Walgreens SWOT Analysis (2024)

Company: Walgreens
Founder: Charles Rudolph Walgreen
Year founded: 1901
CEO: Roz Brewer
Headquarter: Deerfield, Illinois, United States
Employees (2022): 315,000
Type: Public
Ticker Symbol: WBA
Annual Revenue (FY 2022): $132.7B
Profit | Net income (FY 2022): $4.43B

Did you know? When Charles R. Walgreen Sr. opened the first store, he quickly incorporated new ideas into the Walgreen chain, including manufacturing his own drug products to maintain quality and keep prices low.

Table of Contents

Walgreens Strengths

1. Large Footprint

Walgreens has an established retail pharmacy with over 13,000 retail locations (globally) and 9021 drug stores in the U.S., attracting customer loyalty. Moreover, it is estimated that about 78% of the U.S. population lives within 5 miles of a Walgreens.

2. Brand Loyalty

Customers do not just recognize and use Walgreens. Instead, they keep going back for different services, thanks to a positive experience. The good branding has ensured Walgreens gets a more human side that people relate to. Walgreens has over 85,000 health care providers (pharmacists, technicians, nurse etc.)

3. Pharmacy

Pharmacy is a big business for Walgreens, representing about 76% of its revenue and the remaining 24% is retail revenue. In the fiscal year 2021, Walgreen filled 827.5 million prescriptions, including vaccinations.

4. Reliable suppliers

Walgreen has the advantage of dealing with reliable, domestic, and international suppliers who ensure they get goods on time. Their suppliers have sufficient inventory that ensures ongoing delivery if anything goes wrong. The reliability works to their advantage because they can overcome most supply chain bottlenecks.

5. Strong distribution network

Walgreen has established a powerful distribution network that gives it a significant competitive advantage. The company’s distribution network ensures reduced costs and faster growth. Despite the distribution network being this diverse, it remains simple and characterized by optimized logistics for specific needs.

6. Powerful dealer association

Walgreens has a strong relationship with its dealers, something that has become a cornerstone of its success. The company’s dealers provide personal relationships with customers that translates to customer loyalty and increased sales. The dealers are committed to the company’s products and services since they have a strong support system to make them a success.

7. Strong financial position

Walgreens has a strong financial position that helps it attract investors and creditors. With annual revenue of over $132 billion, the company’s stability, reputability, and profitability are magnetic for investors who further take its financial position a notch higher. Creditors are also willing to extend loans to Walgreens because they are certain of repayment.

8. Financial assistance coordination

Walgreens has secured $71 million in financial assistance for its patients. The goal is to ensure patients get specialty medication at an affordable rate. They achieve this through various means, including matching patients with manufacturers, co-paying, and running discount programs that cover the cost of medications. Patients can get financial assistance by dialing 888-782-8443.

9. Employee support programs

Walgreens has a strong employee base of about 315,000 workers. The huge employee base sends a strong message to the public that the company is doing well. Internally, these employees are empowered through various benefits, including child care, flu shots, employee store discount, employee purchase program, and flexible spending accounts. That translates to motivated employees who help the company meet deadlines and make more sales.

10. Open communication avenues

Walgreens is known for maintaining an open communication channel with the public and internal staff. The company provides different ways through which the public can reach it. Its customer service desk receives online inquiries via 1-877-250-5823 and store inquiries through 1-800-WALGREENS (1-800-925-4733). In addition, customers can contact the company via social media pages on chat, post comments, and on the email address [email protected].

Walgreens Weaknesses

1. High employee turnover

Due to the large size of the company and the need to employ more people for different tasks, Walgreens ends up dealing with a high employee turnover. Different employees leave for various reasons, either voluntarily or involuntarily. Whichever the case, the high turnover means they spend a lot of time re-hiring for positions when they could have used the same time to grow the company and nurture the staff.

2. Lack of product variety

Walgreens fails to provide its customers with diverse product ranges that they can choose from. That means a significant number of customers end up buying from competitors (such as Walmart, Target etc.) after failing to get what they want.

3. Inadequate demand forecasting

Walgreen has so far not performed well in terms of demand forecasting compared to competitors. Due to poor demand forecasting, the company has had to deal with high stock-outs. It has a hard time accurately determining the stock levels or setting relevant safety stock levels that can satisfy market requirements.

4. Faces diversity issues

Walgreen has for a long time faced diversity issues. The inability to integrate different cultures works against the company as it risks making some employees feel left out.

Walgreens Opportunities

1. Walgreens Health

Walgreens plans to provide local clinic care services by utilizing its pharmacy network and customer-centric technology. In this effort, the company has invested in VillageMD and CareCentrix to advance its strategy in health care, post-acute care, and home care.

2. New pricing scheme

Walgreens continues to adopt newer technologies that give it the opportunity to implement a differentiated pricing strategy. The new approach to pricing can be beneficial to the company as it would attract a loyal customer base and generate more sales.

3. Government approval to venture into new markets

Like any other company, Walgreens’ opportunities expand as they venture into newer markets. The expansion opportunities have become possible because of the government negotiating free trade and approving new technologies in the health sector.

4. Environmental policies

Environmental matters have become a major concern to the public. Luckily, the nature of the business that Walgreens does gives it the opportunity to be environmentally conscious. That can create positive public relations as more people get drawn into the company’s environmental policies.

5. Online opportunities

The growth of ecommerce, and online marketing present immense opportunities for Walgreens to expand its business. The company can count on this to reach a wider audience and possibly open locations in other countries.

6. Active on social media

Walgreens uses different channels to reach its customers. The company does big on social media, boasting more than 4.4 million followers on its Facebook page. Its Twitter page equally does well, with more than 850,000 followers. The high number of people interested in the company means they have access to a massively huge market for different products and services. Thanks to platforms like Facebook and Twitter, Walgreens stands a chance to enhance its global presence.

Walgreens Threats

1. Reduction in reimbursement

Signicant portion of Walgreens revenue is derived from prescription drug sales reimbursement by private or governmental agencies. Any change in the reimbursement policy and rates can adversely affect Walgreens revenue.

2. Customer buying behavior is changing post-pandemic with higher dependence on online shopping. Failure to provide a robust online experience can adversely affect Walgreens’ business.

3. The pharma industry requires high investment, which puts a blockage on how far Walgreen can expand.

4. Stiff competition from other players in the retail pharma industry who have similar products selection.

5. The rising cost of wages risks reducing Walgreens’ profitability because of the company’s high number of employees.

6. The rising cost of raw materials has a direct negative impact on Walgreens’ profitability.

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