AmerisourceBergen Corp. (ABC), CVS Caremark Corporation (CVS): Walgreen Company (WAG) Dreams of Going Global

Seven stores is hardly enough to move the needle on the company’s declining sales, even if the flagship stores are doing well (Walgreen hasn’t given information specifically about these stores). The stores are also bigger than 20,000 square feet, so even if the concept works, Walgreen can’t just convert its existing stores to the same format. But it may be able to scale the concept down and use the flagship stores to attract attention and brand awareness, a key commodity in the retail market.

Competitors CVS Caremark Corporation (NYSE:CVS) and Rite Aid (NYSE:RAD) are also revamping their in-store strategies. CVS Caremark Corporation (NYSE:CVS) has added fresh sandwiches and salads to its stores, in an effort to grow non-pharmacy revenue and keep customers in the store longer. Rite Aid is going the other way with its new Wellness stores, which draw more attention to the pharmacy section and feature expansive departments for vitamins and supplements, caregiver tools such as bedpans, and organic food.

All three are competing with the likes of Wal-Mart Stores, Inc. (NYSE:WMT) , which is typically known for its gigantic superstores, occupying around 100,000 square feet and selling about as many products. However, in 2011, the company introduced new Wal-Mart Express stores, which occupy about 15,000 square feet and sell 11,000 to 13,000 items — comparable to a corner drugstore. During 2012, the Express stores generated double-digit same-store sales growth, compared to just 1.8%  growth for the company overall.

The Foolish bottom line
Drugstores are facing heavy competition from each other and their big-box competitors, but the category itself stands to gain from an aging population in the U.S. and Europe. Walgreen Company (NYSE:WAG)’s results this quarter may have been somewhat mixed, but its long-term goals could be extremely profitable. This is a company to keep your eye on.

The article Walgreen Dreams of Going Global originally appeared on Fool.com and is written by Jacob Roche.

Fool contributor Jacob Roche and The Motley Fool have no position in any of the stocks mentioned.

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