Dive Brief:
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Walgreens and Jenny Craig on Monday said that they will offer weight loss management services at 100 of the drugstore's locations in 20 states as of January 2020. Markets include Dallas, Houston, Philadelphia and Phoenix, the companies said.
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"Jenny Craig at Walgreens" will offer private one-on-one consultations, a customized menu plan and meal delivery, according to a press release from the companies. After their co-locations open, the companies "will begin to explore other potential in-store and digital initiatives," they said.
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The announcement came the same day Walgreens reported that fourth quarter retail sales fell 3.9% year over year and retail comps fell 1.2%, the latter "entirely due to continued de-emphasis of tobacco," according to a company press release. Operating income fell 30.3% from the year-ago quarter to $700 million, reflecting lower gross margin, as adjusted operating income fell 12.2% to $1.1 billion, the company said.
Dive Insight:
Given drugstore retail's growing emphasis on healthcare services (not just medicine and bandages), this tie-up makes sense, and helps fulfill a promise Walgreens made a year ago to forge more strategic partnerships.
The company has also linked arms with Birchbox, Kroger and Alibaba, and made plans to expand a collaboration with LabCorp patient service centers from 17 stores to 600. Jenny Craig's services will be added to the retailer's existing diagnostic lab-testing, primary care, urgent care, dental, optical and other healthcare options, Walgreens said in the release, in which Jenny Craig CEO Monty Sharma also called it a "natural fit."
But Walgreens has struggled to make good on the potential, in part because its retail stores aren't enticing enough as destinations, according to GlobalData Retail Managing Director Neil Saunders. "All these things should be relatively helpful in driving footfall to stores, especially so because of the convenient location of most Walgreens," he said in emailed comments. "However, none of them address the deficiencies with Walgreens's core retail offer. In other words, they may bring people in, but they won't necessarily get them buying core health and beauty ranges."
Still, the partnerships, along with "rising use of pharmaceuticals on an aging population and need to control costs in health care," are poised to help Walgreens gain share, according to Wells Fargo analysts led by Peter Costa.
