Chief merchant outlines new ways that drug chain helps customers

DEERFIELD, Ill. — Joe Hartsig, the new chief merchant at Walgreens, is taking one of the guiding principles established 116 years ago by the drug chain’s founder, Charles R. Walgreen, and updating it for 21st century shoppers.

The idea “we believe in the merchandise we sell” is being recast as “we believe in the experience we provide” — a concept that encompasses customer care, convenience and quality brands.

“Walgreens is playing an incredibly important role in helping our customer feel good every day. Health care is changing so fast there’s a real need to assist our customers in more ways than ever,” Hartsig says. “It’s all about us helping customers with incredible access and customer care in an affordable way to help them feel their best.
“With such a deep heritage, we have a long history of trust and a track record of building a relationship with our patients and customers. Our goal is to extend that relationship — which begins in the pharmacy — throughout the front end of the store.”

The over-the-counter medication section, where there is the heaviest cross-shopping with the pharmacy, is a case in point. Hartsig indicates that Walgreens is making several moves to buttress its already formidable presence in the category and further increase the rising level of customer satisfaction it has measured through net promoter scores.

“We’re committed to being best-to-market with products that help our patients and our customers feel better every day,” Hartsig says. “As a pharmacy-centered leader in health and wellness, we make it a point to work with suppliers to be first- and best-to-market with Rx-to-O-T-C switch products like Xyzal [from Chattem Inc.] and Flonase Sensimist [from GlaxoSmithKline Consumer Healthcare]. We work years in advance to launch with precision and help our customers improve access and find a lower-cost solution. We are a significant market maker for these products and others, like the relaunch of [Johnson & Johnson’s] Tylenol Rapid Release gels, as our 8,000-plus stores and online presence reach the best health and beauty customers every day.”

Joe Hartsig

Another high priority in the O-T-C section, as it is throughout the front end, is to enhance the customer experience. That can mean different things for different shoppers at different times.

“We’ve been doing a lot of research and experimentation to try and make it easier for the O-T-C customer to find what she needs faster,” Hartsig explains. “It’s not enough to have the right product, you have to provide the right experience, as our customers are time-pressed and want to get in and out quickly to get back to health. [Walgreens group vice president and general merchandise manager for health and wellness] Robert Tompkins and his team have done great merchandising the section.

“Take the pain management area, for example. Our customers told us it was hard to shop this area, given the numerous brands, ingredient types and pack sizes available. Through customer-led research, we found that brand blocking using color-coding could help the shopper find the brands she’s looking for. It is one of those natural associations that make it easier for her to find the products she wants.

“It’s just one part of a broader initiative that we call the differentiated health experience that we are testing in some markets right now. We want to make sure we get it right before we go to scale.”

Another innovation focuses on what Hartsig calls proactive wellness. It is designed to provide Walgreens customers with products and services that support and improve their ­well-being.

“We have started on a journey with a platform that we call ‘Get Healthy Here,’ ” he says. “We’ve always done great things in acute treatment; now we’re trying to do more in terms of proactive wellness. It’s a large and growing space, as our customers are aging and see the value in taking more care in getting and staying healthy and fit. As examples, we’ve enhanced our vitamin area and are adding more fitness-oriented solutions. We’re also adding many more healthy food and beverage items, and improving category locations and adjacencies to put more healthy items within arm’s reach of our customers.”

Walgreens also has a long history of providing beauty and personal care solutions. Beauty is a key growth area, and the company believes such areas as skin care are a natural bridge between health and beauty spaces. With resources in the broader WBA portfolio, Walgreens has made it a mission to grow its share in beauty. Over the past year the company has invested in a multiphased program called beauty differentiation.

“To use a baseball analogy, I’d say we’re probably in the second inning of the game,” Hartsig notes. “We’ve done some really exciting things over the last 12 months — including strengthening the assortment, enhancing the shopping environment, launching the Beauty Enthusiast loyalty program and staffing the departments with highly trained beauty consultants.

“Beauty and health are colliding in more ways than ever, so we certainly want to leverage the strong equity that we have in health and take advantage of this beauty headroom that we see. It will take some time, but we’re confident that we can convert customers who shop department and beauty specialty stores by creating a better overall experience. That means making sure we have the products, including more high-end brands, that she wants to buy, and merchandising them in the right surroundings and with the right customer care.”

Walgreens has thus far brought the beauty differentiation experience to 1,800 stores. Customer response and financial results have been encouraging, prompting the retailer to begin rolling the program out to an additional 1,000 doors. Almost 3,000 of Walgreens’ 8,175 locations will feature the format by the end of the year.

“We certainly have an opportunity to take more market share in beauty,” says Hartsig. “We came in with some strength in certain areas of beauty, including color cosmetics, but in the past we didn’t provide the right environment to attract new shoppers. Now we have a multiyear, multifaceted program that will take us where we want to go. The team led by [group vice president of beauty and personal care] Lauren Brindley, who came over to Walgreens from Boots in the U.K., has done a great job developing a strong road map for success.

“Key parts of the strategy involve bringing in new brands like our own No7 or NYX from L’Oréal; lighting up parts of the cosmetics wall; and making changes to fixtures to allow for a simpler and brighter space. Additionally, our research has shown that our customers want impartial advice and customer care to help them find and choose the right look. So we’ve hired and trained more than 1,800 beauty consultants in the past year. Lastly, we built upon our Balance Rewards loyalty program by putting in place the Beauty Enthusiast plan, which is an incentive for customers to receive extra value by spending $50 and getting back $5 or 5,000 points.”

While pharmacy, health and beauty command center stage at Walgreens, Hartsig and his colleagues aren’t underestimating the importance of other front-end merchandise, including convenience food and beverages, baby care, and photo.

“They will remain an important part of the portfolio,” he points out. “Most people identify Walgreens with our health and wellness solutions, but we see many types of trips that include everyday needs, items like Diet Coke, Cheerios or Pampers, where Walgreens offers a quick and convenient solution.

“We’re focused on reducing and curating our assortment, which now comprises about 21,000 SKUs in the typical Walgreens, to ensure that shoppers find what they’re looking for more easily. Doing so will help us optimize our working capital and supply chain investments, but even more importantly enable our team members in the stores to spend more time with ­customers.

“A big focus right now in areas like grocery, household products and general merchandise is making sure that we’re carrying not only the right product but the right number of brands in a category,” notes Hartsig. “We’re probably guilty of having too many items in our stores and having too much SKU proliferation, which hurts both the retailer and the supplier in the long run. We need to make sure we’re curating our assortment in a better way. We’ve talked a lot to our suppliers over the last few months about our mission to reduce the number of SKUs that we have in our stores, and they agree with the need to ensure that we keep focused on building and maintaining a core offering. We’re also using Walgreens.com and the mobile app to provide an important range of extended assortment. Having launched a new ship-to-store capability last fall, we’re now able to get the customer what she wants in another convenient way.”