Walgreens Plans to Purge Product Offering

DEERFIELD, Ill. — Walgreen Co. intends to make a major change to its product offering, with plans to stop carrying many of its slower-moving products.

"We need to pick the 10 grocery items that customers want," Walgreens President Alex Gourlay told Crain's Chicago Business. The newspaper noted that the products that do "make the cut" will be restocked almost twice as often to prevent bare shelves. Gourlay said the drugstore chain will also dramatically cut back on sale pricing.

These changes are necessary as Walgreens has difficulty now competing against big-box discounters such as Wal-Mart Stores Inc. and Target Corp., the news outlet reported. Walgreens' product mix directly competes with convenience stores in many product categories as well. 

In addition, Deerfield-based Walgreens has had difficulty being competitive against its main drugstore rival, CVS Health Corp., because of CVS' ownership of Caremark, the country's second-largest pharmacy benefits manager (PBM), reported the news source. PBMs are third-party administrators that negotiate prices with pharmacies and drugmakers on behalf of corporations and pay their workers' prescription drug claims.

Walgreens may turn the tables on this disadvantage, however, as the company is reportedly considering forming a partnership with a PBM.

Gourlay was part of the executive management team at Switzerland's Boots Alliance, where he served for 35 years. Walgreens purchased Boots Alliance in 2013 for $15.3 billion. Much of Walgreens' executive management has since been replaced by Boots Alliance executives.