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Walgreens says ‘e komo mai’ to Hawaii

BY DSN STAFF

HONOLULU —“E komo mai” means something akin to “you’re always welcome” in Hawaiian. Walgreens brass extended that greeting here for the first time this month.

In a colorful island sendoff that included a traditional Hawaiian blessing, Walgreen Co. celebrated its first foray into the nation’s 50th state with the grand opening of its first drug store in Hawaii Nov. 1. The store—built on the site of a former Tower Records outlet on busy Kapiolani Boulevard near the vast Ala Moana shopping center—is the first of what company officials promise will be a saturation campaign to seed the islands with as many as 30 stores in coming years.

Three more Walgreens are expected to open in the second half of 2008, in Kaneohe and Kalihi and on Maui.

“We’re going to make substantial investments in Hawaii in the years ahead,” said Dana Psomas, Walgreens district manager for the state.

The grand opening drew Hawaii Governor Linda Lingle, as well as Walgreens chairman and chief executive officer Jeff Rein, who presented a $5,000 donation from Walgreens to the local chapter of the American Diabetes Association.

“As a healthcare provider, we will help improve the lives of local residents living with diabetes, especially the 20 percent of Native Hawaiians with the disease,” Rein said. “That’s two-and-a-half times the rate of other residents. Our pharmacists can have a real impact on helping these patients manage their diabetes and live a healthy life.”

Clark Fujihara, district pharmacy supervisor for the state, added that the chain would offer Hawaii residents pharmacy services “that aren’t currently offered, such as drive-through pharmacies.”

With 9,000 square feet of sales space, Walgreens’ first Hawaii store is roughly 2,000 square-feet smaller than the company standard. Future stores in the state will be larger, officials said, allowing for drive-throughs, more close-in parking and an even broader selection of local products.

Despite the relatively compact size of the Honolulu store, Walgreens leaders pointed out, the densely merchandised unit is large enough to encompass some 20,000 products, including many from more than 50 local product vendors.

“We’re especially proud to have so many local suppliers represented in a store smaller than our typical size,” Psomas said. “We’ve learned from our vendors what is important to Hawaii’s customers, and that’s reflected in our offerings.”

Those offerings will go beyond products that are traditionally supplied locally, such as bread, dairy products, soft drinks and water, according to Walgreens. The company is also using local suppliers for product categories that include candy, local snacks, grocery items, automotive needs, souvenirs and greeting cards.

“Being new to the market, their assistance is invaluable to us,” said the DM. “We want to…merchandise our stores to the local community, neighborhood by neighborhood.”

The new store is one of the first Walgreens units to feature Café W, a self-serve beverage fountain and food bar. “If our customers like this first store, they’ll love our full-featured stores opening next year,” said Psomas.

Walgreens’ far-flung leap into Hawaii puts it on a collision course with the state’s only dominant drug retailer, Longs Drug Stores. Operating out of Walnut Creek, Calif., Longs has been a fixture here since 1954 with 36 stores open in the islands. Some of its locations here are said to be some of the highest-volume drug stores in the United States.

Seeking to exploit the rich potential of its newest and most distant expansion target, Walgreens is steadily nibbling at prime real estate opportunities in the market, lured by the Islands’ more than 1.2 million consumers, its millions of yearly visitors and its relatively high standard of living.

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Big crowds greet Tesco debut in Los Angeles

BY Doug Desjardins

LOS ANGELES Tesco wanted to make a good impression with its Nov. 8 Fresh & Easy debut in Los Angeles—a city where image is everything—and it did just that with a huge crowd jamming the aisles on opening day. Company officials reported similar turnouts at five other grand openings in Southern California and acknowledged customer response exceeded expectations.

More than one hundred people stood in line waiting to get into the Los Angeles store, with employees letting customers in as others left. And what they saw inside was a Tesco’s new hybrid combining elements of Trader Joe’s, Whole Foods and 7-Eleven with some borrowings from its stores in Europe.

The basic concept of Fresh & Easy is a convenient shopping experience with an emphasis on healthy food and prepared meals from its Fresh & Easy private label. During a brief tour of the crowded store, Uwins explained that 50 percent of its food offerings are from its private label and that everything is created, cooked and packaged at its own state-of-the art “kitchen” in Southern California, including all of its prepared meals.

“We expected pre-prepared meals to be a massive hit here in the U.S.,” said Simon Uwins, Tesco’s chief marketing officer. “And so far, judging from the gaps we see in our refrigerated cases, they’re being cleared out rather fast.”

Several things set Fresh & Easy apart from other grocery retailers like Trader Joe’s and Whole Foods, the two it resembles the most. As Uwins mentioned, its Fresh & Easy private label has a 50 percent penetration rate and is represented in nearly every major food category including produce, meat, prepared meals, juice, coffee and mixed nuts.

And that reliance on private label allows it to offer some very competitive prices. Overall, Tesco says its prices are well below its main rivals at standard supermarkets. “We estimate our prices are about 20 percent lower than most supermarkets in the area,” said Uwins.

Its selection general merchandise, health and beauty and over-the-counter medications is small supermarket standards and runs more along the lines of a convenience store, though with a broader assortment. Basics like paper towels, diapers and pet food are stocked in a single aisle and its HBC and OTC products are located on one long shelf toward the back of the store capped with a section for greeting cards and magazines.

The rather small selection—and the complete lack of private label products—shows Fresh & Easy is primarily about the food, though that could change. “There are no private label products outside of food right now but that’s not to say that won’t change,” said Uwins.

The in-store signage is also unique and stamps Fresh & Easy as an organic and eco-friendly retailer, a good image for Southern California. Nearly every green, cardboard endcap features a message about its products including “all our bagged coffee is certified organic” and “our desserts contain 0 percent trans fats.” LED lighting is also used in the store, something else pointed out in its signs. The store doesn’t sell cigarettes but do carry a large selection of wine along with liquor and beer.

The checkout system is completely automated with 100 percent assisted self-checkout. Five checkout stands are small and designed for 15 items or less and the rest are a bit larger with scanners and self-pay systems (though there were plenty of employees nearby to help out people not familiar with the concept).

As expected, Tesco had some detractors at its grand openings in the form of labor unions and neighborhood groups. The Carpenters Local 1506 picketed in front of the Los Angeles store and handed out fliers claiming that a group hired by Tesco to help build its stores “does not meet area labor standards, including paying for health care and pension for all its employees on all projects.”

Tesco has a second wave of five openings planned for Las Vegas on Nov. 14 and plans to have stores open in the San Diego market in late November and Phoenix in early December. It expects to have 50 stores operating in California, Nevada and Arizona by next February.

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Costco announces October sales figures

BY Doug Desjardins

ISSAQUAH, Wash. Costco reported a big 9 percent jump in same store sales in October.

Leading the way was a 17 percent increase in sales at its international stores with U.S. sales jumping 7 percent. The increase beat the 5.7 percent average predicted by analysts for the month.

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