Cooler Screens sues Walgreens for $200M

Cooler Screens, a provider of digital in-store retail media and merchandising, has filed a $200 million lawsuit against Walgreens, claiming the drug chain backed out of an agreement to roll out its Smart Doors technology to some 2,500 stores.

Chicago-based Cooler Screens filed the breach-of-contract suit on Wednesday in Illinois Circuit Court for Cook County and publicly announced the action on Thursday. The technology company—co-founded by Greg Wasson, former Walgreens president and CEO and current Cooler Screens chairman—developed what it calls “the world’s first ‘smart’ cooler doors,” which display images, information and third-party advertising about the products inside refrigerated and freezer cases.

According to a copy of the complaint obtained by Winsight Grocery Business, Cooler Screens seeks damages from Walgreens to recover a more than $200 million investment to buy, install and run the Smart Doors in the retailer’s stores.

That figure includes $446,000 spent for a pilot at six Walgreens stores in the Chicago area, over $45 million for manufacturing and installing the screens in 700 Walgreens stores, $88 million on Smart Doors that were never installed, and more than $100 million spent or committed with third-party vendors to support the Walgreens relationship, Cooler Screens said in the lawsuit document.

Walgreens claimed technical, functional and safety issues with the Cooler Screens technology, the lawsuit stated. / Photo: Shutterstock

Deerfield, Illinois-based Walgreens has denied the suit’s charges and claims it was Cooler Screens that didn’t live up to the contract.

“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 said in an emailed statement on Friday. “The claims and allegations in Cooler Screens’ complaint are baseless and unfounded.”

The dispute unfolded as follows, Cooler Screens reported: The Smart Doors pilot launched in May 2018 at selected Walgreens locations proved successful and generated increased interest from the retailer. In turn, Walgreens extended the test period, and in July 2019 the companies entered into a longer-term deal to put Smart Doors in 2,500 Walgreens stores. Plans called for a two-phase rollout, starting with a 50-store deployment and then installations at the remaining 2,450 stores.

Top Walgreens and Walgreens Boots Alliance executives—including then-CEO Stefano Pessina, Alex Gourlay, Richard Ashworth and Mark Vainisi—participated in talks for the agreement and exhibited high levels of collaboration with the project, according to Cooler Screens’ lawsuit. However, the inception of a new CEO at Walgreens, Rosalind Brewer, in early 2021 later led to a “marked decline in the level of cooperation and support from Walgreens,” Cooler Screens stated in the complaint.

“Brewer apparently did not share her predecessor’s enthusiasm for Cooler Screens. After visiting stores in which Smart Doors had been installed, Brewer decided that she did not like the way they looked,” Cooler Screens explained in the suit. “Brewer wanted to stop the deployment and remove the screens and related technology from the Smart Doors from all Walgreens locations.”

Starting in September 2021, Walgreens began raising issues about technical and functional problems with Smart Doors at some locations and expressed safety concerns about the technology, Cooler Screens said. As of October 2021, the company had installed about 10,300 Smart Doors in approximately 700 Walgreens stores.

Cooler Screens stated in the suit that it presented a remediation plan to address Walgreens’ concerns in February 2022 and had finished remediating all 10,300 doors in December 2022. Still, Walgreens continued to signal its desire not to proceed with the rest of the installations, and at the end of March 2022, counsel for Walgreens sent a letter claiming that the Smart Doors issues persisted and Cooler Screens wasn’t abiding by the contract, Cooler Screens’ complaint said.

Cooler Screens reported that it installed 10,300 Smart Doors in about 700 Walgreens stores. / Photo: Shutterstock

“Safety, customer experience and meeting revenue goals are a priority for our company,” Walgreens said in the emailed statement. “Cooler Screens failed to meet its contractual obligations, and the decision to terminate the contract was based on our experience with Cooler Screens.”

In addition, Cooler Screens reported in the lawsuit that in February 2022, September 2022 and May 2023, Walgreens closed six stores and returned about 90 Smart Doors.

“When Walgreens terminated the agreement, fewer than one-third of the Smart Doors called for in the agreement had been installed, but Cooler Screens had already spent or committed millions of dollars to comply with their obligations under the contract. To add insult to injury, Walgreens is now wrongfully demanding that Cooler Screens spend tens of millions of additional dollars to remove all the Smart Door technology from Walgreens stores,” Cooler Screens stated on Thursday.
 
“Despite the fact that Cooler Screens did not breach the agreement and went above and beyond it, doing everything possible to satisfy Walgreens and salvage the relationship, Cooler Screens was no match for a huge corporation intent on breaking its contractual commitment, which is what led to the filing of this lawsuit,” Cooler Screens said. “Cooler Screens is seeking injunctive relief to prevent Walgreens from removing the Smart Door technology, which it has threatened to do, and is seeking compensatory damages for its more than $200 million loss.”

The legal tussle with Walgreens comes a couple of weeks after Cooler Screens announced a 500-store deployment with The Kroger Co. following a three-year pilot. Other retailers that have adopted and/or tested Cooler Screens’ technology, the company said, include Giant Eagle’s GetGo convenience stores, CVS, Chevron, Areas, Parkland and Western Union.