As a discerning consumer, you know that price matching is one of the most effective tools for ensuring you get the best deal every time you shop. But does this frugal tactic work at Walgreens, the ubiquitous pharmacy chain with over 9,000 locations across the U.S.? The answer is a bit more complex than a simple yes or no.
Walgreens‘ Official Price Matching Policy
Let‘s start with the official word from Walgreens HQ. According to the company‘s customer service FAQ, Walgreens does not currently match competitors‘ prices, with no exceptions noted. This means that if you find an item cheaper at CVS, Rite Aid, Walmart, Target, Costco or any other retailer, Walgreens will not lower its price to match.
However, Walgreens will price match its own website, Walgreens.com, albeit with some caveats. To qualify for a price match, the item must be identical in every way – same brand, size, quantity, color, flavor, etc. Sale prices and promotions are excluded, and the lower online price must be currently in stock and available to ship. Walgreens also caps price matches to one per customer per day, and will not honor online prices retroactively or issue rainchecks.
It‘s important to note that prescription drugs, contact lenses and other healthcare services are categorically excluded from Walgreens‘ price matching policy, even if there is a lower cash price listed on the company‘s own website.
The Walgreens Pricing Paradox
So why doesn‘t Walgreens match prices with its competitors? It‘s a bit of a head-scratcher, given that numerous studies have shown Walgreens to be one of the pricier pharmacy chains overall. A 2021 basket analysis by Consumer World found that a representative assortment of 30 household and personal care items cost a whopping 55% more at Walgreens than at Walmart, 30% more than at Rite Aid, and 20% more than at CVS.
What‘s even more puzzling is the significant price variation that exists across Walgreens‘ own stores. A 2018 investigation by CBS News discovered that prices on individual items could differ by up to 55% between Walgreens locations in the same metro area, with stores in pricier neighborhoods consistently charging more than those in lower-income communities. Yet Walgreens‘ price matching policy makes no provision for equalizing prices across its own store base.
This seeming disconnect between Walgreens‘ premium pricing and its lack of a comprehensive price matching policy has not gone unnoticed by consumers. A 2022 survey by retail analytics firm Quid found that Walgreens ranked dead last among major pharmacy chains in customer perception of value, with only 27% of respondents agreeing that Walgreens offers competitive prices. Anecdotally, social media is rife with complaints from disgruntled shoppers who have had price match requests denied at Walgreens, even when presented with irrefutable proof of a lower price elsewhere.
Inside Walgreens‘ Business Model
To understand Walgreens‘ aversion to price matching, it‘s helpful to examine the company‘s underlying business model and strategy. Unlike big box discounters or grocery stores, Walgreens generates the lion‘s share of its revenue and profit not from front-of-store retail sales, but from its pharmacy operations. In fiscal 2021, prescriptions accounted for over 75% of Walgreens‘ total sales, with retail products making up just 22%.
This skew towards pharmacy gives Walgreens some cushion to maintain higher prices on retail items, as it‘s not as reliant on those sales for its overall financial health. The company also benefits from the relative inelasticity of demand for prescription drugs – most consumers will get their meds at the nearest pharmacy and are less likely to price-shop than they would for discretionary purchases.
Moreover, Walgreens has made a strategic bet that convenience and service will trump price for a significant subset of consumers. The company has invested heavily in its retail clinic and primary care offerings, positioning itself as a one-stop-shop for healthcare needs. Partnerships with Kroger and VillageMD have expanded Walgreens‘ reach beyond its traditional drugstore base, giving it access to a broader and more loyal customer base.
In essence, Walgreens is gambling that its ubiquitous physical footprint, coupled with its growing array of healthcare services, will provide a competitive moat that insulates it from having to engage in aggressive price matching. It‘s a page out of the playbook of specialty retailers like Sephora and Ulta Beauty, which have thrived without matching competitors‘ prices by providing a unique, upscale shopping experience.
The Price Matching Tradeoffs
But is Walgreens‘ no-price-matching strategy sustainable in the long run? There are arguments on both sides. On one hand, consumers are becoming increasingly price-savvy and willing to shop around for the best deal, aided by mobile price comparison tools and a growing array of online pharmacy options. A recent Consumer Reports survey found that 56% of respondents who regularly take prescription medications have price-shopped in the past year, up from just 39% in 2019.
At the same time, inflationary pressures and economic uncertainty have made many shoppers more willing to trade down to cheaper private label alternatives or lower-frills retailers, which could put pressure on Walgreens‘ front-end sales. The company already lags rivals like CVS and Rite Aid in private label penetration, and its continued resistance to price matching may only hasten the erosion of its retail market share.
On the other hand, price matching is not without its own risks and costs. Matching rivals‘ prices can compress already-thin retail margins and condition customers to expect the lowest price every time, rather than rewarding loyalty. It can also be operationally complex and labor-intensive to verify competitors‘ prices and keep tabs on a constantly shifting promotional landscape.
Some would argue that Walgreens is better served by focusing on other levers to drive store traffic and purchases, such as its myWalgreens rewards program, targeted digital coupons, and in-store health services. The company has also been investing in its owned brands and exclusive products as a way to differentiate its assortment and justify premium pricing. Walgreens-owned No7 Beauty, Soap & Glory and Liz Earle skincare lines have gained a devoted following and serve as a bulwark against price matching.
The Future of Price Matching
Looking ahead, the price matching landscape in retail is likely to continue evolving as e-commerce grows and the lines between online and offline shopping blur. The emergence of buy online, pickup in store (BOPIS) as a major fulfillment channel has added a new wrinkle to price matching, as consumers can now check store inventory and pricing in real-time before deciding where to complete their purchase.
This shift could work in Walgreens‘ favor, as its extensive brick-and-mortar network gives it a built-in advantage for BOPIS over pure-play e-tailers. However, it also raises the stakes for Walgreens to have consistent pricing across its digital and physical storefronts, lest it risk alienating omnichannel shoppers.
Ultimately, Walgreens‘ approach to price matching will need to be calibrated to the specific competitive dynamics of the pharmacy industry as well as the evolving needs and preferences of its customer base. What works for a big box generalist like Walmart or a specialty retailer like Ulta may not necessarily be the right recipe for a hybrid pharmacy/retailer like Walgreens. As with any pricing strategy, the key will be to strike the right balance between margin preservation and customer acquisition/retention, while staying nimble enough to adapt to changing market conditions.
For now, savvy Walgreens shoppers will need to be diligent about researching prices, taking advantage of promotional offers, and leveraging loyalty rewards to eke out the best value. And if you do spot a lower price on an identical item at Walgreens.com, by all means politely ask for a price match – just don‘t expect it to be granted on prescriptions or without meeting all the requisite criteria. Happy shopping!
