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Chain Drug Review Retailer of the Year: Walgreens
January 3rd, 2012
NEW YORK – The editors of Chain Drug Review have named the employees of Walgreen Co. — and more particularly, five of the company’s top executives — as the publication’s 2011 Chain Drug Retailers of the Year.
In a larger sense, the five executives — chief executive officer Greg Wasson; president of pharmacy, health and wellness Kermit Crawford; president of daily living products and solutions Joe Magnacca; president of community management Mark Wagner; and chief financial officer Wade Miquelon — are surrogates, representing all 247,000 Walgreens employees. For 2011 was clearly the year of the Walgreen Co., and every one of the people who contributed to its performance over the past 12 months deserve a share of the credit.
2011 Retailer Of The Year: Walgreens
Make no mistake: 2011 was a watershed year for this 110-year-old drug chain. Whether performance is measured in financial terms, new strategic directions and initiatives, ground-breaking programs launched or innovative ventures expanded, acquisitions or organic expansions, Walgreens’ results in the year just ended can most accurately be described as remarkable.
Equally remarkable was the chain’s leadership, one which emerged in the past year as the boldest, most cohesive and most innovative chain drug retailing has seen in some time, a team that Wasson aptly calls “some of the best talent in the industry — not the chain drug industry but the retail industry.”
Anchored by a core of Walgreens veterans and supplemented by one of the more exciting and intelligent new faces to grace America’s chain drug retailing community in some considerable time, these four executives of this $72 billion drug chain have simultaneously demonstrated an uncommon ability to work together as a team and a remarkable aptitude in pursuing their individual mandates.
“We’ve matured, we’ve come together,” says Wasson, “and, by bringing creative thinking and new ideas to the company, we’ve been able to transform the way we do business.”
The result is that Walgreens, in the second year of the second decade of the 21st century, has taken its place among the handful of mass retailers that can accurately be labeled as industry pacesetters. When Walgreens announces or unveils a new direction, embarks on a new initiative, charts a new course or expands on an existing initiative, all of mass retailing pays attention. And many, in the end, follow Walgreens’ lead.
"By bringing creative thinking and new ideas to the company, we’ve been able to transform the way we do business."
— Greg Wasson, CEO
Wasson has ushered in an orderly, rational approach to growth that has infused excitement and innovation into the Walgreens drug store, while replacing the dependence on new stores and an all-things-for-all-customers merchandising strategy with a bold emphasis on health and wellness, dramatic new directions in beauty care, and a new approach to pharmacy, one that turns not on dispensing health care products but on dispensing health care advice and services.
“Pharmacists are the most accessible dispensers of basic health care services. After all, drug stores are everywhere, perfectly positioned to offer accessible and affordable health care services,” Wasson explains. “Pharmacists can be trained to dispense health care advice and services as they were once schooled in dispensing prescription drugs. Our future — and to a large degree America’s health care future — rests on our ability to advance retail pharmacy and the retail pharmacist as an important initial contact point for the patient.”
Crawford notes that Walgreens is already helping to change the way that health care is delivered.
“We’re now transforming the traditional drug store into a health and daily living store,” says Crawford. “Through the addition of such services as immunizations, diagnostic tests and our Take Care Clinics, we’re reinventing our pharmacy, health and wellness offering. Another major part of that is moving pharmacists out away from the prescription filling area and making it easier for them to interact with customers.”
He adds, “Our health and daily living format is a setting for the customer to get one-on-one attention and for us to expand beyond the traditional filling of a prescription to meet all of the customer’s needs — whether that’s through pharmacy counseling, the Take Care Clinic, the health guide offering advice about health and beauty aids, or helping the customer access our online services.”
Wasson has not only brought such new thinking to Walgreens, but he’s also brought new energy. The acquisition of Duane Reade has overnight transformed Walgreens’ image from one of conservative competence to one of aggressive opportunism.
“We acquired Duane Reade because we recognized that it had reinvented the drug store space and, in so doing, had distanced itself from the traditional chain drug store, the model we had utilized for almost half a century,” Wasson says. “In terms of branding, product selection and store ambiance, the people at Duane Reade had created something completely new and unique. We saw that — and more to the point, the customer saw it.”
According to Magnacca, Walgreens has become more analytical with its retail model. “We’re putting more of an emphasis on gross margin management. And, more critically, we now have the luxury of involving our operators in input and ideas,” he says. “To facilitate this analytical approach to merchandising and marketing, we now have merchandising, marketing and operations working together for the benefit of the company.”
The chain, too, has established an environment to nurture new ideas, Magnacca points out. “We’ve discovered that while we can’t create customers by ourselves, we can instill lessons that will make our merchants and operators more adept at developing ideas and programs to that end: creating customers,” he says.
Wagner notes that Walgreens' stores have become more efficient and more exciting, and the chain overall has become more relevant within the communities it serves and has forged closer ties to its customers. One key factor has been the company's razor-sharp focus on boosting store productivity.
“Our execution strategy today is more complex — because it turns on how well we can execute our programs in existing stores to stimulate growth. But it’s also more rewarding — because the results are easier to monitor and appreciate,” Wagner explains.
In fiscal 2011, Walgreens realized some of the fruit of its labors to transform its business model by turning in a robust financial performance, including a 7% gain at the top lineaccording to Miquelon. By most growth measures, the chain in fiscal 2011 posted its best results in 17 years.
“We have basically started retooling the chain for the future to be even more relevant for shoppers,” says Miquelon. “It puts us in a pretty good phase for the next leg of the transformational journey.”
*To read the full 12-page Retailer of the Year report on Walgreens, please see the Jan. 2, 2012, print issue of Chain Drug Review.