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Walgreens moves ahead with store redesign

BY Jim Frederick

NEW YORK Making good on its promise to overhaul and rejuvenate its store format and merchandise presentation, Walgreens shed new light on its store renovation program Tuesday.

That program will see its first large-scale test in the coming weeks, Walgreens’ top financial officer told investment analysts, with the unveiling of some 35 new or redesigned drug stores by early summer. By this fall, some 400 of the company’s more than 6,700 drug stores will sport the new, slimmed-down prototype, SVP and CFO Wade Miquelon told analysts at the Barclays Capital Retail and Restaurants Conference April 28.

The new format features a pared-back product selection — with SKUs down by 15 to 20%, according to Miquelon — and gondola heights lowered to improve department visibility and sightlines. Walgreens is scrapping many slow-moving and redundant product facings and offering more of what the company is calling “affordable essentials” like detergent, mouthwash, skin care products, shampoo and batteries.

The company is also emphasizing more promotional items in both its product selection and advertising, and grouping those products thematically to make it easier for the 5.3 million customers who shop its stores each day to find what they’re looking for.

The goal, said company leaders, is to create an easier and more exciting shopping experience for customers and boost average shopping baskets by at least one more item per customer. The result could be billions of dollars in additional revenues, more productive and profitable stores and additional customer visits as the company works to restore its sales and profit momentum in a recessionary economy.

One Wall Street analyst who has toured the new Walgreens experimental format, Mark Miller of William Blair & Co. Equity Research, called the early result “a good first effort,” adding, “management has improved the aesthetics in its new store format by reducing the SKU count…and keeping the merchandise presentation below its standard five-ft., six-inch risers.

“In addition to streamlining the assortment — which management hopes can reach a 30% reduction over time — the company has strengthened the product lineup in key healthcare and beauty categories,” added Miller. “Additionally, the new store format has an expanded selection of convenience food and staple items, which may help drive stronger traffic to the store.”

In a recent interview with Drug Store News, Walgreens president and CEO Greg Wasson said the company’s aim with its new store format is to “reinvent the front-end experience” by taking a microscope to “every category in the store.”

“It’s everything from reviewing our merchandise selection and our department adjacencies, our profile, our look and feel and so forth within the stores,” Wasson explained, “and also taking a good, hard look at our costs and our efficiencies and our processes, as to how we do business. I think the fortunate thing about the industry we’re in is that we sell a lot of what people need. So we’re focusing on all we can do to meet the new consumer needs and make sure we’re relevant in their everyday life, by offering high value…products and services.”

Walgreens merchandisers and category managers are going through every department within the store, and have “spent the last seven or eight months really understanding what does the shopper want,” said Miquelon.

According to a report from Dow Jones Newswires, Walgreens is reporting that the section-by-section overhaul of the company’s prototype front end is 80 to 90% competed.

“Hopefully, by mid-summer we’ll be well on the way,” Wasson predicted earlier this year.

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Purex Complete 3-in-1 Laundry Sheets to debut next month

BY Allison Cerra

NEW YORK Henkel announced that its new laundry product will hit store shelves next month.

Purex Complete 3-in-1 Laundry Sheets is slated for aisles this May. Each powerful sheet contains a load’s worth of super-concentrated detergent, softener and anti-static all-in-one product. The product, Henkel said, simplifies the laundry process, allowing people to say goodbye to bulky bottles, spills and messes. Final product testing – included going into consumers’ homes and observing how the product was used/performed – showed that 80% of those who tried it said they would purchase it and 94% of consumers stated that the product met or exceeded expectations.

This is the largest U.S. launch in the company’s history. Marketing support will include in-store promotion/education, online and shopper marketing, FSIs, traditional advertising and PR and social media.

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N.Y. drug stores, organizations band together to fight off swine flu

BY Michael Johnsen

NEW YORK On the ground in New York, where most of the confirmed cases of swine flu have been identified, there has been a surge in purchases of such flu medicines as Roche’s Tamiflu, hand sanitizers and face masks through local New York pharmacies, such as Duane Reade and CVS, especially in Queens, each of the retailers has said.

“As New York’s largest drug store, Duane Reade is committed to the health and safety of New Yorkers,” stated Frank Scorpiniti, SVP pharmacy operations at Duane Reade, noting that in particular its 28 locations in Queens have seen increased activity related to the swine flu. “Duane Reade pharmacists are the most accessible healthcare providers. Our pharmacists are providing information on the prevention, detection and treatment of the flu, and we are increasing our supplies of products associated with this.”

CVS has ordered additional doses of Roche’s Tamiflu in anticipation of increased demand, according to published reports.

Meanwhile, Kerr Drug is taking a proactive stance, though the 102-store chain has yet to see any cases of Swine Flu in the Carolinas, said director of marketing Diane Eliezer.

“We’ve just built an endcap to display things like hand sanitizers, gloves and that sort of thing, with signage to identify it in our stores,” Eliezer told Drug Store News.

Meanwhile, Walgreens spokesman Robert Ellfinger said the chain has posted signs in its stores to direct customers to products that could help ward off infection, as well as information at its pharmacies on federal guidelines for minimizing the risk of contact with the disease. “We’ve instructed our pharmacists to direct patients to the recommendations,” he said.

Ellinger also added that the chain has “seen an increase in prescriptions for Tamiflu, but we’re not sure what that means yet. We’re also seeing increases in products like hand sanitizers.”

The National Association of Chain Drug Stores has also been actively monitoring swine flu developments, and is proactively disseminating relevant information to its member companies.

“NACDS has been very active since the inception of this potential pandemic … since it was announced last week,” Edith Rosato, NACDS SVP pharmacy affairs, told Drug Store News. “We’ve been in communication with the Department of Homeland Security and the [Centers for Disease Control and Prevention],” she said, participating in daily conference calls with those organizations around swine flu developments.

“Our role is really to ensure that we get that communication … to our members,” she said. “In any case of an emergency … the important thing is that we continually have supply of medications and consumable products, as well as [over-the-counter] products for any patient that walks into a pharmacy because pharmacies are the first response when it comes to the availability of products.”

Having an outbreak of any kind of influenza-like illness this late in the traditional human influenza season could present a supply-and-demand challenge, however, as chains aren’t typically deep in antiviral inventory at the store level as they may be at the beginning of a season.

On-hand sourcing for flu medicines like Tamiflu and GlaxoSmithKline’s Relenza, which has also been suggested by the Centers for Disease Control and Prevention as a suitable antiviral in the treatment of this swine flu, may in fact be problematic should there be a significant increase in demand, Laurel Edelman, SDI vice president of clinical accounts, told Drug Store News.

“Traditionally, the flu season will last toward the end of April,” Edelman said.

This year, the flu season peaked relatively late in the season, which would have boded well for having supply on hand in the local pharmacy, but it has been one of the slowest flu seasons on record.

“The idea that Tamiflu should be sitting on the pharmacy shelf at the end of a slow season — I’m not surprised to hear that [pharmacies] may have to wait to get [the medicine] from a distributor,” she said.

To date, there have been no reports of antiviral shortages.

GlaxoSmithKline, which on Monday announced it had supplied Mexico with 170,000 additional doses of Relenza, reported that it is exploring additional production capabilities should the need arise, and is working with the World Health Organization and other national agencies around the manufacture of a vaccine to help prevent this new influenza strain, once a suitable candidate vaccine strain is available from the WHO.

The St. Francis Preparatory School in Queens has been the source of sorts for all of New York City’s swine flu cases — as of 11 a.m. Tuesday, 45 cases of swine flu have been traced to the school. According to the New York City Department of Health, as many as 100 students missed classes a week ago due to an influenza-like illness.

“We believe there were probably more than 100 cases of swine flu at the school, and lab tests are confirming what we have suspected,” announced New York Mayor Michael Bloomberg on Monday.

Bloomberg confirmed “there are no other clusters [of swine flu incidence] in the city,”  adding that a six possible cases at a day-care center in the Bronx came back negative for the swine flu.

The St. Francis school has been closed for the remainder of the week, the school announced on its Web site.

“This should provide adequate time for any students who are ill to recover,” the school stated.

All student activities are cancelled and there will be no access to the building during the week.

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