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A Relentless Race to the Bottom

by Seth Godin

They’re shutting down Jimmy Wang’s store. Shutting down a successful little business.

Walgreen’s is moving into town, my town, a town with three or four small drugstores and plenty of places to buy stale cookies, thank you very much.

I’ve written about Brother’s market before, an anchor in my little town. The only place to get hand-picked fresh food, pretty much, and the sort of market you could imagine moving to town just to be near. Remember those little markets where they actually care about the produce they sell? In a world filled with bitter cash register jockeys, Brother’s was different. A smiling face, a family member mentioned, a don’t-worry-about-the-pennies sort of interaction.

I’ve probably shopped there a thousand times, and every single time it brought a smile to my face.

The problem is that while Brother’s was in a race to the top, a race to create more and better interactions, Walgreen’s is in a race to the bottom. They exist to extract the last penny from every bit of real estate they can control. That’s the deal they made with their shareholders.

The landlord who owns this land lives in another state. He doesn’t care. He can ignore the protests and the petitions.

And Walgreen’s won’t even notice the community outrage. We can write letters or call or boycott the new store (or all their stores) and the local manager, the local region manager, the state-level manager, the head of store operations–none of them care, of course, because it’s just a job to them.

Real estate is the soul killer here. You can’t have a beloved local market and a public drugstore chain occupying the very same spot. Pundits like me can talk all we want about being remarkable, about leading and about making connections, but when a public company wants your spot, when it can extract a few extra pennies per square foot, you lose.

The internet has opened the door for millions of businesses to do things differently, because there are other assets now, assets that can transcend location. Your permission to talk to customers, your reputation, your unique products–you can build a business around them online. But that doesn’t work so well if you depend on local (and leased) real estate, if you’re selling watercress or radishes, apparently.

One by one, store by store, the chains expand, earning a few more dollars a share and further insulating themselves from the communities they used to serve. No, my neighbors and I don’t need another drugstore, we have plenty. That’s not going to change Walgreen’s mind, and it’s not going to help Jimmy and his team, either. My heart goes out to them. Thanks for everything you did for our community, guys.

The race to the top continues. It’s just a lot harder if you have a landlord.

 

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