Drug chains may get a rival Walgreen expecting to start opening area stores by 2000

Retailing

December 08, 1998|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Walgreen Co., one of the nation's leading drugstore chains, plans to take on both Rite Aid and CVS in the fiercely competitive Baltimore region and begin opening stores by 2000, the Deerfield, Ill.,-based company said yesterday.

The chain is seeking approval from local governments to build its first three drugstores -- on Eastern Avenue and North Avenue in Baltimore and on Liberty Road in Baltimore County. All would be built using the chain's latest prototype -- large, free-standing stores with drive-through pharmacies and convenience food sections.

Walgreen officials said none of the sites is final, but wouldn't comment on locations. The chain is expected to build up to 20 stores in this area, according to one source familiar with the company's plans.

"We are interested in the market and have started looking at locations, but we don't have sites confirmed," said Walgreen spokeswoman Yvette Venable, who confirmed only that the chain is considering sites in the city and suburbs. "We look to locate in high-traffic intersections, in densely populated areas."

Walgreen, founded in 1901 in Chicago and now concentrated in Illinois, the Southwest, New England and Florida, leads rivals Rite Aid Corp. and CVS Corp. in sales, with $15.3 billion for the fiscal year ended Aug. 31. Both competitors have more stores than Walgreen's 2,600.

Walgreen plans to expand to a total of 3,000 stores by 2000, and to double that number by 2010, by building new stores rather than acquiring chains, Venable said.

Walgreen opened its first North Carolina store this year and has been expanding in Virginia, a market it entered three years ago.

Walgreen has higher sales with fewer stores because "they tend to operate high volume locations," said Eric Bosshard, a drugstore analyst with Midwest Research in Cleveland. "They tend to try to find the most attractive piece of real estate they can and put stores there. They've been more focused on quality of real estate rather than quantity."

The chain also increases volume through heavy promotions on some items, similar to the way CVS operates, Bosshard said.

In the Baltimore area, Walgreen will face stiff competition. As of June, Rite Aid ranked third in the greater Baltimore area among supermarkets, drugstores and discounters, capturing more than 6 percent of the market, according to Columbia-based trade journal Food World, and CVS ranked seventh, capturing more than 3 percent of the market.

"It's a bit of a challenge, because the Baltimore area already is well-served in terms of drugstores," Bosshard said. "It'll be competitive, but they're used to that."

According to the Baltimore County Planning Department, Walgreen is seeking zoning variances and special exceptions that would allow it to build a 12,000-square-foot store in the 8000 block of Liberty Road.

The chain also will present design plans for two proposed Baltimore stores to the city Planning Department's Design Advisory Panel on Thursday, according to the board's agenda.

One store would replace a block of vacant buildings at the eastern end of Highlandtown, on Eastern Avenue between Grundy and Haven streets. The other would be at the northwest corner of North Avenue and Harford Road, currently the site of thrift stores. Any drugstore in the city with a drive-through window requires approval of a conditional use by the City Council.

The new stores would likely be free-standing structures of up to 15,000 square feet with a double-lane drive-through for the pharmacy and departments for one-hour photos, convenience foods and cosmetics, Venable said.

That model has become popular with drugstore chains such as Rite Aid and CVS, which have sought high-profile locations with parking, rather than stores in strip shopping centers anchored by grocery chains that typically have their own pharmacies.

Venable said she expects Walgreen's Baltimore stores to begin opening by 2000.

Pub Date: 12/08/98

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