Coke would never suggest a customer try Pepsi.  Tide would never point someone to Purex.  But something similar is happening at Walgreens these days and it’s costing the store thousands of customers and millions of dollars.  The reason: an ongoing feud between Walgreens and St. Louis-based Express Scripts.  Walgreens stopped filling prescriptions for Express Scripts customers on January 1, 2012, following a stalemate between the two companies over their contract.  Now Walgreens pharmacists are forced to send customers to rival pharmacies like CVS and Rite Aid.

Walgreens clearly has a crisis on their hands and there appears to be no end in sight.  The standoff is costing Walgreens more than prescriptions.  Think about it, when you visit Walgreens, CVS, Rite Aid or a similar store, you never leave with one item, you always seem to need cold medicine, chicken soup, crackers or juice.  Walgreens is losing all those sales, too, because customers are going elsewhere.  I stopped in Walgreens and I was one of two people in the entire store on a weeknight at 6 pm.  Seemingly loyal Walgreens customers are going elsewhere, not because they want to, but because they are forced to.  Chances are good those customers won’t be coming back, especially if they have a great brand experience at another store.  Those stores are welcoming pharmacy customers with big signs and bigger deals.  Walgreens loss is their gain.

Walgreens is trying to manage expectations regarding sales, but the numbers don’t lie.  January same-store sales are down for Walgreens, and it’s a good bet, February is headed in the same direction.  This contract disagreement has the potential for long-term changes in the industry.  Express Scripts is having no trouble filling prescriptions at Walgreens competitors.  The ball is clearly in Walgreens court.  They are trying to bring back customers with ads and deals, but has the damage already been done?  Walgreens would be smart to get a deal done with Express Scripts.  It will help repair their corporate image and bring back more customers.

Corporate reputation and image management are tricky subjects, especially when executives dig in their heels and can’t get a deal done.  The impact goes far beyond the board rooms to the employees and the customers.  If you haven’t reviewed your company’s overall image lately, now would be a good time for an audit.  BP, Carnival Cruise Lines and now Walgreens are going through image issues.  Is your company, association or organization next?  Are you ready?  TVG can help!  Give us a call at 314-991-4641 or email us at tvg@vandivergroup.com.