-- Connecting the dots between our economy, government and business --
Walgreens was scheduled in two years to celebrate its 100th year as a publicly traded company. Now the storied pharmacist and retailer won’t honor that milestone, because it no longer will be publicly owned.
Summary and audio linked here.
Chicago’s political leadership is floating a pension buyout program as evidence it is seriously addressing the city’s thirty-six-billion-dollar unfunded pension liability, but Mark Glennon, founder of the Illinois policy research organization Wirepoints, said that the proposal moves debt from one column to another rather than reducing it, and that the broader fiscal picture facing the city continues to deteriorate across every measurable dimension. Audio here.
Expect no retraction or apology. This what they do.
The state’s existing buyout program for its own pensions is the precedent for Chicago, which should be a warning: Look out for similar exaggerated claims and shoddy analysis.
Full interview and summary linked here.
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When you have a Walgreens on every other corner, you become like Starbucks whose now closing locations left and right. Walgreens also had a terrible website that they never fixed. If I had a nickel for every time I went to take advantage of buy 1 get 1 free online deal only to find every store withing 20 miles only having 1 in stock, I’d be rich. Good luck ever going to the physical store and trying to get them to match their online price that they say can be applied to pickup orders. Nice people at the store but… Read more »
Only guessing but I think there is a good chance of them moving out of Deerfield.
This article a great example of how the Marxists at the Tribune do not understand economics and think of it as a zero-sum game. The premise of this editorial is rather odd for a corporation that is doing what it deems necessary to survive, but the editorial makes sense only when you realized that hammer and sickle Marxists wrote it. Check out this quote, where the dolts on the editorial board give away their Marxist ideology by expecting Walgreens to keep operating stores that are losing money, as if Walgreens is an entity that exists solely to provide a service,… Read more »
Remember that primarily east coast drugstore called Rite-Aid? Really hard to contemplate Walgreens going into steep decline. I suspect that the private equity could justify the purchase for the real estate alone. More changes coming for sure. If you look at the business model of GoodRx and why iy works, you can see the perverse pricing models for prescription medications drives a unnatural market behavior. You can at least in part blame the ACA for much of the turmoil with pharmacies. Obamacare has been a real disaster – Thank you Bushie John Roberts and John McCain for foisting the monstrosity… Read more »
The retail pharmacy store model is suffering by design. The days of breaking even on prescription meds to encourage store traffic for overpriced convenience items are shrinking. Insurance companies will continue to push for more mail order refills and further reduce store traffic. CVS and Walgreens will continue to shutter non-profitable stores. The Blockbuster video stores were once thriving as well.
Nowadays a big percentage of drug purchases are at the drive-thru, not generating any traffic thru the store.
Some years ago we had a neighborhood Walgreens that had the cheapest alcohol and cigarette prices in the area. The place was always packed. Walgreens decided to become health conscience so eliminated alcohol and cigarette sales, moved to one of the newest strip malls built with TIFs and other gimmickry and then hiked prices on everything. Walgreens at the time had a great growth model and they walked away from it seeking out a new moralistic model that didn’t work. Fixing what ain’t broke generally doesn’t work in my past observations but no one asked me.
It was over for Walgreens as soon as the Boots merger went through and Pessina became CEO. Quite a few people were not happy about that move and correctly predicted exactly this outcome. The world did not need a “global” drug store chain and the European and American consumers are so different and the supply chains so radically different there was absolutely no overlap. Boots management destroyed Walgreens, then their failure to adapt to and streamline online pharmacy like CVS did and finally the BLM summer of love, the gift that just keeps on giving, permanently wrecked their urban store… Read more »
Add in their disastrous decision to get into the quick care market and the buy out of failing Rite Aid and the writing was on the wall.
Interesting perspective from the management side. From the consumer side, the stores are too big, too expensive and there are too many of them. Outside of high traffic areas, I don’t know how stores sell enough tylenol, toilet paper and make up to pay the extraordinarily high rents they pay for prime locations. I suppose the pharmacy business probably subsidizes everything else. Every store has several thousand dollars worth of ‘electronics’ including cheap headphones and USB sticks that are several years old. Who exactly are buying these?
The pharmacy portion of their retail model is a loss leader. It’s designed to get foot traffic in the store. Without that traffic people don’t flock to their store to pay their high prices.
My unscientific view based only on what I have seen is that they have a big problem with obscenely high prices on basic over the counter stuff.
That “problem” that you correctly observe has always been a feature of their business model. They know they are getting squeezed by insurance companies requiring mail order and they see the handwriting on the wall. That’s why retail pharmacies have their own mail order pharmacies, attempted to run medical clinics, have purchased insurance companies (CVS and Aetna), vaccination destination during COVID and since, etc… These companies are trying to figure out how to drive (vaccinations) more people to their stores but more importantly make a profit outside of the brick and mortar setting while still being a hub of controlling… Read more »
Marko says its a profit center and you say its a loss leader. I have no idea, I thought the pharmacy was a profit center, I know they have a PBM too. I guess that’s all part of the problem here, no one is quite sure how or if they are making money off various things.
Marko discussed the larger profit margins of cosmetics, candy, alcohol and seasonal items. PBM’s are quite profitable. Their data they control and sell is quite profitable. Their profitability on dispensing prescription drugs is quite low and in the past was a loss leader to drive sales in their stores. Branded products more than generic. So while it may make a slight profit it’s not something that will drive stock prices. How do you think the chain pharmacies were able to drive out the independent pharmacies 30 years ago? They lost money on prescriptions just to take over the market and… Read more »
It’s my understanding the profit centers outside the pharmacy are cosmetics, candy, alcohol and seasonal items. All of those are higher margin and considered “front of store”. The rest of the stuff is just for convenience to lure you into that store rather than another store, no significant margins. It was also talked about at the time of the Boots merger that Pessina needed a way for his multi billionaire family’s pharmaceutical business to get into the American market so Pessina may have been able to get his EU subsidized drugs into the high profit American retail market and could… Read more »
Too many of them exactly, I have 3 Walgreens within a 6 mile radius were I live.
You must live in the boonies, ten within a six mile radius of my home. No idea when was the last time I was in one.