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Smith to retire at end of 2008, CVS announces executive moves

BY Antoinette Alexander

WOONSOCKET, R.I. CVS announced on Wednesday announced several executive moves, including the retirement of Kevin Smith, senior vice president of supply chain and logistics, at the end of 2008.

Smith has been with CVS for the past eight years and made numerous contributions to the organization, including the integration of six new distribution centers.

Until his retirement, Smith will remain with CVS as the head of its Environmental Leadership Council to help build the foundation for the company’s environmental and sustainability practices. He will drive the assessment of the company’s environmental footprint, identify risks and opportunities, and help set short- and long-term goals in this area.

In other moves, Ron Link has been promoted to senior vice president of logistics, reporting to Larry Merlo, president of CVS—Retail. He will be responsible for leading the company’s logistics division in managing inventory and capacity, developing distribution solutions and providing best in class logistics service to CVS’ 6,300 stores.

Link joined CVS in 1994 as the director of the Lumberton, N.J., distribution center. He was promoted to vice president of logistics in 1999. Hi accomplishments during his career at CVS including leading the integration of 11 acquired distribution centers while driving strategies to improve service to CVS stores.

Dana Lilly has been promoted to vice president of distribution operations, reporting to Link. Lilly most recently served as the regional director of distribution operations. In his new role, Lilly will be responsible for all distribution center operations in the company’s 15 facilities, logistics planning and optimizing transportation effectiveness, including the development of strategies to drive service levels, order quality and on-time performance to CVS stores.

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American Greetings, MGM ink licensing deal

BY Michael Johnsen

CLEVELAND Greeting card recipients may soon encounter Inspector Jacques Clouseau.

American Greetings and MGM Consumer Products announced an agreement Monday that will allow the greeting-card maker to use images from MGM films on its products.

Classic films such as “The Pink Panther” series, starring Peter Sellers as the klutzy Clouseau, “Rocky” and “Dances with Wolves” are among the films to which American Greetings will have access, along with newer movies such as “Legally Blonde.”

MGM’s library of films comprises 4,100 titles, making it the world’s largest.

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A new look for Walgreens

BY Mike Troy

ORLANDO, Fla. Walgreens’ pursuit of growth in recent years has caused the company to open in-store clinics, create a new offering of health services and even pursue acquisitions. Now, the company best known for operating 15,000 square foot stores located at the intersection of Main and Main also is bringing new thinking to store designs and prototype development.

“One size does not fit all,” Don Whetstone, senior director of merchandising strategy and development said last week at the Retailing Smarter conference sponsored by the University of Florida’s David F. Miller Center for Retailing Education and Research. Whetstone is a 27-year Walgreens veteran who now leads a newly created organization responsible for the development of an expanded portfolio of store formats and strategies to better meet the needs of key markets and trading areas.

Walgreens will continue to rely on the familiar 15,000 square foot corner drug store with approximately 26,000 products across 150 departments located on a two acre parcel, but work is underway on the development of alternative formats and new store designs. As in other segments of the retail industry, smaller formats are seen playing an important role in Walgreens future expansion, especially as the company pursues growth in high density markets with limited real estate opportunities.

“A smaller format will facilitate our continued expansion in markets in the Northeast and California,” Whetstone said. “We find ourselves having to become more flexible to shoehorn into some of these areas.”

He offered as an example a Walgreens store on Castro Street in San Francisco that is one third the size of the company’s average store but it produces twice the annual sales. “We have to take that concept and learn from it and be able to take it places like Boston,” Whetstone said.

In addition to smaller formats in urban areas, Walgreens also has developed a store prototype designed to operate profitably in small markets that offer top line sale potential below the typical $8 million the average new Walgreens store generates during its first year of operation. According to Whetstone, the company has created a store design that functions with 17 percent less inventory, 22 percent less labor, 24 percent less facility costs and half the advertising pages of a typical store without compromising the customer experience.

In addition to new store designs and smaller formats, the coming years could bring sweeping changes to the appearance of Walgreens conventional stores. “Even our prototype needs a facelift every now and then and we are working on that now,” Whetstone said.

Walgreens converted a warehouse three miles away from its Deerfield, Il headquarters into what Whetstone called the Innovation Center. It is a place where merchants and store designers are able to experiment with fixtures, signing, presentation and product adjacencies.

The result was the development of a new design that is now in place at four Chicago area stores and two other locations elsewhere. The design features a softer, more feminine color palette, lower fixture heights, a crisp clinical look in the pharmacy department and a racetrack layout that Whetstone concedes will probably not be used going forward.

Walgreens is still assessing customer feedback and Whetstone shared one telling comment from a woman who visited the new cosmetics department and said, “it looks like it’s been designed by a woman instead of a bunch of old guys.”

Walgreens has abundant opportunities ahead of it to change consumer perceptions of its store designs. The company currently operates 6,727 locations and one third of those stores are less than five years old. Through the first three quarters of its fiscal year, Walgreens has opened 420 stores and is on track to achieve its full year goal of opening 550 stores.

“We open a store about every 17 hours,” Whetstone said.

Long-term term, plans call for 7,000 stores by 2010. Looking ahead to 2012, the company has revised its terminology somewhat to talk about having 10,000 points of care, inferring that much future growth with come from sources other than retail stores.

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