Detailed SWOT Analysis Of Walgreens – One Of The Worlds Leading Retailer

In our previous blog, we did an in-depth SWOT analysis of one of the largest retailers in the world, Costco. Here we will be looking into the Comprehensive SWOT Analysis of Walgreens.

Walgreens runs as the second-largest pharmacy store chain in the United States. It is also one of the largest prescription drugs companies by market share. As of 2020. it is one of the worlds leading retailers by market capitalization.

Walgreens is having such a large presence in the market worldwide is due to the implementation of the latest marketing strategies which is essential for any business because most of the people nowadays are on online platforms and it is easy to target them. If you are interested in learning what digital marketing is and how to use it to your advantage – check out our Free MasterClass on Digital Marketing 101 by the CEO and Founder of IIDE, Karan Shah.

Thus this makes us keen to know how Walgreens has been soo successful in its industry. So, for that, we will be doing a SWOT Analysis of Walgreens. But before we start with its SWOT Analysis let us learn about Walgreens as a company, its products, competitors, financials, and more.

ABOUT WALGREENS

Walgreens was founded in the year 1901 by Charles Rudolph Walgreen in Chicago, Illinois. It has its headquarters situated in Deerfield, Illinois, United States. It operates over 9,000 stores in the United States. It has over 300,000 employees working under it.

Walgreens is committed to making the world a better place through health and wellness. It has the vision to become the leading partner in reimagining local healthcare and wellbeing for all. It is known for filling prescripts, health and wellness commodities, health knowledge, and photo services. 

In the year 2020, it made a revenue of $121.98 Billion. It has a market capitalization of $34.45 Billion as of 2020.

Quick Stats About Walgreens

 

Products of Walgreens

Walgreen being such a large brand it provides its customers with a large number of products. Following are some of the products that Walgreens provide:

1. Filling prescriptions
2. Health and wellness products
3. Health information
4. Photo services

 

Close Competitors of Walgreens

As we are aware, every brand or firm has its opponents. Below mentioned are the top competitors of Walgreens:

1. Walmart
2. CVS Caremark
3. Kroger
4. Rite Aid
5. Target Corporation
6. Shoppers Drug Mart

 

Now that we have known about the company let us start with the comprehensive SWOT Analysis of Walgreens.

 

SWOT Analysis of Walgreens

 

The SWOT analysis of Walgreens will find out the areas of the business that are performing well and those that are not performing well which need to be improved.

Strengths and Weaknesses are the internal factors of Walgreens and Opportunities and Threats are the external factors of Walgreens.

Let us now start with its SWOT analysis by first looking at the Strengths of Walgreens.

Strengths of Walgreens

Below mentioned are the strengths that Walgreen possesses, which makes them one of the leading companies today.

• Dependable suppliers – The firm has a good quantity of competent raw material suppliers, which allows it to bypass many supply chain bottlenecks.
• Well-built brand portfolio – Over the years, Walgreens has funded in forming a strong brand portfolio. This brand portfolio is remarkably useful when the organization wants to expand into new product sections.
• Powerful distribution network – Walgreens has built a solid distribution network that reaches its products to it’s potential market.
• Prospering track record of blending corresponding firms through mergers & acquisition – The firm has successfully integrated various technology companies into streamlining its operations and developing a strong supply chain.
• Adequate profits on capital expenditure – Walgreens is reasonably successful at the execution of new projects and making good returns on capital expenditure by forming additional revenue streams.
• Strong dealer association – It has established a culture amongst distributors & dealers where the dealers not only promote the company’s products but also spend in training the sales team to show the customer how they can get the maximum benefits out of the product.  

 

Weakness of Walgreens

Weaknesses are the factors that affect the growth of Walgreens. These are the internal factors that it needs to take care of. Following mentioned is the area where Walgreens can improve. 

• Lack of internal feedback mechanism – The company could not undertake the challenges presented by the new competitors in the division and has lost a small market share in the niche categories. Walgreens has to create an internal feedback mechanism through the sales department; on the terrain to overcome these challenges.
• The raised attrition rate in the workforce – Corresponding to other organizations in the industry, Walgreens has a higher attrition rate and has to pay a lot more in comparison to its competitors on the training and advancement of its employees.
• Low ratios – The profitability ratio and Net Contribution percentage of Walgreens is under the industry average.
• Not highly successful at integrating firms with different work cultures – Walgreens is not successful at integrating small companies yet, it has its quota of failures to consolidate firms with diverse work cultures.
• Inferior product demand forecast – This leads to a greater rate of blown opportunities compared to its competitors. One of the causes, why the day’s inventory is more in comparison to its opponent brands is that Walgreens is not very great at demand forecasting; this ends up maintaining higher inventory both in-house and in the channel.
• Gaps in the product variety traded by the company – This shortage of options can give the new competitors a niche in the market.

 

Opportunities for Walgreens

These factors help Walgreens to increase its market share and improve its business. Below are the opportunities that Walgreens can acquire.

• Opening up fresh markets because of government approval – The enactment of new technology measures and government free trade negotiation has allowed Walgreens to join a new emerging market.
• Pricing – The latest technology grants an opportunity to Walgreens to follow a differentiated pricing strategy in the new market. It will allow the firm to sustain its loyal customers with excellent service and attract new customers through other benefit-oriented propositions.
• New consumers from online channels – The firm has made a significant financial investment in the online program. Walgreens has gained a new sales channel as a result of its investment. In the coming years, the firm may capitalize on this potential by getting to know its customers better and supporting them with their needs using advanced data analytics.
• Up to dated environmental policies – The new opportunities will generate a level playing field for all the performers in the industry. It serves as a good opportunity for Walgreens to establish its dominance in new technology and gain market share in the new product category.
• Market Development – The market development will guide the dilution of competitor’s privileges and allow Walgreens to enhance its competitiveness against the competitors.
• Decreased cost of transportation – Lowering transportation costs can also lower the cost of Walgreens items, giving the firm an opportunity. Either to increase profitability or to win market share by extending privileges to customers.

 

Threats to Walgreens

Threats are the negative factors for Walgreens which bring down their flourishing business. Following are the threats to Walgreens:

• Rising pay levels – Actions such as charging $15 for an hour of work and hiking prices in China can drive a severe burden on the profitability of Walgreens.
• Rising raw materials prices – This might put Walgreens’ profitability at risk since hiking raw material prices can lead to higher end-product pricing.
• Isolationism – The United States’s growing economic isolationism may prompt similar responses from other nations, resulting in the reduction of Walgreens’ worldwide sales.
• No constant supply of innovative products – the company has developed many products over the years, but those are frequent responses to the advancement by other players. Second, the supply of brand-new items is inconsistent, resulting in high and low sales swings over time.
• Fierce competition – over the previous two years, consistent profitability has expanded the number of marketers in the sector, putting downward pressure on not only profitability but also overall sales.
• Liability laws – In different countries, liability laws are diverse. Walgreens may be open to multiple liability claims that have given differences in policies in those markets.

 

With this, we have reached the end of the SWOT Analysis of Walgreens. This study helps Walgreens to enhance its strategies and improve its business.

CONCLUSION

Tackling all these Walgreens has proven to be one of the strongest and leading companies of all time. The firm has dependable suppliers and a good marketing network along with this it can grow by changing its pricing strategies and gaining new customers from online modes. Even with such advantages, there are some flaws that stop its growth. They have a lack of feedback mechanism and low profitability ratios that the market average. Isolationism in the US and fierce competition in the market are some of the things it needs to tackle.

It can improve its stand in the market by improving its marketing techniques with the use of advanced digital marketing techniques it can gain more customer awareness and increase its brand value as most of the customers nowadays are on online platforms it is easier to get their eyes on your products. If you are interested in learning and upskilling, check out IIDE’s 3 Month Advanced Online Digital Marketing Course to know more.

If you would like to read such detailed analyses of companies, find more such insightful case studies on our IIDE Knowledge portal.

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