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Walgreen Co. Message Board

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  • thegoldenlaw thegoldenlaw Dec 10, 2006 11:09 PM Flag

    This Is Why Walmart Will Kill Walgreens

    Here is what is really behind Walmart's push to sell generic drugs at 4 dollars a shot......

    In many states, selling products below cost is illegal. Walmart runs into this problem all the time. Walmart and Target are using the political popularity of selling prescriptions below cost in order to apply pressure to state legislatures to repeal the laws against selling below cost. If this happens, Walgreens and pretty much any other speciality retailer of any kind will get slaughtered, one by one. Walmart and Target will target pharmacies first, speciality electronics retailers next and so on. This is their end game. The press in this country, including the purportedly "savy" financial press has completely missed the boat on this one.

    I am not sure if this will work. In fact, I would not be shocked if Walmart and Target have opened themselves up to some litigation over this -- both from the Walgreens of this world and from consumers. If it does work, Walmart and Target will make Microsoft's dominance in the software biz look weak.

    goldenlaw.

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    • goldenlaw, interesting thought but, (1) I don't think anything on the $4 list is being sold under cost & (2) In today's environment I dont't believe WMT could damage WAG significantly with a price war.

      • 1 Reply to immerlogic
      • For some generics, $4 is less than cost. I think Walmart has determined that this is the only way it can drive a Walgreens out of the competitive field. It was easy enough to beat the tar out of other specialty retailers because they were not that good at what they do. Walgreens is very good at what it does. As such, Walmart is playing dirty and looking very long term on this front. As a WAG shareholder, I sure hope you are right.

        Goldenlaw.

 
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