Monday, December 22, 2008

Breaking News: Mega-Drug Chain Walgreens Hires Former Tesco Fresh & Easy USA VP of Operations Brian Pugh For New VP of Format Development Position

U.S. drug store chain Walgreen's has hired former Tesco Fresh & Easy Neighborhood Market co-vice president for operations Brian Pugh as the mega-chain's new vice president of format development, Fresh & Easy Buzz has learned.

Pugh, who abruptly left Fresh & Easy Neighborhood Market USA this summer, will focus on growing the consumables and related categories, such as food, groceries and household goods, in his new executive position at Walgreen's.

Walgreen's has been adding more food, grocery and household items to its drug stores over the couple years, as well as increasing the categories sku counts and promoting them more in recent months during the serious U.S. economic recession. Pugh will focus on increasing the consumables and related category development in the Walgreen's stores in his new corporate position.

Earlier this year Walgreen's also said it planned to create a new, smaller-format Walgreen's store. Typical Walgreen's drug stores are about 15,000 -to- 20,000 square feet. The new, smaller-format stores will be about 10,000 square feet -- and even smaller in some cases like those stores designed for dense urban regions; cities like New York, San Francisco and others.

The drug chain already operates some smaller-format stores in cities like San Francisco, where the available space and real estate costs in numerous neighborhoods make it logical to do so. However, those stores are basically scaled-down versions of a typical, bigger, Walgreen's drug stores. The new, small-format Walgreen's in most cases will be of a bit of a different, customized, format compared to these smaller versions of the basic Walgreens stores.

Although he was primarily hired to focus on the consumable and related categories overall for Walgreen's, Pugh's experience in small-format retailing also will be utilized by Walgreens as it roles out its new small-format drug stores selectively in the U.S.

Pugh, came from the United Kingdom with Tesco Fresh & Easy CEO Tim Mason and a number of other former British Tesco executives to start up Fresh & Easy Neighborhood Market USA in Southern California. He was the sole senior vice president for operations for Fresh & Easy until Tesco transferred its former CEO of Tesco-Lotus, the company's Thailand division, to Fresh & Easy Neighborhood Market headquarters in El Segundo, California to share the title and duties of senior vice president of operations with Brian Pugh.

Both men held the title co-senior vice president for operations until September of this year, as we were the first publication to report in this piece: "Key Personnel Breaking News: Co-Vice President of Retail Operations Brian Pugh No Longer Employed At Tesco Fresh & Easy Neighborhood Market," Pugh suddenly left Fresh & Easy.

Tesco's Fresh & Easy has never commented publicly on the reasons for Brian Pugh's leaving the grocery chain. Additionally, Fresh & Easy Buzz has been the only publication to date to write about it.

In addition to hiring former Fresh & Easy executive Brian Pugh, Walgreen's also made two additional new hires to its senior corporate team.

The drug chain hired Colin Watts as vice president and president of the Walgreens' Health and Wellness disease management business, which helps patients coordinate their care, continue treatments and practice healthy behavior. He is the former president of Johnson & Johnson's McNeil Consumer Healthcare Worldwide business and most recently worked as vice president and general manager of the U.S. business of Campbell Soup Co.

Additionally, Walgreen named Jeffrey Zavada, a national vice president of health insurer UnitedHealth Group Inc., as vice president and chief sales officer. He will be responsible for selling health services to health insurers and other health plan sponsors.

A Walgreens' corporate spokesperson has confirmed the drug chain's hiring of Brian Pugh, as well as the the two others, to Fresh & Easy Buzz.

Tesco's Fresh & Easy Neighborhood Market has been following a retail store location strategy, which we call "critical mass," that is modeled strongly on the strategy used by drug store chain giant Walgreens.

For Fresh & Easy that strategy is to open numerous stores within a short distance of each other in specific market regions like Southern California, Metropolitan Las Vegas, Nevada and in the Phoenix, Arizona Metro region market. Walgreens uses this strategy near nationwide in the U.S.

Tesco's Fresh & Easy also has been co-locating many of its small-format, combination grocery and fresh foods stores next to or near Walgreens drug stores in both existing and new shopping centers in its Southern California, Southern Nevada and Phoenix, Arizona region markets.

These two facts make Brian Pugh's new job at Walgreens both an occupationally and operationally synergistic one in at least those two aspects to his previously position at Tesco's Fresh & Easy Neighborhood Market USA. One could say not only that has he landed -- but that he has done so at a bigger retailing airport, in terms of store count and annual sales in the U.S.

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