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Big week for drugstore retailers saying they are not worried about Amazon.

First, it was CVS CEO Larry Merlo, who said that his approach to competing with Amazon is to not “leave any white space for Amazon to disrupt,” and argued that while Amazon’s purchase of PillPack was interesting, it is a “niche” business using “off the shelf” technology that doesn’t have that big of an upside.

Now, Bloomberg has an interview with Walgreens Boots Alliance CEO Stefano Pessina, who said that “it will be easier for his company to move online than it will be for Inc. to copy its massive store network.”

In the interview, Pessina “predicted that Amazon ‘will find it more difficult to create the physical infrastructure than we will find it difficult to digital-ize our company,’ citing an ongoing overhaul of the company’s software and digital operations. He predicted that people will still want to interact with other human in store, or to have the reassurance of a pharmacist to answer questions about a prescription.”

And, he said that “reports that may open up thousands of physical stores is a acknowledgment that a brick-and-mortar presence is still important in some retail markets.
KC's View:
Methinks he doth protest too much.

I’ll buy the argument that a network of bricks-and-mortar stores - if they are well run and decidedly differentiated, with relevant and resonant products and services - can be a decided advantage. But I completely reject the notion that it is easier for a company like Walgreen to go digital than it is for a company like Amazon to get physical. That’s something that Tom Furphy and I have talked about numerous times in The Innovation Conversation … and I know that he feels it is much more challenging for an existing business to cast aside legacy methods of doing business and adapt to the demands of online retailing.

Some of this is betrayed by Pessina’s own words, I think, because you don’t compete with Amazon by “overhauling existing software and digital operations.” You compete by rethinking everything you’ve been doing, by challenging assumptions, by being willing to rethink every aspect of your business.

I think companies like Walgreen and CVS, in fact, are trying to do this with their various health care moves. But I think that trying to diminish Amazon’s impact and potential is the wrong approach.