Inside This Issue - News
Walgreens to reinvent shopping experience
April 6th, 2009
LAS VEGAS – While the current economic downturn has created tremendous challenges for most of retail, Walgreen Co. sees it as an opportunity to implement major changes in its merchandising and marketing, according to vice president and chief marketing officer Kim Feil.
Speaking at Information Resources Inc.’s IRI Summit 2009 here, Feil said Walgreens is focused on reinventing the shopper experience in its stores and on changing the way it engages vendors in that process.
She described significant changes in shopper behavior and shared the latest customer segmentation analysis Walgreens has conducted as the groundwork to merchandising changes already under way. She also outlined organizational changes geared toward working with vendors on marketing programs.
Walgreens customers, Feil noted, are now focusing more on nondiscretionary items and value sizes. They are also paying with cash more often and using coupons with greater frequency.
Not surprisingly, they are buying more private label goods and they are cutting back on — but not eliminating — impulse buys. On the other hand, the typical Walgreens shopping basket reveals that customers are buying for their entire family: Pet care, for instance, has emerged as one of the chain’s fastest-growing categories.
Health care, however, remains central. “Our customers are particularly looking to us for help with their health and wellness needs,” Feil said. “Especially as the cost of health care continues to rise, their health needs are becoming more urgent and they really don’t have information that is as accessible to them as they would like.”
Feil pointed out that Walgreens has been investing heavily in customer research and, as a result, has been able to identify key shopping patterns and customer segments.
Most shopping trips fall into one of six categories, she said:
• Pharmacy purchases.
• Finding an immediate over-the-counter remedy.
• Fill-in shopping.
• Big-basket trips.
• Special occasions.
• Items that are intended for immediate consumption.
At the same time, five main shopper profiles have emerged from the chain’s research. They range from “Efficient Eileen” — an energetic, loyal customer focused on pharmacy, O-T-Cs and personal care — to “Care-Seeking Carol,” a senior shopper who relies on circulars and does not use the Internet, and whose needs center around health care.
Successful merchandising to these different customer segments is less a matter of items and categories than it is about service and, in some cases, advice, Feil said.
Nonetheless, cross-category teams have spent more than 1 million hours on reprioritizing Walgreens’ categories and assortments, expanding some segments and streamlining others in an effort to make its stores easier to shop and more responsive to customer needs.
For example, some end-caps are now clearly bannered as “affordable essentials,” containing certain everyday purchase categories and items that have the highest purchase frequency, offered at great values.
In addition, Walgreens has followed the lead of some other retailers in creating a consolidated baby care section for greater shopper convenience. As a result, Feil said, 41% of customers shopping the new set have added an item to their baskets.
New retail marketing teams have been formed to work with Walgreens’ general merchandise managers in each major department to develop integrated marketing and merchandising plans in collaboration with suppliers.
“We want to develop 360-degree marketing plans for these categories,” Feil told vendors in the audience. “We’re now going to have a broader array of marketing vehicles to enable us to talk to our customers in the way they want to be talked to.
“These marketing teams and our insight teams are going to sharpen that to be more meaningful to you and the dollars that you bring into our