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October 16, 2018 at 06:36 PM
Walgreens Boots Alliance Inc. Chief Executive Officer Stefano Pessina said it will be easier for his company to move online than it will be for Amazon.com Inc. to copy its massive store network, predicting a long future for the pharmacy chain as it strikes new partnerships in health and retail.
In a wide-ranging interview at Bloomberg’s headquarters in New York, Pessina said that reports that Amazon.com may open up thousands of physical stores is a acknowledgment that a brick-and-mortar presence is still important in some retail markets.
“It shows that they have understood that you cannot just be online,” Pessina said. “The customer of the future will not be happy to sit at home to talk to an Alexa.”
(Related: As Health Care Eats the Economy, Walgreens Joins the Dow)
Investors haven’t completely agreed. Since Pessina took over Walgreens through a merger with Alliance Boots at the end of 2014, his company’s shares are down 1.9%. Its biggest strategic move has been the acquisition of 1,932 stores from Rite Aid Corp. Amazon shares, meanwhile, have gained 467% over that period and the company has expanded its offerings with groceries, online services, video, consumer electronics and dozens of other industries.
Bloomberg News last month reported that Amazon.com is considering opening up as many as 3,000 new AmazonGo cashierless stores in the next few years to sell things like food items and other convenience goods, according to people familiar with the matter. Amazon has not publicly confirmed the plans.
“I don’t believe it is a big threat,” Pessina said of Amazon. “It will be another competitor, but I don’t think we’ll disappear because of Amazon. We’ll adapt.”
He predicted that Amazon “will find it more difficult to create the physical infrastructure than we will find it difficult to digital-ize our company,” citing an ongoing overhaul of the company’s software and digital operations. He predicted that people will still want to interact with other human in store, or to have the reassurance of a pharmacist to answer questions about a prescription.
Walgreens is also trying to keep pace with its existing competitors such as CVS Health Corp., which by the end of the year plans to close its acquisition of Aetna Inc., a deal designed to push more of the insurer’s customers into its drugstores. Cigna Corp., another insurer, is swallowing up pharmacy-benefits manager Express Scripts Holding Co.
“We should have bought an insurance company four years ago when our multiple was was higher than their multiple,” Pessina said. “At the time, we were engaged with Rite Aid.”
