- Walgreens and Cooler Screens are suing each other after the pharmacy chain tried to get out of its contract with the company that installed refrigerator doors that can display digital ads. Arsen Avakian, CEO of Cooler Screens, had his team shut off Walgreens doors altogether in an attempt to get the company to respond to overdue invoices.
You may have started seeing digitized refrigerator doors at some of your favorite grocery stores and other retailers. But Walgreens has had years-long drama with a provider of the ad-bearing fridge doors—and they’re trying to get out of their contract.
Doing so, however, could cost the company millions.
Cooler Screens sued the pharmacy chain for $200 million in June 2023 for breach of contract, according to a case filing in Cook County, Ill. While it’s not news that Cooler Screens sued Walgreens, and Walgreens subsequently countersued Cooler Screens for monetary damages, Bloomberg reported Thursday Cooler Screens CEO Arsen Avakian found his own means of retaliation.
Avakian’s team secretly cut the data feeds to digitized refrigerator doors at more than 100 Walgreens stores in the Chicago area, Bloomberg reported. These “smart doors” would typically display images and prices for the actual products behind the glass, as well as advertisements. As part of their contract, Cooler Screens had installed 10,000 smart doors at hundreds of U.S. Walgreens locations, according to Bloomberg, and had plans to install 35,000 more doors.
But in December, the doors at the select Chicago locations “glazed over with white pixels,” or “blacked out altogether,” according to Bloomberg, preventing customers from finding the products they were searching for.
“We were disappointed in Cooler Screens’ attempts to interfere with our customers’ experience in certain stores and are pleased all their cooler doors have now been removed,” a Walgreens spokesperson told Fortune. “We look forward to showing all the ways in which Cooler Screens breached its contract and being vindicated in court.”
Counsel for Walgreens even suggested the outage hurt the pharmacy chain’s business in the last quarter.
“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,” Walgreens counsel wrote in a court filing, according to Bloomberg.
Not only did the outage allegedly hurt business, but it burned some bridges. Walgreens CEO Greg Wasson had actually co-founded Cooler Screens with Avakian and helped secure the deal, which has effectively been terminated.
Avakian told Bloomberg turning off the doors altogether was the only way to get Walgreens to respond to overdue invoices for maintenance and internet fees.
“I got to tell them once, twice, three times, five times, ‘Guys, you got to pay the f—ing bill!’” Avakian told Bloomberg. “We’re somehow surviving this assassination attempt by Walgreens, which will be a miracle if we do.”
While digitized refrigerator doors can be “innovative,” they’re expensive to install and maintain, Sean Turner, chief technology officer and co-founder of retail tech platform Swiftly, told Fortune.
“There’s also the challenge of sourcing content that is relevant and adds value for shoppers without overwhelming them,” Turner said. Still, if implemented and maintained properly, they can “increase sales and improve shopper engagement,” he added.
But that didn’t appear to be the case at Walgreens. The Walgreens spokesperson told Fortune the company terminated its contract with Cooler Screens “due to their failure to meet our expectations and their contractual obligations.”
Before the big blackout in December, the internet-connected fridge panels would often flicker, crash, or show the wrong products, Bloomberg reported, fueling Walgreens’ dissatisfaction with the tech.
“High installation costs, potential privacy concerns, technical challenges, and the risk of overwhelming customers with excessive advertising are key drawbacks” of products like Cooler Screens, Jacqueline Flam, senior vice president of beauty, drug, and OTC retail at consumer intelligence firm NielsenIQ, told Fortune. “Ultimately, cooler screens create risk in complicating a simple, straightforward sale.”
Cooler Screens didn’t respond to Fortune’s request for comment.