Walgreens stampedes into Dallas/Fort Worth

Drug Store News, Dec 9, 1996 by James Frederick

DALLAS - Six months after opening its first store here, Walgreen Co. threw a party to celebrate its rapid entry into the Dallas/Fort Worth market.

Walgreen has plenty of reasons to celebrate. It has already opened 16 stores in the Dallas/Fort Worth metroplex, and anticipates opening more than 100 stores in the huge market within the next five years. "This is one of the biggest entries into a new market in Walgreens history," said Charles R. Walgreen III, company chairman and chief executive officer. "We're thrilled to be here."

Nevertheless, Walgreens faces stiff competition from market leader Eckerd Corp., which operates some 180 stores in Dallas/Fort Worth. Eckerd has been remodeling its stores in the region and has been grabbing sites for new stores; new Eckerd units have opened in recent weeks in Plano and Fort Worth. Considering that Eckerd's soon-to-be owner, thee J.C. Penney Co., is located in Dallas' backyard, with headquarters in Plano, that aggressive trend could easily continue.

Walgreens is also up against some of the industry's best supermarket food/drug combo operators in the metroplex, including Albertson's, Kroger, Tom Thumb/Page Drug, Minyards and Brookshire. Wal-Mart and Kmart have also established a strong pharmacy presence in the region.

"Dallas/Fort Worth is the economic engine which drives the Texas economy," company president Dan Jorndt said. As such, it also continues to draw newcomers at a rapid clip. Population in the Metroplex has jumped from 2.9 million in 1980 to 4.1 million in 1996, and is expected to boom to 5 million by 2010, according to Walgreens' estimated.

In their remarks prior to the ribbon-cutting ceremony, Jorndt and other company officials also mentioned these highlights of current Walgreens strategy and operating conditions:

* "We're rolling on-hour [photo labs] nationwide," Jorndt said. Rolls of 24-exposure 35mm film are processed in an hour or less for $6.99; next-day service is $4.99.

* New Walgreens stores typically cost $3 million to open, and take from two to three years to break into the black.

* Of the chain's 230 new and relocated stores opened this fiscal year, 220 will include drive-through pharmacies.

* By thee end of the year, 1,200 of Walgreens' 2,205 drug stores will be freestanding units. By the year 2001, the chain will operate 2,400 freestanders, 23 years after the first freestanding Walgreens store opened in Chicago.

* Walgreen's capital expenditures for new and remodeled stores, technology and other improvements hit $357 million in 1995, and will top $400 million in the current fiscal year. Thanks to the chain's aggressive building and remodeling efforts, the average Walgreens store will have been newly opened or remodeled within the past 5.5 years by the year 2001.