As the nation’s leading drugstore in sales, earnings growth, same-store sales increases, prescription drug market share, and prescription sales per store, and first on the list of Global Most Admired Companies in the food and drugstore category, Walgreens' position as the market leader is perhaps its greatest strength (Walgreens Corporation, 2006c; Carpenter, 2004). Its next closest rival, CVS, trailed Walgreens in sales by nearly $7 billion annually and Walgreens outsells number three Rite Aid by over $30 billion (Walgreens Corporation, 2006c). The average Walgreens store fills about 256 prescriptions daily, compared to the average 100 prescriptions filled by independent pharmacies and the average 180 prescriptions filled by other chain pharmacies (Merrick, 2006). A national presence, Walgreens has established itself as a known and trusted brand name across the country.
While Walgreens it the current market leader, the company's greatest weakness may be its inability to set itself apart from competitors based upon price. Wal-Mart's recent announcement that it will sell a month's supply of many generic prescription drugs for only $4, later matched by Target, exemplifies the impact of large discounters. Following this announcement by Wal-Mart, who is currently the number four pharmacy provider, the price of Walgreens stock dropped 11% (Miller, 2006; Patsuris, 2004). While a large company, Walgreens is not the low-cost leader in the industry and faces serious competition from discounters, who are willing to accept lower margins on prescription drugs because they can make up for lost profit in other categories. Walgreens will not match these prices, meaning that Walgreens has chosen not to compete on price in its most important category.
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