. In the years ahead, these transactions will prove to have been the first steps toward changing drug wholesaling in America, a business that had appeared to defy change for generations.

In short, whatever the ultimate outcome of the Walgreens-Alliance Boots tie-up, it has already remade chain drug retailing both here and globally.

Perhaps the most widely admired change in 2014 was CVS Health’s decision to halt the sale of tobacco products in its stores and begin marketing instead incentives for its customers to stop smoking. The company acknowledged that it stood to lose some $2 billion in tobacco sales as a result of this decision, but insisted that, as a health care retailer, the potential gains from this position far outweighed the losses.

And indeed, CVS Health has followed its decision by unveiling an aggressive program to encourage consumers to allow the drug chain to play a role in smoking cessation efforts. Again, whatever the result, this decision has, initially at least, cast a rosy halo over the entire chain drug industry.

The most surprising happening in 2014, according to many observers, was Rite Aid’s remarkable recovery and return to profitability and excitement. The drug chain accomplished this by unveiling a consumer health care program that actually appealed to consumers. It did so for a simple reason: Rite Aid’s health care effort, unlike so many others, actually offered a beneficial in-store experience, one that promised — and delivered — help to customers seriously interested in improving and maintaining their health.

Several key executives left the chain drug industry in 2014. The departure most keenly felt was the retirement of Tony Civello, who left the industry after his drug chain, Kerr Drugs, was acquired by Walgreens late in 2013.

The departure that most stunned the industry, announced as 2014 wound down, was that Walgreens chief executive Greg Wasson would retire after the completion of the Walgreens-Alliance Boots merger, one that he, as much as any individual, championed, supported and oversaw. Wasson will be best remembered for this merger, but his relatively short tenure as Walgreens CEO was notable for many other accomplishments as well, both at Walgreens and in the larger world of chain drug retailing.

Also noteable was the continued viability of America’s regional drug chains. Though they continue to shrink in number, the ones that remain are laudable for the quality of their performance. Bartell Drugs, which is preparing for its 125th anniversary celebration this year, has emerged as the most watchable drug chain in the western United States.

And then there was the continued high performance of the National Association of Chain Drug Stores, an organization that leads the industry with events, words and deeds that other associations simply cannot ­duplicate.

And then there was …


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