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Safeway gets nod from AFP

BY Allison Cerra

PLEASANTON, Calif. — Safeway this week received an award for demonstrating commitment to various causes through financial support and encouragement.

The retailer said it received the 2011 Freeman Philanthropic Services Award for Outstanding Corporation from the Association of Fundraising Professionals. AFP presented the award to Safeway’s EVP Larree Renda, who also serves as chair for the company’s charitable organization, the Safeway Foundation.

Safeway raises and donates more than $200 million in monetary and product support to various causes, including cancer research, education, hunger relief and organizations helping people with disabilities, according to the company.

“Safeway is a model of corporate citizenship, not only taking the lead on a broad range of issues, but also working closely with local employees to ensure that community needs are addressed through its philanthropy,” said Paulette Maehara, president and CEO of AFP. “Safeway is a shining light of innovation and dedication to the charities it supports, and all of us at AFP are honored to be able to recognize the company for its philanthropic efforts.”

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P&G, Teva deal: A complementary alignment

BY Alaric DeArment

WHAT IT MEANS AND WHY IT’S IMPORTANT — In the universe of business partnerships, a joint venture between Teva Pharmaceutical Industries and Procter & Gamble is like two galaxies coming together.

(THE NEWS: P&G, Teva enter partnership. For the full story, click here.)

Market analysts see a lot of potential in the deal. Morgan Stanley called it a “modest positive” due to the strong growth potential, despite combined joint venture sales being 1.5% of the mix and “of limited importance to the stock.” In addition, Morgan Stanley pointed out that the venture would promote cross-channel growth by taking advantage of Teva’s presence in pharmacies and P&G’s presence in supermarkets and other stores.

Over-the-counter switches represent another major opportunity, with Teva having a natural advantage as a generic drug manufacturer; P&G sold its prescription drug business to Warner Chilcott in 2009.

With P&G controlling 51% of the venture and Teva controlling 49%, Teva’s OTC drugs will add about half a billion dollars to P&G’s sales. Most of Teva’s OTC business is in the European Union — especially Germany — as well as Eastern Europe, Russia and Latin America.

To be sure, Teva and P&G have strengths that will complement each other — P&G with its portfolio of globally recognized brands and Teva with its enormous manufacturing capacity. With Teva doing the manufacturing, P&G will have greater access to a host of new markets, especially emerging economies and Europe. Teva, which is more well-known in the United States for generic prescription drugs, will be able to take advantage of P&G’s brands.

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Walgreens thinks big with multichannel plans

BY Rob Eder

WHAT IT MEANS AND WHY IT’S IMPORTANT — Almost two-thirds of consumers live within 3 miles of a Walgreens. For the rest of America, Walgreens is using its multichannel strategy to get even closer. The deal with Drugstore.com considerably accelerates the chain’s plans.

(THE NEWS: Walgreens boosts online presence with Drugstore.com acquisition. For the full story, click here.)

To be sure, driving e-commerce solutions has been a critical part of Walgreens’ plan for some time now. A major overhaul of the company’s website at Walgreens.com more than a year ago has fed massive spikes in traffic — up 50% in the last two years, SVP e-commerce Sona Chawla explained to investors at the company’s annual analyst day in November 2010. More than a half-million people visit Walgreens.com each day.

Combined with some of the other important investments it has made, including ordering online and picking up at the store and its mobile applications, Walgreens can serve the customer on her terms. And with more than 85% of Americans carrying mobile phones with them wherever they go, basically Walgreens can be wherever the customer is, virtually speaking, and that “is having a multibillion-dollar impact on our business,” Chawla said.

How? Well, online retail sales certainly continue to grow, but there’s more than one way to skin a cat online. “What’s also growing is what is called Web-influenced retail sales,” Chawla noted. “The Web [will] influence half of all retail spending in 2012, and if you look out to 2014, it’s 53%.”

It’s building fast — especially for Walgreens.

”Our customers are already telling us they multichannel,” she explained. “When we do our surveys, almost half of our site visitors say their next action is to go to Walgreens. Last year when we did the survey, it was 40%; now it’s 50%.”

It is an area in which Walgreens clearly is a leader among retailers because Walgreens has enabled its website to tie into its store inventory systems to enable customers to check product availability at their local store. Only 22% of retailers who were pursuing a similar multichannel approach had this capability, Chawla said in November.

Back in November, Walgreens had just introduced a mobile application that enables customers to scan the bar code on their prescription label to order a refill in a matter of seconds. According to the company, during its recently reported second-quarter earnings period, half of all refills that come in from a mobile device are using the refill by scan feature (as opposed to using the regular mobile app).

Make no mistake: Walgreens isn’t doing this to be like the annoying guy who always has the latest gadget just to piss people off. (“You mean you DON’T have the new 10G iPhone?!”) There’s a lot of money in the multichannel consumer. “We did a recent study of our customers, and we found that customers who use multiple channels are three times more valuable than customers who use a single channel,” Chawla said at the November analyst meeting.

Factor in the more than 3 million loyal Drugstore.com customers, and the more than 60,000 new products that now are part of the Walgreens online mix, and you get a sense of just how big last week’s acquisition could be for Walgreens. It’s huge.

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