Inside This Issue - Opinion
Wasson steers Walgreens in new directions
July 18th, 2011
In the two and a half years since he became chief executive officer of Walgreen Co., Greg Wasson has succeeded in remaking the corporate culture of America’s largest drug chain.
Long known for its conservative approach to business, the retailer — which Wasson’s three immediate predecessors often referred to as a “crawl, walk, run company” — is today distinguished by its willingness to embrace change.
Evidence of the transformation is easy to find. Initiatives touching upon multiple aspects of Walgreens’ operations, including pharmacy, customer service and store design, have been unveiled in the last month alone.
The company took a bold public stance in contract renewal negotiations with Express Scripts Inc., one of the nation’s biggest pharmacy benefit management companies, stating that it intends to withdraw from the PBM’s provider network at the end of the year. The move came in response to what Wasson characterizes as a proposal that includes “below-market rates and minimal predictability for the services we provide.”
The decision to protect Walgreens’ long-term interests, even though the fallout next year might cost the company some 90 million scripts and $5.3 billion in revenue, demonstrates the retailer’s willingness to act on principle and draw a line in the sand against what it considers unfair pharmacy reimbursement schemes. Walgreens has long adhered to that policy, using it several times in years past to counter pending cuts in Medicaid payments, but Wasson has implemented it deftly in dealings with major private-sector PBMs.
Breaking new ground, Walgreens has started to roll out Web Pickup to 480 stores in greater Chicago. The service, which is also available at 27 outlets in San Jose, Calif., enables consumers to shop online and collect merchandise at the stores in as little as an hour.
The company, which earlier this year paid $409 million for drugstore.com, has further augmented its commitment to giving customers the tools they need to interact with Walgreens when and how they want to by harnessing the power of social media. The drug chain, which has more than a million fans on Facebook, is integrating its store network through such mobile platforms as Facebook Places and Foursquare and is building its presence on social media sites including Twitter and YouTube.
At the same time, the company isn’t resting on its laurels in terms of the in-store experience. Duane Reade, the New York City drug chain that Walgreens acquired in 2010, unveiled its flagship store at 40 Wall Street earlier this month.
The location features what is described as an “up-market” focus with a broad array of offerings, particularly in consumables and beauty care, not normally found in drug stores. For the first time, cobranding with the parent company appears: Signs state the prescription counter is “powered by the Walgreens pharmacy network.” Based partially on insights gained from Duane Reade’s experience, Walgreens is refining and enhancing its own prototype.
All the activity is indicative of the mind-set that Wasson has instilled in the company. Shortly after being named to head Walgreens, he acknowledged the desire among many people, both inside and outside the company, for “change, critical thinking, new ideas.” That’s exactly what Wasson and the management team he has assembled, from Walgreens veterans and new talent, have delivered.
In some ways Wasson was an unlikely candidate to lead that shift in sensibility. A Walgreens employee since he was in pharmacy school, he had firsthand knowledge of a great retailer. Rather than let it constrain his thinking, Wasson always looked for ways to improve the company. The result is an organization as dynamic as any in mass market retailing.