Walgreen Tests Store Brand Prepared Foods

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January 19, 2010

Walgreen Co. plans to offer private label fresh prepared foods to attract time-pressed customers to its store and better competes with other retailers offering food, according to a Bloomberg report.

"Everyone is time-starved and we have the most convenient 7,000 locations in the U.S.," Bryan Pugh, vice president of merchandising, told Bloomberg. "They're on-the-way-home destinations that are easy to get in and out of and will provide a good value."

Deerfield, Ill.-based Walgreens, will be testing food option in key markets before roll out, according to the report, but the chain declined to reveal the timetable and costs of the venture.

This move makes Walgreens the second drug chain to add prepared foods to its offer. Last year, New York City-based Duane Reade introduced a variety of grab-and-go foods including sandwiches, salads, sides and yogurt parfaits in select stores.

Several years ago, Walgreen's began testing Cafe W, a self-serve beverage center that included hot coffee and fountain drinks as well as some packaged snacks. The concept was tested in several large markets but was never fully rolled out.

The new food offering will reportedly include salads, cut fruits, and ready-to-bake pizzas and sandwiches, according to Bloomberg. The drug chain is also adding beer and store brand wines.

With declining same-store sales posted in November and December, the goal of the food program is to boost Walgreens' revenue, Pugh told Bloomberg. The question is whether Walgreens can gain customer acceptance and trust with food, competing against large players such as Costco, Wal-Mart, Target and Kroger, as well as many convenience stores, grocers and quick-service restaurants that sell fast food.

Walgreen "does have a lot of stores, but I don't see it as being a venue of choice for consumers," Bob Goldin, an executive vice president at Technomic, a Chicago-based foodservice consulting firm, told Bloomberg. "It will be hard for them to establish credibility in freshness and variety. I don't see it as being a big business driver."

Read These Related Articles:

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• Walgreens Confirms Chilled Foods Test this Fall
• Waitrose Targets Desk Jockeys with New Lunchtime Store Brands Line
• Wegmans' Customer Research Prompts Expansion of Store Brand Prepared Foods
• Wal-Mart Downsizes and Recasts its Marketside Web Site

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