Walgreens Replaced Fridge Doors With Smart Screens. It's Now a $200 Million Fiasco

The refrigerated section at the flagship Walgreens on Chicago’s Magnificent Mile was glowing with frozen food and bottled drinks, but not for long. Where the fridge cases were previously lined with simple glass doors, there were door-size computer screens instead. These “smart doors” obscured shoppers’ view of the fridges’ actual contents, replacing them with virtual rows of the Gatorades, Bagel Bites and other goods it promised were inside. The digital displays had a distinct advantage over regular glass, at least for the retailer: ads. When proximity sensors detected passersby, the fridge doors started playing short videos hawking Doritos or urging customers to check out with Apple Pay. If this sounds disruptive—in the ordinary sense of the word, not Silicon Valley’s—that might have seemed a generous description in December 2023, when all the screens went blank.

At first, the outage didn’t arouse suspicion. These internet-connected fridge panels, developed by a Chicago startup called Cooler Screens Inc., frequently flickered, crashed or showed the wrong products. Every so often, they caught fire. But store managers were stuck with them. As part of a 10-year contract with Walgreens for a split of the ad revenue, Cooler Screens had installed 10,000 smart doors at hundreds of US locations like this one. It planned to install 35,000 more. By this point, Walgreens had already tried to pull out of the deal and get rid of the doors, blaming what it says was glitchy hardware and software. But Cooler Screens had temporarily prevented their removal the prior June by suing Walgreens for breach of contract, seeking $200 million and demanding its screens stay in place. Unreported until now is that over the ensuing months of legal battling, during which Walgreens had countersued for monetary damages, Cooler Screens Chief Executive Officer Arsen Avakian decided to try a different form of pushback.

On Dec. 14, Avakian’s team secretly cut the data feeds to more than 100 Walgreens stores in the Chicago area. The dozen or so smart doors affected in each of these stores either glazed over with white pixels or blacked out altogether. Customers could no longer see where the Coke and Red Bull and Hot Pockets and Heineken sat, and either assumed the fridges were out of order or found themselves rummaging through one by one. Some staffers pasted pieces of paper on the opaque screens that read, for example, “assorted sports drinks & coffee.” Others filed service requests online with Cooler Screens, which had been marking all incoming complaints as resolved without fixing anything.

By the time Walgreens caught on and persuaded a judge to issue a temporary restraining order against Cooler Screens forcing it to restore the data feeds, the doors had been offline for a week. Before, it had been annoying for some screens to occasionally black out; it was much more painful for hundreds of them to crash simultaneously. Walgreens’ lawyers suggested this might have dented the company’s quarterly grocery sales. This “December attack,” as they called it, mostly targeted Illinois, the home state of Walgreens Boots Alliance Inc., the pharmacy chain’s parent company. “This was a brazen pressure tactic intended to harm Walgreens’s business and customer reputation during the busy holiday shopping season and force Walgreens to capitulate to Cooler Screens’s demands,” counsel for the retailer wrote in a court filing.

https://www.bloomberg.com/news/features/2025-01-16/walgreens-fridge-fight-bodes-poorly-for-future-of-retail?accessToken=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJzb3VyY2UiOiJTdWJzY3JpYmVyR2lmdGVkQXJ0aWNsZSIsImlhdCI6MTczNzgyNDkxOCwiZXhwIjoxNzM4NDI5NzE4LCJhcnRpY2xlSWQiOiJTUTZFR01EV1gyUFMwMCIsImJjb25uZWN0SWQiOiJDNjgyQTUwQzJCRDM0MTFCQTgwQjEwQjZEQjczQzM1MSJ9.VJrLsO8Iexlzp5Fw5JIQEJwJm8-x8-XDDvT6qvvXegw