Retailer Pulse: Unpacking Walgreens’ footprint consolidation

Retailer Pulse:
Unpacking Walgreens’ footprint consolidation

This October, Walgreens made news by announcing plans to close 1,200 stores over the next three years. While headlines may have caused uneasiness for some, there’s more to this story than meets the eye. Walgreens is proactively consolidating its footprint to focus on high-performing locations and sharpen its role and future as a healthcare leader.

To unpack what this shift means for consumer brands, we sat down with Mike Parkis, who brings two decades of experience to his role as VP, Drug Channel. Mike spent over 17 years with Walgreens, most recently as a Merchandising leader in Health & Wellness, and leads a highly experienced team with deep understanding of the Walgreens model and what it takes to win there. Here’s what he shared about the implications of Walgreens’ recent moves and actionable strategies for brands to excel here as Walgreens evolves.

What does Walgreens’ recent announcement mean for brands historically reliant on Walgreen’s footprint?

It’s essential to understand that Walgreens is taking this action to sharpen its focus on long-term, strategic growth. This is a normal process, or should be, for any retailer. By jettisoning poor performing locations, Walgreens will still have unmatched scale and will be now able to concentrate investments on its 6,000 more profitable locations—while also continuing to build its digital capabilities. As the company said, “This solid base supports our conviction in a retail pharmacy-led model that is relevant to our consumers, and we intend to invest in these stores over the next several years.” Each day, Walgreens becomes clearer and clearer in how it wants and intends to grow with the US consumer. Walgreens wrote the book on retail healthcare and is in an enviable position, having built healthcare expertise and trust with its consumer/patient communities over the past 123 years. Given the current-day importance of having strong shopper loyalty because of its reputation as a healthcare provider, Walgreens is staying laser-focused on evolving and adapting to attract the next generation of consumers without stepping away from its core shopper base. And, while it’s heavily weighted in-store, like all retailers in this channel, Walgreens is keenly focused on ensuring a simple, seamless omnichannel experience across store and digital shelves. The other thing to know: Walgreens has a formidable supply chain. It’s best in market in its ability to deliver products to a consumer in less than an hour—faster than Amazon, a little-known fact that could become an important future differentiator for shoppers considering a variety of competitive shopping options.

What should suppliers be doing to partner effectively with Walgreens moving forward?

Prioritize high-performing locations.

Make sure you have the right level of data so you can shift your ability to focus on the most productive Walgreens locations for your brands. Targeting the best stores based on deep-dive analysis into sales and shopper demographics will ensure your product assortment and investment resources are going into stores with the most potential. This will deliver the best consumption results and make certain TDP’s (total distribution points) are optimized and hitting hurdle rates. After monitoring sales trends and ROI (return on investment) analysis, don’t be afraid to step away from what’s not working. Proactively partner with your category buyers to adjust assortments or programming recommendations in order to improve future growth trajectories. In the end, those suppliers with a keen understanding and deep focus on where (and when) their brands sell best will be able to mitigate sales losses from these store closings.

Ensure a value proposition aligned with Walgreens’ strategic growth areas.

Walgreens is doubling down on owned brands and has said it will be more selective about the national brands it offers customers. It’s never been more important to show how your product aligns with Walgreens’ strategic focus areas — health, wellness, and women’s health. Walgreens is looking for truly unique product offerings as well as valuable category-building consumer and shopper insights to help them win in these top-priority strategic pillars. Ask yourself, “Am I truly adding value? Do we understand the questions that need answering from Walgreens’ perspective? Are we innovatively solving an unmet Walgreens consumer need?" You’ve got to demonstrate how your brand is significantly contributing to meeting Walgreens’ goals, whether it’s driving incremental foot traffic or filling a category gap.

Tighten your focus on the customer.

To truly understand the shopper and their needs, perceptions, and desires, you must speak to Walgreens (your customer). Otherwise, it’s impossible to be successful in their marketplace. Really important: Be willing to invest time to develop insights before you speak with your category merchant. Have a category-first mindset—not a brand focus. When the category succeeds, you succeed. As another step in your preparation, reach out to MPG to help you best leverage business-driving insights prior to engaging in these conversations. As your resident Walgreens experts, we thrive on sharing our knowledge to help our clients achieve their goals.

Should consumer brands still focus on the Drug channel in 2025?

Absolutely—but with a sharper strategy. Focus on a few meaningful things that will drive the business. The Drug channel still holds unique advantages that other retailers can’t replicate: 15,000 points of distribution, advanced loyalty programs that keep customers returning, and a consumer base that enjoys the trust, convenience, education, and experience that only this channel brings.

Walgreens Boots Alliance (WBA): Fast Facts

The top 10% of WBA Stores account for 20% of sales

The top 25% of WBA stores account for 40% of sales

The bottom 1,200 stores (15%) account for 7% of sales

Walgreens’ top 3 metro markets and % of sales to the chain:

Chicago – 5.3% of sales

New York – 3.9% of sales

Boston – 2.1% of sales