As Private Label Sales Grow, Walgreens Aims For More
The private label product assortment at Walgreens continues to grow and the drug store chain is working to further expand its store-branded product offerings in the year ahead, the company’s chief executive officer said in a recent company conference call to discuss second quarter results.
Tim Wenthworth, CEO of Walgreens Boots Alliance, said the retailer is leaning into a “massive and timely opportunity” to increase its own brand penetration, which has grown 95 basis points year-over-year and now stands at 17.1%.
“We expect we can further expand with a meaningful margin advantage over national brands,” he said. “We plan to deepen our partnership with a reduced set of national suppliers, carefully selecting who we work with alongside our own brands.”
“As consumers continue to focus on looking at value they are leaning into own brands. This is working out quite nicely for us. We are feeling quite good about the level of depth that we can go with own brands.”
— Tracey Brown, Walgreens Boots
While Wentworth offered few specifics on Walgreens plans for boosting its private label assortment, Tracey Brown, executive vice president, president Walgreens retail and chief customer officer, said there are a few steps the drug store chain is taking in the near term to drive own brand product sales.
“We are incentivizing our frontline team members to showcase own brand products and what is important to the customers in their market,” she said.
Additionally, related to growing its private label assortment, the retailer is focused on store reach and shelf depth and new product innovation, the latter of which Brown noted will take some time.
“As consumers continue to focus on looking at value they are leaning into own brands. This is working out quite nicely for us,” she said. “We are feeling quite good about the level of depth that we can go with own brands.”
Wentworth added that as consumers feel continued pressure from inflationary trends and depleted household savings, they are making deliberate choices to seek value, resulting in channel shifting behavior.
“We're responding to these market dynamics by making investments in key value items and focusing our capabilities to engage with customers in an intelligent, targeted way,” he said.
Among the more notable new own brand items to launch at Walgreens was the expansion of the retailer’s Nice! private label into the breakfast category. The line includes Marshmallow Treasures, Cinnamon Squares, Toasted Honey O’s, as well as assorted instant oatmeals, oats and granolas.
More recently, Walgreens saw its Nice! Brand Gummy Mango peelable candy fly off store shelves thanks in large part to a post on TikTok that featured the product. Owner of the TikTok account “trindoesthings” was shown tasting and testing the candy, commenting on its flavor and showing the many ways it can be peeled.
Beyond discussing its own brand products growth plans, Walgreens Boots during the conference call reported a 6.3% increase in year-over-year sales to $37.1 billion. Net loss in the second quarter was $5.9 billion compared to net earnings of $703 million in the year-ago quarter, reflecting non-cash impairment charges. Loss per share in the second quarter was $6.85 compared to earnings per share of $0.81 in the year-ago quarter.
