Inside This Issue - News
Idea of 'well' guides Walgreens' business
February 14th, 2011
CHICAGO – As it moves deeper into its second century in business, Walgreen Co. will become less of a retail drug store and more of a health and daily living store, chief executive officer Greg Wasson said at the company’s annual shareholders meeting here.
“Our intent is to own outright the strategic territory of ‘well,’ where health and happiness meet,” Wasson told the 2,500 shareholders gathered last month in the Navy Pier Grand Balllroom on Chicago’s lakefront.
“Well is an attitude, a state of mind,” he said. “Our goal is to help people live well, stay well and get well.”
Hopefully, Wasson said, Walgreen’s transformation — now two years in the making — will position the company to be the first choice for Americans’ health and daily living needs.
“With more than 7,600 locations within three miles of 63% of all Americans, our drug stores are our center of gravity,” he said. “Our strategy is to leverage the best store network in America, enhance the customer experience and achieve major cost reduction and productivity gains.”
As it redefines the business model that helped make it the country’s premier drug chain in the 20th century, Walgreens is redefining the role of the community pharmacy and becoming firmly entrenched in other health-related businesses.
Besides its network of stores in every state, the District of Columbia and Puerto Rico, the company operates an e-commerce site, a specialty pharmacy division, work-site health centers and a vast network of Take Care health clinics in its stores.
Still, Wasson insisted, everything Walgreens does revolves around its drug stores. Ensuring that those outlets offer the products and services consumers want is an ongoing challenge and the key to making everything else work.
“We’re operating in a fast-changing environment,” he said. “We’re seeing the convergence of the retail and health care industries, and that is good for us.”
But, he said, it is also forcing Walgreens to stay on its toes. “Once you have the best corners, it’s about making them more relevant,” he told reporters at a press conference after the meeting. “You have to continue to adjust your mix.”
To do that, Walgreens has been steadily ramping up its Customer-Centric Retailing (CCR) initiative that began in 2009. The store optimization effort, which has seen the company make dramatic changes in its mix across many front-end categories, is now being employed in 2,100, or 28%, of Walgreens’ stores.
Wasson said he expects that a year from now CCR will be in 5,500 stores, or 73% of the company’s outlets.
“CCR was a much-needed refresh for our chain,” he said at the press conference. “It is helping to drive up the average market basket, and while it is not yet providing the one-and-a-half more items per basket that we hope to achieve, it is showing good results.”
As critical as CCR has been in revamping Walgreens’ stores, Wasson was quick to point out that it has only been part of a broader effort to make the company’s drug stores more relevant to today’s shopper.
Offering more store brands, incorporating some of the things that it has learned about urban retailing since it acquired Duane Reade last winter and expanding its fresh food offering will help keep Walgreens on the cutting edge, he told shareholders.
Meanwhile, as Walgreens delves deeper into health care, the company is causing patients to see their community pharmacy in a different light and rely on their pharmacist for a broader array of health and wellness services.
“We believe it’s up to us to advance the profession of community pharmacy,” Wasson said. “We’re not waiting for someone else to do it.”
In fiscal 2010, he noted, Walgreens filled some 778 million prescriptions, a 7.5% increase over 2009. But more importantly, Wasson said, the company has become the go-to guy for such health services as flu shots.
In fact, president of pharmacy services Kermit Crawford said at the press conference following the meeting that only the federal government provides more flu vaccinations than Walgreens.
Going forward, he said, immunizations of all kinds will become a much larger part of health care than they are now, and Walgreens’ success in providing seasonal flu shots makes it well positioned to grab a significant share of this business.
With 26,000 pharmacists and nurse practitioners qualified to give immunizations at a time when a shortfall of primary care physicians is expected, Walgreens is one of the country’s most convenient providers of these services, Crawford said.
“Somebody has to fill that space,” he noted. “Why not us?”