Former Walgreens CEO sues Walgreens for breach of contract over removal of smart cooler doors from stores

A company started by the former CEO of Walgreens is suing the pharmacy chain for breach of contract after it pulled the plug on the rollout of smart screen cooler doors at its stores. Greg Wasson, who co-founded Chicago-based Cooler Screens after leaving Walgreens in 2014, alleges his former employer reneged on a multiyear agreement to install the startup’s smart doors — coolers with digital video screens displaying the contents — at 2,500 stores. Advertisement The lawsuit, filed Wednesday in Cook County Circuit Court, alleges Cooler Screens lost more than $200 million after the program was “prematurely halted” by Walgreens under new CEO Rosalind “Roz” Brewer in late 2021 — only two years and 700 stores into the rollout.

“After visiting stores in which Smart Doors had been installed, Brewer decided that she did not like the way they looked, purportedly comparing the screens to ‘Vegas’ in a derogatory way,” the lawsuit states. “Brewer wanted to stop deployment and remove the screens . .

. from all Walgreens locations. ” Advertisement Launched in 2017, Cooler Screens was co-founded by Wasson, Arsen Avakian and Glen Tullman.

Using his connections, Wasson pitched his successor at Walgreens, Stefano Pessina, on the Cooler Screens technology, which uses digital cameras and retail data to show customers what’s behind the cooler doors and feed them ads to influence purchases. The technology is designed to pump up in-store sales while generating advertising revenue for Cooler Screens. In May 2018, Cooler Screens ran a three-month pilot test at six Walgreens locations, including two Chicago stores — North Michigan Avenue and North State Street.

Deemed a success, the test was expanded to 50 stores and in July 2019, Cooler Screens and Walgreens entered into a multiyear agreement to install the technology in 2,500 stores across the U. S. — roughly a fourth of the pharmacy chain’s retail footprint.

Deerfield-based Walgreens has nearly 9,000 retail locations. When Brewer, former chief operating officer at Starbucks, succeeded Pessina to become the first African American woman to lead Walgreens in March 2021, the Cooler Screens program was in 55 stores and entering phase two — a rapid expansion mode geared to install the smart doors at 200 stores per month. Brewer, however, “did not share her predecessor’s enthusiasm for Cooler Screens,” according to the lawsuit, and the rollout came to a halt in September 2021 amid concerns raised by Walgreens that the smart doors were not meeting the standards set in the agreement.

The Walgreens CEO v Walgreens CEO lawsuit alleges Brewer and Walgreens “worked to undermine” the technology, while Walgreens asserts the technology didn’t work, citing flickering images, inaccurate inventory displays and electrical issues. Cooler Screens blamed “old and outdated” refrigerators and freezers at Walgreens for the glitches, and a lack of cooperation for torpedoing its advertising sales. Despite efforts last year by Cooler Screens, which remediated all 10,300 doors installed at stores across the U.

S. , Walgreens terminated the agreement in February. Advertisement “We are disappointed that Cooler Screens is falsely claiming that anything other than their failure to perform was the basis for the termination of our contractual relationship,” Walgreens spokesperson Jim Cohn said in a statement Thursday.

“The claims and allegations in Cooler Screens’ complaint are baseless and unfounded. Safety, customer experience, and meeting revenue goals are a priority for our company. Cooler Screens failed to meet its contractual obligations, and the decision to terminate the contract was based on our experience with Cooler Screens.

” As part of the termination, Walgreens wants Cooler Screens to uninstall its doors. If not, it plans to uninstall the 10,000-plus smart doors on its own, according to the lawsuit. Cooler Screens has since installed the same technology at other retailers including grocery chain Kroger, which owns Mariano’s in Chicago.

But the company says the smart doors it custom-built for Walgreens, including thousands of unused screens that were never installed, cannot be repurposed for other retailers. The lawsuit, which alleges four counts of breach of contract, is seeking an injunction to prevent Walgreens from taking any action to uninstall the smart doors before reaching an agreement with Cooler Screens. It is also seeking $200 million in damages.

rchannick@chicagotribune. com.