Walgreens & the 'Blurring' of America

Published in CSP Daily News

Drugstore chain "deliberately blurring many retail channels to fit how consumers shop today"

CHICAGO -- If a Walgreens looks more like an upscale sushi bar or a grocery store than a pharmacy, that's OK with CEO Gregory Wasson, said a Forbes report.

That impression is by design and part of the "Well Experience" concept that the company is rolling out to more locations this year as it pushes further beyond the traditional look of a drugstore to a variety of looks that also emphasize fresh food, beauty supplies and private-label products.

"You're beginning to see the blurring of the retail channels in America," Wasson told more than 2,000 shareholders at the company's annual meeting on Jan. 9 in Chicago."

"We are taking a multi-pronged approach to delivering the Well Experience," Wasson said. "We are combining leading-edge design with enhanced products and services, increased engagement with team members and customers, and an 'omni-channel' approach that blends our brick-and-mortar stores with e-commerce and mobile commerce. We are deliberately blurring many retail channels to fit how consumers shop today."

To that end, Walgreens said in a press statement that it is continuing to expand its product offerings, including:

  • Expanded grocery items and fresh food in stores for on-the-go consumers with quick, convenient pickup, and a growing selection of healthy food choices that are important to underserved food desert communities.
  • Substantial investment continues in private brands, including Walgreens, Delish, Nice! and many more that have led to a two-percentage points increase in private brand penetration year-over-year to 22%.
  • Enhanced beauty departments that now include an array of niche and prestige brands not found in traditional drugstores, including the introduction of Boots No7.
  • Mobile device capabilities that have expanded in the past year to include prescription refills and transfers by scanning the pill bottle; QuickPrints, an application that enables users to print photos directly from their devices to any Walgreens store; and in-store maps that allow customers to use a digital shopping list to map and locate items in a store.

The push--which also has the potential to heighten the threat that the chain poses to the convenience channel--comes as Walgreen recovers from the loss of customers to CVS from last year's Express Scripts contract dispute and expands globally through its Alliance Boots partnership, said the report.

Walgreen opened about 400 "Well Experience" stores, mostly in the past year, though not even close to the breakneck pace of a few years ago when the company opened new stores every 17 hours. Wasson said the company is "still opening stores . . . maybe just in a different way."

For example, Walgreen just last month opened its 8,000th store in Hollywood, Calif., at Sunset and Vine, complete with flash bulbs and testimonials from celebrities like Mark McGrath and Kurt Russell. The new stores also appear in iconic buildings such as a location in Chicago's Bucktown/Wicker Park neighborhood where a three-floor drugstore opened in the historic Noel State Bank building where even the basement was turned into a "vitamin vault."

The new Well Experience stores, still considered a pilot project, are a hit with local politicians and developers who see Walgreen as revitalizing decaying buildings that include some architectural gems. It also boosts Walgreen in these neighborhoods. "They help lift our brand and that's what we are trying to do," Wasson said.

The nation's largest drugstore chain with fiscal 2012 sales of $72 billion, Deerfield, Ill.-based Walgreens operates 8,061 locations in all 50 states, the District of Columbia and Puerto Rico.

For more on Walgreens--and how retailers ponder where wellness and convenience collide--read "Ever Walgreens" in the the March 2012 issue of CSP magazine or see Related Content below.