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In true hedgehog fashion, Walgreens taps an experienced pro to lead merchandising

BY Michael Johnsen

RadioShack on Thursday evening tapped Joe Magnacca, who played a key role in making Walgreens’ front-end transformation pop, to be the small-box electronics retailer’s chief executive. On Friday morning, RadioShack’s shares jumped as Wall Street absorbed the news. 

And while that hire makes perfect sense for RadioShack, where does that leave Walgreens? While merchants the likes of Magnacca don’t exactly grow on trees, in classic hedgehog style the news also speaks to the depth of Walgreens’ bench. The company has a lot of faith in Bryan Pugh. They hired him to be chief merchant before they bought Duane Reade and acquired a problem just about any retailer would love to have: two very talented men leading the merchandising drive. 

In other words, don’t expect Walgreens to skip a beat. Last year when DSN had camped out within the executive suites at Walgreens to get some first-hand perspective on what was really happening on the corner of happy and healthy, Pugh shared a vivid picture as to how savvy merchants keep evolving their game: "You’ve got to skate to where the puck is going, not to where it’s been.” 

It’s a beautiful analogy that really does capture the essence of retailing. You’ve got to keep an eye on the puck, or it’ll be cherry-picked onto the end of the competition’s stick. And while you’ve got your eye on the puck, you still have to know what’s happening all around you, or you risk being boarded by another competitor. 

Pugh has that 360-degree vision. 

He came to Walgreens in 2009 from Tesco’s Fresh and Easy USA where he was COO and SVP operations. He also has experience working in big-box retail and club.  

"It’s all about measuring and making sure you get the model right," Pugh told DSN regarding remodels and making the front-of-store a product borne out of consumer needs. 

Walgreens will still be playing five-on-five now that Pugh is taking his place on center ice. Walgreens will still be lighting the lamp with their customers across beauty, wellness and fresh. 

Because Pugh has strength across his bench, too. 

“I am very thankful that we have a very solid merchandising team with solid leadership in the GMM roles: Shannon Curtin on beauty, personal needs and seasonal; Robert Tompkins on health and wellness; and Steve Broughton in food and convenience goods," he told DSN. "Our category managers and category specialists are making tremendous progress over the last year, and we are looking forward to continuing to change the traditional drug store into a health and daily living destination.”


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It’s official: CVS Caremark has acquired Brazil’s Onofre. What’s next?

BY Antoinette Alexander

During its fourth quarter conference call on Wednesday, CVS Caremark officially unveiled its foray into the international drug store space with the acquisition of Brazilian retailer Onofre, the eighth-largest drug chain in Brazil.

Now that the other shoe has dropped, what’s next?

While chains are prevalent, Brazil remains a highly fragmented market that is clearly ripe with opportunities thanks, in part, to an aging population, a decline in unemployment and a rise in incomes.

“It’s a maturing marketplace [and] it’s expected to have continued strong growth for the foreseeable future. As people move up the economic ladder, they’re spending more on healthcare as well as education and with increased access to healthcare and pharmacy both are expected to grow over the next several years,” CVS Caremark president and CEO Larry Merlo told analysts during Wednesday morning’s conference call. To be more specific, healthcare and pharmacy are expected grow double-digits for the next decade.

The market in Brazil has been experiencing some consolidation, largely domestic, but some industry observers speculate that the move by CVS Caremark could spark further consolidation.

In fact, Merlo even indicted that, going forward, there could be other opportunities acquisition-wise.

“I think one of the other keys for us is the market is recessive to chain pharmacy. Chains are pretty prevalent in the Brazil market but, at the same time it’s still fragmented. I think the largest player has about a 9% share,” Merlo told analysts.

There’s no doubt that the wheels of globalization are turning. Another clear example is Walgreens and its recent acquisition of Alliance Boots.

The reality is that the problems facing the U.S. healthcare system are very similar to the problems facing western nations throughout the world. By bringing together the two most iconic brands in pharmacy retailing in the world, “you now have the U.S. and the European markets,” Greg Wasson, Walgreens president and CEO, said in an earlier interview. “Close to 1 billion people who are aging, the generic wave coming full speed at us, every country in the world trying to control healthcare costs … and what’s the best way to control healthcare costs? To get more people compliant on generic drugs. This sets us up in two of the biggest economies in the world on a global scale, with the opportunity now to expand beyond Europe into Asia and Latin America.”

 

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Reports: Delhaize America to cut 500 jobs

BY Alaric DeArment

NEW YORK – Delhaize America is cutting 500 jobs, according to published reports.

News media in North Carolina reported that the Belgian supermarket operator’s American subsidiary would cut 350 jobs and 150 open positions as part of a reorganization. Employees of the company received notifications of the layoffs via email, according to the reports.

The layoffs come not long after the company experienced a shakeup in December 2012 when Food Lion president Cathy Green Burns left the company, succeeded by Beth Newlands Campbell. Other executive changes included the departure of Delhaize America chief supply chain officer Mark Doiron and the appointment of SVP business service center and sustainability Greg Amoroso as CFO.

David Criscione became chief strategy and development officer, and Deborah Dixson was appointed chief information officer.

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