Walgreens Says It Is ‘Reinventing’ the Pharmacy With Micro-Fulfillment Centers – PYMNTS.com

The nation’s second-largest chain of drug stores said Thursday (Jan. 5) it is moving forward with costly investments in technology.
This, as Walgreens Boots Alliance told investors that the long-term benefits of its digital transformation strategy would offset near-term costs, at a time when many retailers are bracing for a slowdown, and continue to sink funds into its long-term omnichannel future.
The company stated in its fiscal first-quarter financial results, released Thursday, that large capital expenditures have seen its free cash flow turn negative, to -$117 million for the three months ending Nov. 30, marking a $762 million swing from a year ago.
Part of this decrease comes as the company invests in digital technologies, including building out automated micro-fulfillment centers (MFCs) to reduce pharmacists’ workload.
“[We’re] reinventing the role of the pharmacist through micro-fulfillment centers and eliminating task-based metrics,” CEO Rosalind Brewer told analysts. She later added, “We’re investing to grow in a very difficult time frame, but we remain committed to our strategy.”
These MFCs are not the only digitally powered fulfillment capability that the company is investing in. In October, Walgreens began trying out a 30-minute pickup guarantee for curbside and drive-thru orders in select markets. Plus, last month, the retailer began offering 24-hour delivery at nearly 400 stores.
“It’s a really delightful service, and it meets a need that customers have in a pinch,” Stefanie Kruse, Walgreens vice president of digital commerce, told PYMNTS’ Karen Webster in a December interview. “We’re a last-minute destination, and we’re known for convenience. Being able to really be there at a time of need for our patients and customers is what we aim to do. This really helps us do that, and in more meaningful ways now.”
Plus, across the pond, the company’s United Kingdom-based pharmacy chain Boots has been building out its eCommerce options. In September, the company announced the launch of a forthcoming digital marketplace, set to go live in the spring.
The retail group may expand its digital presence with acquisitions going forward, but these will be smaller scale moves that will not change the direction of the entire company.
“We’re more likely to buy smaller companies with specific capabilities that we need to advance our organic business,” Chief Financial Officer James Kehoe said on the call. “So, we’re not going to go out and do a $2 [billion] or $3 billion acquisition on a health tech company. We’re likely to be very targeted, and it’ll be in the hundreds of millions, not in the billions.”
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