Shop n Save Lures Displaced Buyers - Analyst Blog

SUPERVALU Inc .'s ( SVU ) subsidiary Shop n Save is set to accommodate the TRICARE customers who are caught in the rift between WalgreenCompany ( WAG ) and St. Louis-based drug provider Express Scripts Inc. (ESRX).

Things were not going well between Walgreen and Express Scripts since June 21. Finally, Walgreen declared that it will refrain renewing its license with Express Scripts with the onset of 2012.

This means that from January 1, 2012, retail giant Walgreen will no longer allow Express Scripts' consumers to refill their prescriptions at their stores. Along with this, Walgreen will also stop serving the Tricare, the pharmacy benefit offered to nearly 6 million current military personnel, their dependents and military retirees.

Therefore, customers who are registered with Express Script will have to refill their prescriptions at new pharmacies or pay for them out of their own pocket.

Walgreen revealed that more than 250,000 Express Script customers wanted to get access to Walgreen stores. It offered to negotiate Tricare renewal separately from Express Scripts' commercial business, so that the military personnel get uninterrupted medical benefit from its stores. It also offered to reduce the reimbursement rates that could result in huge savings by the military personnel.

However, Express Scripts said that it couldn't allow Walgreen to pick and choose its customers and give the benefit to only military personnel and their families. According to Express Scripts, this would harm its contractual agreements with other customers.

SUPERVALU's Shop n Save has not missed the chance of taking advantage of this feud, and they are preparing to grab the customers who are not being able to fill prescriptions from Walgreen from next year onwards.

The drug store has close to 50 stores in Illinois and Missouri, and 34 pharmacies. It is planning to hire more workers and enhance its pharmacy services to welcome patients with Express Scripts prescription plans.

It has urged the Express Script customers to transfer prescriptions well ahead of time, as then the pharmacist at the Shop n Save stores can arrange for the medicines in advance.

Other pharmacy retailers like Schnucks Market, with 95 in-store pharmacies in Missouri, Illinois, Indiana, Wisconsin and Iowa and Dierbergs, are also reported to lure Walgreen displaced customers and ramping up their amenities to accommodate them in their stores.

Supervalu holds a Zacks #3 rank that implies a short term 'Hold' Rating.

EXPRESS SCRIPTS ( ESRX ): Free Stock Analysis Report

SUPERVALU INC ( SVU ): Free Stock Analysis Report

WALGREEN CO ( WAG ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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