Reuters reports that Jeffrey Rein, chairman of Walgreen Co., told an investor group this week that the company was considering slowing the pace of new store openings, but that no decision had been reached.
The upside of such a move, Rein said, would be reduced stress on the company’s personnel development programs; during 2008 alone, the company expects to need 875 new managers because of new store openings as well as promotions and retirements. This apparently places quite a burden on the company’s infrastructure, enough so that the change of pace is being seriously discussed.
The downside is that if Walgreen doesn’t take certain locations, it may lose them to other retailers, which could create additional problems down the road. Besides, new stores are a commonly accepted measurement of corporate health in the public markets, and while a slowdown might not hurt profits, it could end up being misinterpreted, causing a decline in the company’s stock market value.
The upside of such a move, Rein said, would be reduced stress on the company’s personnel development programs; during 2008 alone, the company expects to need 875 new managers because of new store openings as well as promotions and retirements. This apparently places quite a burden on the company’s infrastructure, enough so that the change of pace is being seriously discussed.
The downside is that if Walgreen doesn’t take certain locations, it may lose them to other retailers, which could create additional problems down the road. Besides, new stores are a commonly accepted measurement of corporate health in the public markets, and while a slowdown might not hurt profits, it could end up being misinterpreted, causing a decline in the company’s stock market value.
- KC's View:
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Deciding to slow down the pace of openings has got to be one of the toughest decisions a CEO can make. After all, sometimes it seems that we have an economy where speed, size and efficiency are valued above quality and effectiveness…until, of course, they are not.
But one can imagine that there are plenty of retailers out there where management may wish, in retrospect, that they hadn’t hit the gas pedal quite so hard, in part because it created unreasonable expectations and in part because it stressed the corporate culture beyond the point where it could thrive.
