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Rein out as Walgreens leader

BY Jim Frederick

DEERFIELD, Ill.

Rein, a 26-year Walgreens veteran who built a reputation for quiet-spoken but determined leadership, effective people skills and competitive drive, expressed “great confidence in the company’s future.” But his abrupt departure comes in the wake of Walgreens’ unsuccessful bid for Longs Drug Stores and in the midst of an alarming drop in consumer confidence amid Wall Street’s financial meltdown.

Rein, 56, also gave up his seat on Walgreens’ board of directors, cutting all official ties with the nation’s largest drug chain. The company named 62-year-old Alan McNally, the board’s lead director, to serve as acting chairman and chief executive officer, and to help lead a nationwide search for Rein’s successor.

Undertaking that search will be a special committee of three board members. In addition to McNally, that committee includes William Foote, chairman of the governance committee, and James Skinner, chairman of the compensation committee.

“We would like to thank Jeff Rein for his many outstanding contributions to Walgreens over the past 26 years and respect his decision to retire,” McNally said. “Walgreens is a strong company with market-leading businesses and exceptional growth prospects. We are confident that our core retail and pharmacy business and growing health-and-wellness initiatives will drive continued growth and value creation for shareholders.”

Rein, in a departing statement, thanked Walgreens’ 226,000 employees “for their exceptional dedication and commitment.”

“It has been a tremendous honor to serve,” he said. “Walgreens is one of America’s finest corporations, and I am proud of our accomplishments over the years in building America’s largest drug store chain offering consumer goods and services and serving the health-and-wellness needs of millions of Americans.”

Rein, a pharmacist and accountant, joined Walgreens as an assistant manager in 1982 and distinguished himself in store, district and divisional management before moving into top posts in marketing and finance. He succeeded David Bernauer as chief executive officer in July 2006, maintaining the company’s aggressive internal expansion pace and its drive to shed operating costs and maintain steady gains in profitability, a Walgreens hallmark for more than three decades.

With the economy in a downward spiral, pharmacy margins shrinking and rivals Wal-Mart and CVS fiercely attacking Walgreens’ market share throughout the United States, however, the company has found it increasingly difficult to maintain its 34-year unbroken streak of record sales and earnings. In addition, Rein’s retirement came just two days after Walgreens announced in a tersely worded letter to Longs chairman and chief executive officer Warrant Bryant that it was withdrawing its offer for the West Coast chain.

However, Walgreens spokesman Michael Polzin insisted Rein’s departure “has nothing to do with the Longs proposal.” In addition, he told Drug Store News, the outgoing chief executive officer’s abrupt retirement is “not a health-related issue or an ethical issue in any way.”

Polzin also said the position of Greg Wasson, president and chief operating officer, is not affected by the Rein announcement. Beyond that, he said, Walgreens is not commenting.

Presumably, Wasson is on the list of possible successors being considered by the search committee, which Polzin said is considering candidates “both inside and outside the company.”

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Battery makers upgrade power sources, get more shelf space

BY Mike Duff

LOS ANGELES and ST. LOUIS, Mo. As new products keep rolling in from major battery brand manufacturers, retailers are updating their marketing to maximize the potential of increasingly specific product functions.

On Aug. 18, Energizer announced the launch of its new Advanced Lithium battery, one designed to reliably power wireless gaming accessories, digital cameras, hand-held games or MP3 players.

Five weeks earlier, Panasonic introduced the EVOLTA battery, which it characterized as the world’s longest lasting AA alkaline battery cell in more devices. EVOLTA represents a certain resistance to battery specialization. “We see the trend in batteries going toward more ‘middle-drain’ applications as the reduction in power consumption needs of appliances has resulted in less high-drain devices needing primary battery power. EVOLTA eliminates the confusion for consumers and gives them confidence that our battery will perform well across many applications,” said Matt Sora, vice president of sales and marketing.

While others keyed on batteries, Duracell focused on the kind of line extensions. Among the new products debuted was Duracell Daylite, the cornerstone of new flashlight line designed to take LED lighting to the next level, the company stated, by capturing and using 100 of the light generated versus 70 percent in more typical instances. The flashlight introduction came hard on the heels of the debut of Duracell’s My Pocket Charger and the PowerSource Mini, which were developed to complement cell phones, BlackBerrys and MP3 players.

Ultimately, said Duracell spokesman Kurt Iverson, battery producers are bringing technology to bear in developing more effective, longer lasting products that use innovation to provide power more efficiently. “In the case of the Daylite flashlight, it’s getting a product to work using less battery power and still produce a brighter beam of light,” he said.

The involvement of major battery brands in a range of portable energy dependent items certainly is stretching traditional brand boundaries and merchandising concepts as well.

Jacqueline Burwitz, spokeswoman for Energizer said that, while the brand remains the one that keeps on going and going, the company’s merchandising support has evolved with its product line. “It has changed. Now it’s a matter of pairing the right battery with the right device,” she said.

Battery makers have encouraged many retailers to create ancillary product display spaces that complement the products they power, but drug chains haven’t necessarily bitten, as many prefer to depend on a battery center merchandising program. “We have those sections,” said Stacy Rinehart, a USA Drug spokeswoman. “We have our batteries in those displays.”

That doesn’t necessarily mean, however, that drug chains aren’t changing to the existing market.

Rather than develop secondary displays, Walgreens focuses on appropriately expanding its battery centers to make it easier to shop for specific applications, said Robert Elfinger, a company spokesman. 

“The battery section has grown significantly,” he said. “Customers are starting to understand that high-draining devices such as digital cameras are getting specific batteries, and they are looking for some of the new high-tech batteries. We’re expanding the battery sections to accommodate them.”

Thus, drug chains, for the most part, feel as if a battery center, usually conspicuously positioned, makes sense in terms of both attracting customers and return from floor space, as it can keep pace with developments in the category if properly configured to changes in the market.

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Survey says 40 percent of shoppers plan to start holiday gift-shopping before Halloween

BY Jenna Duncan

WASHINGTON The National Retail Federation today released results of its 2008 Holiday Consumer Intentions and Actions Survey, run by BIGresearch, showing that the average American holiday shopper plans to spend more than $800 each on holiday shopping.

The NRF’s survey results showed that 40.2 percent of consumers said that they will begin  holiday shopping before Halloween and survey respondents plan to spend about $832 on average on holiday items. This average reflects only a 1.9 percent increase over last year’s average total: $816.69. It’s the lowest anticipated spending increase NFR launched its survey in 2002.

Forty percent of survey respondents said that sales and/or promotions is the biggest lure to where they will shop, while 12.6 percent said they will seek “everyday low-prices.” Only 5.6 percent said they would choose holiday shopping locations based on convenience and 5.2 said it depends on customer service.

NRF president and chief executive officer, Tracy Mullin, said, “Retailers are going into this holiday season with their eyes wide open, knowing that savings and promotions will be the main incentive for shoppers. No one is canceling Christmas because money is tight, but consumers will be sticking to their budgets and looking for good deals when deciding where to spend this holiday season.”

Survey repondents also said they would spend about $51.43 each on decorations, $32.43 for greeting cards and postage, $95.04 on candy and food and $22.61 on flowers. The Internet has seen steady rates of shoppers: 44.2 percent of the shoppers in the survey said they were buying gifts online, flat from 44.3 last year. NRF has said that it predicts holiday sales to increase 2.2 percent over last year, for a total of $470.4 billion.

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