Tuesday, January 16, 2018
Business

Walgreens offer fresh food sections in some Tampa Bay stores

The offerings seem straight from a restaurant menu. Lobster bisque. Grilled chicken breast with tortellini. California rolls.

You wouldn't expect them amid the paper plates, nail polish and pain relievers at a drugstore. But, at some Walgreens locations, they are now part of the spread.

The Illinois-based chain recently began rolling out the fresh food concept in Florida, a few years after it began testing it at some of its 8,000 stores nationwide. There are 14 fresh stores statewide, including four in the Tampa Bay area. About 50 more are slated for the state this year.

The concept coincides with drugstores' efforts to get more people through the door in an increasingly competitive retail market. If customers come in for a chef salad, maybe they'll also pick up a toothbrush or get a flu shot.

"You can go and get a prescription, but then not come back for 90 days," said Jim Jensen, merchandise manager for perishable beverages and snacks at Walgreens. "Food you eat every day. The idea is about frequency."

Experts see the fresh food as a logical step for Walgreens, CVS and other stores, which have had good results expanding food and consumable items, such as beer and toilet paper. Coupled with the popular rewards cards, fresh food is another way for stores to "own" customers and boost their spending, said Mike Tesler, a partner of Retail Concepts consulting.

"If you check tags on key chains, the most common ones are for Walgreens and CVS. They've been very successful with that," he said. "If you're going into a store with a 20- or 25-percent-off coupon, it changes the consumer mind-set. They are looking for things to buy."

And people always need fresh food.

Adding perishable food is also a good way to offset health and beauty business lost to big-box chains, dollar stores and online retailers, he said. People might buy cosmetics online, but not sandwiches and salads.

Walgreens often places fresh food sites in urban areas with limited access to grocery stores and health care services. It looks for neighborhoods where supermarkets have closed, but takes several factors into consideration, from store sales to local competition. No word on whether Walgreens will try to fill the void in Tampa Bay neighborhoods where Sweetbay recently closed 22 stores. A company spokeswoman said no fresh food plans are in the works for the Walgreens near the Midtown Sweetbay in south St. Petersburg, which shuttered amid public outcry.

Many stores with fresh food sections also have Take Care clinics for administering shots, treating common illnesses and doing physicals, as well as pharmacies specializing in HIV, hepatitis C, fertility and transplant treatment. They can be incorporated into full or partial store remodelings.

The Walgreens at Hillsborough Avenue and 22nd Street in east Tampa introduced fresh food in November during a store upgrade. It had done well with a small section of sandwiches and prepackaged produce and wanted to expand the selection for customers who don't have a lot of supermarkets nearby and often rely on fast food.

"We're definitely pleased with it," store manager Doug Boyd said. "We've had a lot of positive comments from customers. It's nice for people to be able to come in and get healthy food."

Items are delivered six days a week and have an average shelf life of a few days. Most of the food is made under Walgreens' private Delish brand. Several soups and dips come from Panera Bread. Cut fruits and vegetables are the most popular, along with the wraps, salads and sushi.

"It's really good, but I'm kind of a health freak," said Lawrence Wyatt, 32, grabbing a seasonal fruit salad, then a pack of cigarettes. "I like the selection."

Creating a ''food oasis," as the sections are sometimes called, costs money up front and isn't without risk. Stores must set aside prime floor space near the front door that could go for other products. Employees must restock inventory, inspect for freshness daily and monitor refrigerator temperatures.

The Hillsborough store has more than three aisles devoted to fresh food and groceries, much of it perishable. It takes a full-time grocery specialist and part-time employee to manage the entire section. Boyd said the investment has been worth it. Although he didn't have numbers, business seems to be up.

Selling perishable goods guarantees stores will have waste, but Walgreens has limited the amount by focusing on top-selling items and fine-tuning the ordering and delivery system, Jensen said. The profit margin of perishable food is generally higher than other items, especially ones on sale. But don't look for the fresh food to go on special. Because it's not available at all locations, it doesn't appear in weekly ads.

Fresh food sections are designed to complement health services offered in many of the stores and strengthen the relationship between customer and pharmacist. A pharmacist consulting a patient about his diabetes medication, for example, might give him a tour of the store, pointing out good food choices and not-so-good ones, said Walgreens spokeswoman Vivika Panagiotakakos.

Wellness and healthy food initiatives, while altruistic to an extent, are necessary for drugstores' long-term survival, experts say. Stores that once relied on prescription drugs to draw traffic now face competition from Walmart, Target and grocery stores, which sell some prescription medications for just $4. Many insurers require customers to use mail order for their prescriptions, and some stores, drugstores included, offer home delivery.

Drugstores also have lost business in the photo department as customers no longer have to come in to buy and process film. Thanks to digital cameras and smartphones, they can do everything online.

The shift toward health and wellness puts the stores in a better position to become one-stop centers for everyday needs. Having locations on every major corner and street gives drugstores an advantage over other, larger retailers and puts them at the front of customers' minds.

"They're ubiquitous," said Tesler, the retail consultant. "Every one on their way to and from work can stop into a Walgreens, whether it's for toothpaste, toilet paper, paper towels, shampoo or a prescription."

Susan Thurston can be reached at [email protected] or (813) 225-3110.

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