Walgreens rekindles micro-fulfillment center strategy

Dive Brief:

• Walgreens opened a new micro-fulfillment center in Brooklyn Park, Minnesota, reviving its push to expand the use of the automated facilities, according to a May 20 press release.
• The facility is the 12th of its kind in Walgreens’ network and will service almost 200 Midwest stores while processing roughly 13 million prescriptions annually, the release said.
• Last fall, the pharmacy retailer paused its rollout of micro-fulfillment centers to improve facility productivity and cut operational costs, but CEO Tim Wentworth said in January that the company planned to re-accelerate the effort over the next 12 months.

Dive Insight:

Walgreens’ micro-fulfillment center in Minnesota is the first to open since the company paused the expansion of its network of the automated facilities last fall.

With the addition of the Minnesota site, Walgreens now services more than 5,000 stores in the U.S. from its 12 micro-fulfillment centers located throughout the country, per the press release. The company aims to support “closer to 6,000 stores” with these facilities, Wentworth told analysts in January.

Walgreens’ micro-fulfillment centers use robotic technology to fill and ship prescriptions to stores, according to the press release. In the last year, the company has realized improvements in shipped volume and prescriptions filled per month from such facilities. 

Walgreens is ramping up its micro-fulfillment center push amid a tumultuous time for retail pharmacies. The company itself is planning to shutter 1,200 stores in the next three years. Meanwhile, Rite Aid is consolidating its distribution center footprint amid its second bankruptcy filing in less than two years.