Walgreens 2014 Annual Report Download - page 22

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 significant adverse effect on our business, results of
operations and financial condition.
If we do not successfully develop and maintain a relevant omni-channel experience for our customers, our
business and results of operations could be adversely impacted.
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 shop online. As part of our omni-channel strategy, we are making technology investments in our
websites and applications for mobile phones and other electronic devices. 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 adversely affected. In addition, if our online businesses 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 adversely affect our business,
reputation and results of operations.
Our strategy is dependent, in part, upon the successful implementation of various strategic initiatives.
While our overall business strategy consists of many components and underlying initiatives, our long-term
financial performance will be impacted by our ability to execute certain key initiatives. In fiscal 2015, we plan to
pursue strategies designed to create a “Well Experience” and further transform our traditional drugstore to a
“retail health and daily living” store while delivering an outstanding customer experience through enhanced
employee engagement; transform the role of community pharmacy to play a greater role in healthcare through
integration and expanded services; and establish an efficient global platform enabling us to expand across new
channels and markets. If we are unable to effectively execute one or more of these key initiatives, our business,
financial condition and results of operations may be materially adversely affected.
Our ability to grow our business may be constrained by our inability to find suitable new store locations at
acceptable prices or by the expiration of our current leases.
Our ability to grow our business 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 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.
A significant disruption in our computer systems could adversely affect our operations.
We rely extensively on our computer systems to manage our ordering, pricing, point-of-sale, pharmacy
fulfillment, inventory replenishment, customer loyalty program, finance and other processes. Our systems are
subject to damage or interruption from power outages, computer and telecommunications failures, computer
viruses, security breaches, vandalism, natural disasters, catastrophic events and human error, and our disaster
recovery planning cannot account for all eventualities. If any of our systems are damaged, fail to function
properly or otherwise become unavailable, we may incur substantial costs to repair or replace them, and may
experience loss or corruption of critical data and interruptions or delays in our ability to perform critical
functions, which could adversely affect our business and results of operations. In addition, we are currently
making, and expect to continue to make, substantial investments in our information technology systems and
infrastructure, some of which are significant. Upgrades involve replacing existing systems with successor
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