Monday, March 2, 2009

Walgreens Promotes Former Tesco Fresh & Easy Exec Bryan Pough to VP Merchandising Position; Move Fits Drug Chain's Current Strategic Focus

Mega-drug chain Walgreens has promoted former Tesco Fresh & Easy Neighborhood Market co-vice president for operations Bryan Pough to the position of corporate vice president of merchandising-Walgreens after just slightly over two months on the job as vice president of store format development at the corporate headquarters of the largest drug chain in the U.S.

As we reported in this December 22 piece [Breaking News: Mega-Drug Chain Walgreens Hires Former Tesco Fresh & Easy USA VP of Operations Brian Pugh For New VP of Format Development Position], Deerfield, Illinois-based Walgreens hired Pough as its vice president of store format development in December, 2008, a new position in which he was tasked with focusing on growing the consumables and related categories in the drug chain's stores, such as food, groceries and household goods, as well as the strategic development of the existing and new store formats for the drug chain, including its new small-format drug store development we call "Smallgreens." The existing format development has to do with the drug chain's new, added focus on food, grocery and related products.

As we've written about previously in Fresh & Easy Buzz, Walgreens has been dramatically increasing the number of consumables SKUS in its U.S. drug stores, including adding lots of food, grocery and perishable products, both national and regional brand, as well as under its own store brands, which include Deerfield Farms, Walgreens and W, along with a couple others.

Walgreens has also been featuring more food, grocery, health and beauty care (HABA) and household item packaged goods in its 12-page weekly advertising circle since late last year, something we've previously reported on as well.

And since mid-January of this year the quantity of consumable, HABA and household packaged goods items in the weekly advertising circulars has more than doubled. For example, this week's Walgreens ad circular looks much more like a supermarket chain advertising circular than one that a drug store chain would normally produce. The first three pages of the promotional piece, for example, are devoted almost entirely to food, grocery, HABA and household items.

This is all part of Walgreens' strategic plan to focus more on everyday essential products in its stores in general, and in particular because of the current economic recession in which shoppers are cutting back dramatically on non-essential products.

Walgreens said today that Bryan Pough was named the comapny's new vice president of merchandising effective yesterday, Sunday, March 1. As vice president of merchandising Pough will continue in his roll as head of store format development, adding the merchandising responsibilities to that role, according to Walgreens. This gives the former Tesco Fresh & Easy Neighborhood Market USA executive a full plate right on the front lines at the drug chain.

Pough replaces former Walgreens vice president of merchandising George J. Riedl, who has been named senior vice president of pharmacy innovation and purchasing in the pharmacy services department, effective March 1, according to the company.

"During his 27 years with Walgreens, George has led several areas in pharmacy services, e-commerce and purchasing,” said Walgreens President and CEO Greg Wasson. “He brings vast knowledge of our entire company to his new role, and his pharmacy experience uniquely positions him for taking the implementation of POWER forward and driving our transformation of community pharmacy."

Riedl, 48, will oversee all pharmaceutical purchasing along with rollout of the POWER project, which is designed to enhance patient-pharmacist interaction and reduce costs. POWER is currently operational in more than 360 Florida stores and is anticipated to roll out to all 774 Florida stores by the end of August, according to Walgreens CEO Wasson.

Pough brings with him an extensive background in the food and grocery retailing industry, which fits the current merchandising direction Walgreens is moving in regarding beefing-up its consumer packaged goods merchandising and marketing, along with the transformation of its stores into a more consumables and essential consumer packaged goods-focus merchandising mix.

His focus while at Tesco on the small-format Fresh & Easy also fits with Walgreens plans to develop and open the smaller-format "Smallgreens" stores, along with continuing to open its larger drug stores.

Here's what Walgreens' CEO Wasson said today about the promotion of former Tesco Fresh & Easy Neighborhood Market co-vice preident of operations Bryan Pough to the vice president of merchandising position at the drug chain:

"Bryan brings a quarter century of terrific merchant expertise to Walgreens, including a combination of store operations and merchandising responsibility for Wal-Mart and Tesco,"
Wasson said.

"Over the last three years with Tesco USA, Pugh designed the Fresh & Easy Neighborhood Market store operations model and launched the retail grocery chain on the West Coast, where it grew to 90 locations in less than a year.

Prior to his Tesco experience, Pugh spent six years with CP Group of Asia, opening hypermarkets in China and Thailand and having responsibility for all purchasing, including consumables, over-the-counter health and wellness, electronics, clothing and other categories. From 1985 to 1993, he worked for Wal-Mart Stores, Inc., moving up from an assistant store manager in the Sam’s Club division to vice president of membership marketing."

The store format development aspect of Pough's portfolio includes, among other things, heading up a group that's looking to open small-format Walgreen's drug stores in the U.S., as we mentioned above. This development is something Fresh & Easy Buzz reported almost a year ago that Walgreens was studying.

The "Smallgreens" (our term not Walgreens') stores would be about half the size of the chain's current stores, which are in the 10,000 -to- 20,000 square foot range, depending on the store location and format model.

Walgreens already operates some smaller footprint stores, such as those in highly-dense citys like San Francisco. But they are small-format based on design considerations and space (real estate)restrictions rather than intent. In other words, the stores are basically smaller versions of a basic Walgreens drug store.

The "Smallgreens" format is a specific design and format for the chain's smaller-version drug stores.

We've learned that a major focus of the smaller-format Walgreens stores will be on consumables, particularly food, grocery, household and HABA items, including a limited assortment of perishables like Walgreens currently offers in its 6,658 drug stores, which it operates in 49 U.S. states, and is expanding upon in those stores. Think "affordable esentials" as the merchandising base mix for the "Smallgreens" format stores. This focus also fits with the company's current strategic focus chain-wide on consumables and essential packaged goods items.

Walgreens announced another personal move today. Thomas J. Connolly, 49, has been promoted to vice president of facilities development effective March 1, overseeing real estate, construction and facilities planning, design and engineering. Connolly succeeds senior vice president of facilities development William A. Shiel, 58, who has retired after a 38-year career with Walgreens.

Expect to see an even greater focus on the food, grocery, household and health and beauty care categories in Walgreens' stores over the next couple months and throughout 2009.

This will include, in our analysis:

>An ongoing increase in store floor and shelf space devoted to food, grocery, household and HABA items.

>Increased introduction of more store branded items across all consumable and packaged goods categories. This includes packaged perishables in the dairy, deli categories.

>The likely addition of a couple new grocery product categories, including in the perishables segment.

>An increased emphasis on promoting grocery items, with a focus on essentials, in-store and in the drug chain's weekly advertising circular. More consumables and packaged goods in the weekly ads, less items like cameras and gifts.

>Increased focus on offering "everyday essentials" at hot promotional prices. This includes items like eggs, milk, bread, refrigerated orange juice, toilet paper, toothpaste and the like.

Another added added layer of competition

Walgreens' strategic focus on consumables and related consumer packaged goods is adding an additional layer of competition in the already red-hot competitive environment in U.S. food and grocery retailing between discounters like Wal-Mart, Target and Costco (and others) and supermarket chains, along with all of the other alternative format retailers out there, such as dollar and 99-cent format stores, other drug chains like CVS-Longs, and many other competitors

This competition is being felt in a white-hot way in California, Nevada and Arizona, where Tesco's Fresh & Easy operates its 115 small-format, convenience-oriented, combination grocery and fresh foods markets.

And since Walgreens, which had gross sales of $59 billion in 2008 (all in the U.S.), operates numerous stores in these three states, another layer of competitive heat in the food and grocery (and household item and HABA) categories is being added in each of these market regions, as Walgreens continues to up its ante in the food, grocery and related category segments in its drug stores.

Suggested Reading: Related posts from Fresh & Easy Buzz

>January 22, 2009: Neighbors by Location Only: Will Mega-Drug Chain Walgreens' New Focus on Consumables and 'Affordable Essentials' Rob Sales From Tesco's Fresh & Easy?

>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

>December 22, 2008: Drug Chain Walgreens to Slow New Store Growth; Despite Tesco Fresh & Easy's Recent Announcement to Do Similar, We Suggest An Analogy is Misplaced

>September 22, 2008: Key Personnel Breaking News: Co-Vice President of Retail Operations Brian Pugh No Longer Employed At Tesco Fresh & Easy Neighborhood Market

>March 12, 2008: Breaking News: Tesco plc. Makes Major Personnel Change to Fresh & Easy Neighborhood Market USA Senior Management Team

>May 29, 2008: Tesco Makes Official Announcement of Jeff Adams' Title and Position at Fresh & Easy Corporate; Confirms Our Report of March 5

>March 29, 2008: Tesco's Fresh & Easy 'Taking a Pause' From New Store Openings: A Full Review In the Works

>August 22, 2008: Special Report: Today Last Day For Fresh & Easy Neighborhood Market Director of Grocery Charlotte Maxwell; Moving Back to Tesco in the UK

>August 17, 2008: Special Report: Tesco Fresh & Easy's Director of Grocery Returning to the UK; Grocery Chain Reorganizing its Corporate Buying Department

>August 17, 2008: Special Report: Tesco Fresh & Easy Neighborhood Market Experiencing A Category Manager and Buyer 'Brain Drain'

1 comment:

Anonymous said...

If I was Bryan I would ask the Walgreens CEO to take out that part about creating Fresh & Easy, as I wouldn't want to be the one blamed for creating that format and its operations when it crashes and burns.