"Everyone is time-starved, and we have the most convenient 7,000 locations in [image-nocss] the U.S.," Pugh said. "They're on-the-way-home destinations that are easy to get in and out of and will provide a good value."
He declined to say when the project will be implemented or how much it costs, said the report.
Walgreens, based in Deerfield, Ill., must sort out supply and distribution issues and test in some markets before introducing freshly prepared foods such as salads, cut fruits, ready-to-bake pizzas and sandwiches into more stores, Pugh added.
The goal of the program, along with the sale of beer and private-label wine, is to boost revenue, he said. Same-store sales declined in November and December as 10% unemployment and falling home values blunted consumer spending, the report said.
"If they can get consumer acceptance, this would be good for sales," Andrew Wolf, a Richmond, Va.-based analyst with BB&T Capital Markets told Bloomberg. "Consumers aren't used to buying salads from a drugstore chain. That would have to change."
The move will push Walgreens into competition with supermarket chains Kroger and Safeway Inc., membership warehouse clubs operated by Costco Wholesale Corp. and Wal-Mart Stores Inc., and retailers such as Target, said the report. Walmart's supercenters sell prepared foods including ready-to-bake pizzas.
"You've also got convenience stores and gas stations trying to go in that direction," Bob Goldin, an executive vice president at Technomic Inc., a Chicago-based food industry consulting firm, told the news agency. Walgreen "does have a lot of stores, but I don't see it as being a venue of choice for consumers," he said. "It will be hard for them to establish credibility in freshness and variety. I don't see it as being a big business driver."
Target, the second-largest U.S. discount store, is expanding its food offerings in general merchandise stores under the name PFresh. PFresh stores will have fruit, ground meat and other fresh foods, as well as premade sandwiches, salads and other prepared meals, spokesperson Jana O'Leary told Bloomberg. "Our customers asked for an expanded food section," she said. "We want it to be a one-stop location for all their needs."
Target has 108 PFresh stores and plans to have 350 by year's end, the report said.
"We won't get our customer every day on the way home, but if we could get 50% of our customers one day a week on the way home, that would do wonders for our sales," Pugh said.
Walgreens has hired a director of fresh foods, who will begin work in several weeks, Pugh told Bloomberg. He would not name the person.
However, theFresh & Easy Buzz blog on January 6 reported that Jim Jensen, the director of fresh foods for El Segundo, Calif.-based Fresh & Easy Neighborhood Markets Inc., U.K.-based Tesco's U.S. "convenience grocery" chain, has left the company. It did not name his new company. Pugh himself joined Walgreens in late December 2008 from Fresh & Easy, where he helped design the markets, which specialize in fresh foods.
"Fresh & Easy conceptually was a home run, but it hasn't worked out in the field," Wolf said. "The stores lacked ambiance and were in low-rent, C locations. Walgreen's has A locations. They really do have the best locations in the U.S."
Walgreens also is selling private-label wines at about 1,500 locations. It sold more than 200,000 bottles, at $2.99 a bottle, since the line, which includes chardonnay, cabernet, zinfandel and merlot, was introduced in December under the Southern Point name, Pugh said. A $5.99 private label will be offered in April, he added.
Stores carrying beer and wine have higher average sales per person, he said. That purchase alone pushes up sales in a shopper's grocery cart as much as 60%, he said.
"Beer and wine are proven winners for drug stores, but not proven fixers," Wolf said. "What's for dinner will be much trickier to pull off." The challenge is attracting enough customers to keep the fresh food turning over and finding space for the new products in already crowded venues, he said.
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