algreen Sr., purchased one of the busiest drugstores on Chicago’s South Side, and transformed it by constructing an ice cream fountain that featured his own brand of ice cream. The ice cream fountain was the forerunner of the famous Walgreen’s soda fountain, which became the main attraction for customers from the 1920s through the 1950s. People lined up to buy a product that Walgreen invented in the early 1920s: the milkshake. The company has long resisted the merger fever that has spread through the drugstore industry. Instead, Walgreen has stressed internal growth strategies: large-scale infiltration of new markets, relocation of units to freestanding stores, and convenience, including 24-hour operations and drive-through pharmacy service (Walgreens 1999 Annual Report). Growth Rate of StoresWalgreens continues to grow faster than the industry or their competitors while maintaining profitability. Following is a chart of one year growth rates for Walgreens and the Drug Store Industry.WalgreensIndustryRevenue19.03% 14.17% (18)Net Income17.73% (5.7)2.35% (5.6)Cash Flow16.12% 7.09% Even with their current size, Walgreens continues to outgrow the industry in every major category.The drugstore market is one of the fastest growing and most consolidated markets in all of retailing. Walgreens has a significant advantage in economy of scale, in the quality and growth of their real estate, use of technology, and trusted brands. They have made use of the Internet and mail order distribution chains and the addition of huge new stores should enable them to steal share and continue to grow faster than the industry.As of August 31, 1999, Walgreens operated 2,821 drugstores in 39 states and Puerto Rico, with large concentrations of stores in Florida, Illinois and Texas. Internally, the company is growing faster than any other drugstore chain. It opened 386 new or relocated drugstores during fiscal 1999, while closing 114 units. All new s...
