From street level, the view of the Walgreen Co., Deerfield, Ill., looks much the same as it has in the last few years, with continued growth in sales and store count.

Behind the scenes, Jeffrey A. Rein, chairman and chief executive officer, has charted a new course for the drug store chain.

Primarily through acquisitions, Walgreens is on its way to becoming an integrated provider of health care services. The retailer has TakeCare Health Clinics in its stores, clinics at other companies’ worksites, specialty pharmacy services, home care, a prescription benefit management operation and a mail-order pharmacy.

The offerings are meant to complement the retail store presence, which continues to make life difficult for supermarkets, with solid performance on nearly all fronts.

“Above all, we are a drug store, and we are proud of the success we are showing, especially in our front-end business, as consumers turn to us for value and shopping that is close to home,” Rein said during an earnings webcast last month.

“In a challenging economy, we continue to successfully execute our strategies for growth, while effectively managing costs,” he said.

Walgreens is “successfully combining a convenience stop with a health care solution,” said Don Stuart, managing director, Cannondale Associates, Wilton, Conn. “In that way, they are satisfying more needs, balancing some of the margin erosion that they may be experiencing in the pharmacy with margin gain in front of store sales.” This is “a winning strategy, a great brand,” he said.

“Jeff is leading the largest retail drug chain in a time of enormous change in that industry,” said Neil Stern, partner, McMillan Doolittle, Chicago. “Discounted generics, a down economy and sweeping change to the health care industry have made the Walgreens growth machine more vulnerable than at any time in recent memory.”

The chain reported this month it has scaled back its growth plans. While it still plans to reach its goal of 7,000 stores by 2010, Walgreens recently entered Hawaii, and next year will set up shop in Anchorage, Alaska — its 50th state — organic store growth will drop from 9% in fiscal 2008 (ends Aug. 31), to 8% in 2009, to 6% in fiscal 2010 and 5% in fiscal 2011. The actual number of net new stores — adjusted for relocations and closings — will drop from 500 in 2008 to 365 in 2011.

— DAN ALAIMO

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