ear Daily, 4/2000)The large chains stand to benefit from their size by creating virtual vertical integration partnerships with their suppliers. Joint planning, product development, and demand forecasting will benefit both suppliers and retailers. Functions can be shared according to who can perform them at the lowest cost. As partners change their business processes, organizational structures, and information systems for the benefit of the partnership, barriers to exit will be created. Barriers to other companies who have not made such investments will also be created. This will lead to more exclusive supply chain relationships (Retailing 2005). The chain drugstores will depend a great deal on the sale of private label items. The private label can provide differentiation based on both quality and price. They provide the retailer with a greater markup as well. Discount programs which encourage purchase of private label items provide value to both the customer and the retailer. Another critical means for gaining market share will be the utilization of the Internet to supplement sales from existing stores. CVS purchased Soma.com in order to take advantage of its existing structure and expertise to enter the online market. Walgreens has created its own site. Rite Aid bought into drugstore.com and will provide the fulfillment of drugstore.com’s retail prescriptions. The online drugstores that are not affiliated in any way with an existing store are not viewed as major threat (Community Practice, 5/5/2000)History Of WalgreensWalgreen Company prides itself on being consumer friendly. This large drugstore chain has made its mark on the map by following a simple strategy—focus on convenience. By convenience they include: how fast people get into the store or are served in the drive-through pharmacy, how fast they get out, how easily they find what they came to buy, and how well they are reminded of what they are for...
