Retail pharmacy in place to deliver on 'last mile' expectations, Walgreens COO says

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Retail pharmacy in place to deliver on 'last mile' expectations, Walgreens COO says

By Michael Johnsen - 11/07/2017

SCOTTSDALE, Ariz.— Drug stores are best positioned to deliver along the last mile of the customer journey, Walgreens Boots Alliance co-COO Alex Gourlay told investors Tuesday morning during a "fireside chat" at the Credit Suisse 26th Annual Healthcare Conference. That's even more true now as Walgreens heralded a milestone yesterday with its partner FedEx on providing pickup and drop-off services at virtually every Walgreens in the U.S.

In the wake of CVS Health's announcement Monday on next-day pharmaceutical deliveries, Gourlay said: "The market is changing. It goes back to the point that customers want more flexibility about how they receive products and services in the last mile. The way Walgreens sees this is that we believe we're well-positioned to provide these services, both in our own products, pharmacy and front-of-store items, as well as other peoples' products through our FedEx deal."

Gourlay noted, that like CVS, Walgreens has a number of tests around serving that last mile, including tests with Google and Postmates. "Drug stores, or pharmacy networks, are really well placed for this last-mile challenge," he said. "That's an opportunity for ourselves and clearly CVS sees it the same way."

Whether the proclivity of the FedEx-within-Walgreens offer will pay dividends or not will be evident this holiday season. "The fact that Walgreens and Duane Reade are open on Christmas Day gives [FedEx] a lot of extra capacity," Gourlay said. It's not only a convenience play, Gourlay noted, there is increased security associated with the offer as well. "The trends are very clear, in America it's called 'porch piracy,' where people are more and more concerned about leaving products for collection or delivery on their front doorstep. It's a real opportunity for us."

In addition to solving the supply chain needs of its consumers, Walgreens is also making significant upgrades to the supply chain feeding its more than 7,500 stores. "We continue to invest in technology, particularly as we update a more-than-25-year-old infrastructure," Gourlay said. "We are actively changing our supply chain."