Walgreens Boots Alliance Inc. will soon be offering package pick-up and return services at more than 8,000 of its locations. The pharmacy is partnering with Narvar to offer FedEx OnSite services.
Many customers prefer to shop online but most online shoppers don’t like returning packages by mail. President Alex Gourlay said Walgreens is offering this service as an added convenience to its customers.
A rocky road ahead for Walgreens
It’s unclear whether this new strategy will be enough to help Walgreens. The company’s latest earnings report fell short of expectations. And the company is now forecasting that growth will be mostly flat for the rest of 2019.
CEO Stefano Pessina said that the company was impacted by a number of market trends sooner than it had expected. Walgreens will cut more than $1.5 billion in costs by 2022, up from its previous estimates of $1 billion.
Walgreens is still dealing with the fallout from its failed merger with Rite Aid. The company bought 2,000 Rite Aid stores for $5.2 billion. And its stock is currently sitting at around $55 per shares, down from $85 at the end of 2018.
Walgreens has attempted to regain its footing by forming strategic collaborations with other companies. It formed a retail partnership with Kroeger and a digital health partnership with Microsoft Inc. And of course, it formed a drug delivery partnership with FedEx. The company also plans to open 600 medical-testing locations in its stores.
One of Walgreens biggest weaknesses is that its sales are largely tied to its stores. Sales on items like makeup and toiletries have fallen every quarter since 2016. In the age of Amazon, it’s difficult to compete for sales in this area.
Walgreens faces a tough road ahead but there are several strategic areas they can work on. The expansion of its e-commerce services and digital presence is a step in the right direction. Its app is highly rated and has more than 55 million downloads.
Plus, Walgreens has 85 million active Balance Rewards members. It has a large customer base to appeal to, it’s just unclear how this will drive more business for the company.
Overall, investors are divided over whether Walgreens stock is a good buy or not. The company’s stock is already trading at a discount but it could fall further in 2019.