Walgreens Named New CEO: Is The Company a Serious Retailer Any Longer?

Yesterday, the Walgreens Boots Alliance named a new CEO - and not a typical one. The company hired Tim Wentworth, a veteran of the insurance industry as its replacement.

One wonders if this marks the beginning of the end of Walgreens as a serious retailer.

Here are just a few of the struggles Walgreens has been having in the past few years:

* Rampant theft leading to more products being locked up.

* Declining customer experiences (you should see New York City drug stores - it's like a third-world country).

* Announcements this year that the company is closing 450 locations.

* Reported bad conditions for pharmacy workers, including walkouts.

* Walgreens laid off 10% of its workforce in May.

* After the last CEO stepped down, the stock hit a 24 year low.

* Sales hurt by declining consumer spending, and reduced sales of COVID supplies and tests.

In short, could it get much worse?

As a response, the Board has firmly planted its flag into a growing industry -- healthcare services. This is similar to the direction that its competitor CVS has been pursuing for years with its convenient MinuteClinics, etc. Not to mention WalMart.

What does this all mean?

* Retail is not the primary direction of the chain. Retail is now just an omnichannel delivery vehicle for high-priced and recurring services -- paid for by insurance. CVS has been headed in this direction for the past few years, and Walgreens needs to catch up.

* One wonders if the retail experience itself will recover without strong retail leadership?

* This new healthcare direction is likely to be anchored by the insurance industry -- in other words, how do we get scalable recurring revenue paid for by "other people's money" (OPM).

Walgreens is becoming a healthcare company that happens to have retail stores, rather than the other way around. Perhaps higher healthcare margins will help the company pay for much-needed retail experience upgrades.