Walgreens 2015 Annual Report Download - page 22

successfully the products and services our customers will demand. If we misjudge either the demand for products
and services we sell or our customers’ purchasing habits and tastes, we may be faced with excess inventories of
some products and missed opportunities for products and services we chose not to offer. In addition, our sales
may decline or we may be required to sell the merchandise we have obtained at lower prices. Failure to timely
identify or effectively respond to changing consumer tastes, preferences and spending patterns could negatively
affect our relationship with our customers and the demand for our products and services, which could materially
and adversely impact our results of operations.
Our private brand offerings expose us to various additional risks.
In addition to brand name products, we offer our customers private brand products that are not available from
other retailers. We seek to continue to grow our exclusive private brand offerings as part of our growth strategy,
including through the expanded offering of Boots No7 and other brands owned or licensed on an exclusive basis,
as well as through selective acquisitions. Maintaining consistent product quality, competitive pricing, and
availability of our private brand offerings for our customers is important in differentiating us from other retailers
and developing and maintaining customer loyalty. Although we believe that our private brand products offer
value to our customers and typically provide us with higher gross margins than comparable national brand
products we sell, the expansion of our private brand offerings also subjects us to additional risks, such as
potential product liability risks and mandatory or voluntary product recalls; our ability to successfully protect our
proprietary rights and successfully navigate and avoid claims related to the proprietary rights of third parties; our
ability to successfully administer and comply with applicable contractual obligations and regulatory
requirements; and other risks generally encountered by entities that source, sell and market exclusive branded
offerings for retail. An increase in sales of our private brands may also adversely affect sales of our vendors’
products, which, in turn, could adversely affect our relationship with certain of our vendors. Any failure to
adequately address some or all of these risks could have a material adverse effect on our business operations,
results of operations and financial condition.
If we do not successfully develop and maintain a relevant omni-channel experience for our customers, our
businesses and results of operations could be adversely impacted.
Our business has evolved from an in-store experience to interaction with customers across numerous channels,
including in-store, online, mobile and social media, among others. Omni-channel retailing is rapidly evolving and
we must keep pace with changing customer expectations and new developments by our competitors. Our customers
are increasingly using computers, tablets, mobile phones, and other devices to comparison shop, determine product
availability and complete purchases online. We must compete by offering a consistent and convenient shopping
experience for our customers regardless of the ultimate sales channel and by investing in, providing and maintaining
digital tools for our customers that have the right features and are reliable and easy to use. If we are unable to make,
improve, or develop relevant customer-facing technology in a timely manner, our ability to compete and our results
of operations could be materially and adversely affected. In addition, if our online activities or our other customer-
facing technology systems do not function as designed, we may experience a loss of customer confidence, data
security breaches, lost sales, or be exposed to fraudulent purchases, any of which could materially and adversely
affect our business operations, reputation and results of operations.
We may be constrained if we are unable to find suitable new store locations at acceptable prices or by the
terms of our current leases.
Our ability to grow our retail pharmacy businesses may be constrained if suitable new store locations cannot be
identified with lease terms or purchase prices that are acceptable to us. We compete with other retailers and
businesses for suitable locations for our stores. Local land use and other regulations applicable to the types of stores
we desire to construct may impact our ability to find suitable locations and influence the cost of constructing our
stores. The termination or expiration of leases at existing store locations may adversely affect us if the renewal
terms of those leases are unacceptable to us and we are forced to close or relocate stores. Further, changing local
demographics at existing store locations may adversely affect revenue and profitability levels at those stores.
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