Walgreen to bring fresh food to "food deserts"

CHICAGO Wed Jan 12, 2011 7:30pm EST

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CHICAGO (Reuters) - Walgreen Co plans to add more fresh food to about 400 stores in areas where access to produce and other goods is scarce, as it tries to position itself as a one-stop shop for health and daily needs.

The drugstore chain has already added fresh fruit, vegetables, meat and a variety of other fare to 10 stores in parts of Chicago where grocery stores are hard to find.

Executives at the company's annual meeting on Wednesday said they see a greater opportunity to expand those types of shops in Chicago and other places across the country over the next several years, aiming for about 300 to 500 of the company's more than 7,600 stores.

Adding a wider variety of food, beer and wine at the chain in general is also part of the company's strategy to become a more convenient option for shoppers, who have a variety of stores to choose from.

It has started to sell some of Duane Reade's "delish" line of foods at Walgreen locations, after buying the New York-based chain last year.

Walgreen, which has sold some food and drinks, such as milk, for years, is learning a lot about selling fresh food from Duane Reade, Chief Executive Greg Wasson said.

Walgreen is not alone in adding food to its stores. Discounter Target Corp, Family Dollar and a variety of other chains have dedicated more space to food in their stores, especially in recent months.

The chains hope that by providing a wider variety of items people will come into their stores more often, and spend more when they visit.

Grocery stores, meanwhile, have come under pressure from soaring costs and added competition from various stores.

The 10 stores already selling more food in Chicago are in areas with limited access to medical resources, Kermit Crawford, the company's president of pharmacy services, told reporters at the meeting.

Trying to become a broader provider of healthcare services is also part of the company's strategy.

Walgreen said it will push to provide a wider variety of vaccines, after becoming the second-largest U.S. provider of flu shots behind the government.

Vaccinations such as the ones for hepatitis B and travel are among those that patients should be able to get at the company's pharmacies and in-store clinics, Crawford said.

The move to provide a wider variety of health services is one that Walgreen expects to reap benefits from immediately, and more so when millions of Americans become insured under the government's healthcare reform.

(Reporting by Jessica Wohl; Editing by Steve Orlofsky)

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