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Walgreens offers new urban solution: Expanded grocery set for ‘food deserts’

BY Jim Frederick

DEERFIELD, Ill. —In such big urban centers as Chicago, the problem posed by a lack of full-fledged supermarkets and decent nutritional options to some lower-income neighborhoods has become so acute that those areas have their own designation—local politicians and community activists call them “food deserts.”

Walgreens has begun offering an oasis, of sorts, for those in-town residents. Responding to a clear need for more grocery options in parts of Chicago largely barren of food store choices, the chain has developed a store-within-a-store concept to provide local residents with an expanded mix of groceries, including perishables, frozen foods and baked goods.

Walgreens took the wraps off its first expanded food concept on May 29 in a 2-year-old Walgreens drug store at the corner of Madison and Western avenues on Chicago’s Near West Side. It marked the occasion with a grand reopening ceremony attended by company leaders and local politicians.

Ten more of the expanded food sections will open in other Chicago “food deserts” by late 2009, said company officials.

“Customers are telling us in these areas where food stores have left that they’re shopping us and buying food from us,” said Bryan Pugh, VP merchandising, in an interview with Drug Store News in late May. “Mayor [Richard] Daley has called these areas food deserts. Over the course of time, food stores have left these areas, and we’re still there. And we’ve got a good pharmacy business, a good front-end business, but we really didn’t treat these areas any differently.”

That changed after city officials approached Walgreens to step into the void and provide the thousands of urban Chicago residents no longer served by nearby supermarkets with some limited food options in those neighborhoods. “I met with the city officials and…Mayor Daley’s chief of staff,” recalled Mark Wagner, EVP operations and community management. “They were concerned that there weren’t enough grocery stores on the south side and west side, and they wanted to know what we could do to help solve that and provide a solution for it.”

Walgreens’ solution was an expanded food department for urban stores, such as the unit at Madison and Western. That department, which occupies the entire left front section of the store, features four aisles, is laid out in a side-to-side pattern perpendicular to the front-to-back gondolas in the rest of the store to set the food section apart. Those aisles offer a broad selection of groceries, including a limited selection of fruits and vegetables, cereal and a snack food layout in the corner once occupied by one-hour photofinishing and digital photo self-service kiosks. The kiosks are still there, but they’ve been moved nearby to accommodate the new food section.

“We’ve expanded refrigeration and dry grocery, and there’s 200-plus items that are new to this store,” Pugh said. He called it “step one on the road to continuous improvement. We’ve got another 10 in the pipeline before November,” Pugh continued. “We’re working with our local team here, because it’s a new initiative for us, but at the same time, all the data tells us we’re heading in the right direction. Customers are already telling us this is important.”

The expanded food departments will demand some changes in Walgreens’ normal supply chain and product sourcing, Pugh added. “If we’re going to go that route, we need to get more frequent deliveries, so we have to have the volume,” he said.

Nevertheless, said Walgreens executives, the foray into expanded grocery could spell significant new business—not to mention expanded goodwill in urban communities. “This is an opportunity for us,” Pugh said. “We’re trying it on a small scale, but all of our data tells us it’s very important to those people within that half-mile to a mile from those stores.”

In a very real way, Walgreens’ new food store format is a perfectly logical extension of its community healthcare mission. A study conducted in 2006, titled “Good Food: Examining the Impact of Food Deserts on Public Health in Chicago,” found higher incidences of diabetes and other nutrition-related diseases among residents of areas of Chicago classified as food deserts, where fast-food joints easily outnumber supermarkets.

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Kroger declares quarterly dividend

BY Michael Johnsen

CINCINNATI The Kroger Co. announced that its board of directors declared a quarterly dividend of 9 cents per share to be paid on Sept. 1 to shareholders of record at of the close of business on Aug. 14.

Kroger, one of the nation’s largest retail grocery chains, employs more than 326,000 associates, who serve customers in 2,475 supermarkets and multi-department stores in 31 states.

On Thursday, the company announced that its president and COO Don McGeorge was retiring. McGeorge has been replaced by W. Rodney McMullen.

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Walgreens to test diabetes care model

BY DSN STAFF

NEW YORK Walgreens continues to flesh out its revamped strategy to be the nation’s most convenient and accessible provider of pharmacy and health-and-wellness services.

 

The latest plank in that platform is its plan to test a pharmacy-driven outreach and support program for patients with diabetes.

 

Diabetic-care services and product presentations are nothing new in the nation’s chain and independent drug stores; every pharmacy leader knows that diabetes is a major, (often undiagnosed) health challenge and a “gateway” disease that usually subjects its sufferers to a slew of other related conditions involving the circulatory system, the skin and other organs. It’s also no secret that diabetics generate far more in annual drug store sales to treat these related conditions.

 

What makes Walgreens’ pilot program worthy of notice are two things.

 

 

First, with some 6,800 retail pharmacies, 350 in-store and worksite clinics and a network of specialty pharmacies across the United States, the company wields enormous potential power in the healthcare marketplace. If it expands its fledgling diabetes pilot beyond the test stage, it has thousands of “points of care” through which it could offer diabetes support programs and other disease management offerings. It’s a huge potential resource to offer diabetic patients and their employer-based or government-sponsored health plans, not to mention those patients’ overburdened, time-constrained primary care doctors.

 

 

Second, Walgreens is very deliberately positioning its diabetes care offering as a part of a much broader, integrated healthcare platform that links patients in the program to all the company’s health-and-wellness capabilities, said Walgreens CEO Greg Wasson. And it dovetails neatly with the Obama administration’s call for “more preventive care and better access,” in the words of Walgreens’ top manager.

 

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