Walgreens exec keeps Rx, front end sharp in transition period
DEERFIELD, Ill. — As president of pharmacy and retail operations at Walgreens, Richard Ashworth has helped point the chain in a new direction.
The change, both at the company’s support office and in stores, has given the retailer a major boost. Measures ranging from net promoter scores to on-time prescriptions to in-stock levels are up significantly, pointing to the effectiveness of the company becoming more customer-focused. Overall, Walgreens is much better-positioned than it was in just the recent past.
For playing no small part in the chain’s dramatic progress, Ashworth has been named Chain Drug Review’s Operations Executive of the Year for 2016.
Ashworth says the retailer’s gains required a break from one element of Walgreens’ tradition. “I love Walgreens’ DNA,” he says, citing the company’s century-plus history as a growing business that thrived even during the Depression while always taking exceptional care of its employees and customers.
But the company’s top-down culture needed to be recast to have all employees buy into a new strategy where input comes from the store level up, and Walgreens is, in a sense, “without rank,” says Ashworth. “The idea is that everyone is in this together — everyone has a voice charging toward the new tomorrow.”
A fresh approach has also been brought by the merger of Walgreens and Alliance Boots. That was evident from Alliance Boots’ growth through acquisition and commitment to partnerships, Ashworth says. Adopting the new outlook has been “one of the less quantitative synergies of the merger, but it is more qualitative and actually one of the big accelerators for why we are performing so well,” he says.
On the operations front, the new vision has led to the store manager being put in charge of all facets of his or her store, while leaving other personnel with their own areas of expertise, says Ashworth.
At higher levels, the “one box” mentality has led to Walgreens eliminating a couple of divisions at the top, allowing it to push down more management closer to the customer through new positions, including one at the area director level. Area directors supervise operations against the backdrop of the retailer’s overarching strategy, with district managers guiding day-to-day execution. Boosting district managers’ capability in that role is the company’s increase of their numbers from about 200 to more than 600. That has cut the number of stores each DM oversees from upwards of 40 to around 13.
The result, says Ashworth, is that “everything has gotten better,” with employee engagement at a record high. Both structural change and the change in management surrounding it have been highly beneficial, he said.
The changes were propelled not by Walgreens’ ongoing cost-cutting measures, he emphasizes, but by its focus on bettering the customer experience.
One benefit has been that with DMs having so many fewer stores to cover, they have gotten to know the employees in each store more closely. Engagement has risen sharply because employees feel more of a connection to their DM, whereas before they maybe heard about, but never saw, the DM, Ashworth says. Now the DM is in the store at least every two weeks.
Also raising the level of employee engagement is the “Frontier” movement, which Ashworth calls a “bottom-up” drive to have store-level employees provide input into operations.
Teams of retail employees and pharmacy staff members can propose ways to ensure services meet expectations, or address why hiring has been challenging, among other things, with the goal of remedying matters inside the store as opposed to waiting for a DM to come with all the answers.
“The reality is the stores create the answers,” Ashworth says.
Making those answers come to fruition is the company’s “retail hub,” he says, in which every aspect of the company — from pharmacy to digital to human resources — is jointly designed, built and deployed. With messages transmitted from the hub outward, Ashworth and president of retail products and chief merchandising officer Linda Filler can “actively manage” the concerns of store-level employees. “It’s fast, and it’s powerful,” he says.
Also as part of the one-box mentality, Walgreens has been “laser focused” on the consumer and patient, adds Ashworth. That goes to the heart of the “Your Voice Matters” tour, in which executives meet with store employees around the country. The town hall-style meetings provide store-level feedback on how the company could better serve customers. The feedback, in turn, produces results such as the chain’s drug take-back initiative, its reduced pin pad checkout time and the length of receipts, Ashworth comments. And addressing them has led the company to quickly address these issues, he says.
Besides wanting to get out quickly, customers want interaction in the form of text messaging and other digital communications. In light of that, the retailer has gotten its customers digitally involved. They are using the Walgreens app for refills, with a prescription now being filled with the app in this country every second. The chain feels strongly about this type of omnichannel engagement with patients, says Ashworth, “and that drives a much better service experience, because then they know when prescriptions are ready.”
The retailer also launched the online Rx Tracker, which lets patients know where their prescription is in the dispensing process. And the “Extraordinary Customer Care” initiative has elevated customer satisfaction while reducing transaction times. Also, a review of Walgreens’ labor model has shown how time can be shifted from tasks to customer interaction.
Furthermore, “The Moments that Matter” program has revealed shoppers and patients’ different expectations based on the reasons for their visits.
A customer buying a commodity has a much different mind-set than one who needs medications for a newly diagnosed serious illness, Ashworth explains. Discerning that mind-set is no simple matter, he notes, saying it relates to “the art of service.” The “science” of the process entails having a clean, in-stock store with ample parking and a friendly team member at the register. The computer systems are up and running, and the new item that was advertised is available, he said. “We have all of that down, and we will continue to focus on it, but the next layer is how do we really connect with those most important moments? We will be rolling that out and are really excited about it.”
Health and beauty aids retailing is not the same as selling commodity food and beverages, he points out, in that people seeking products for wellness or beauty want “experiential interactions.” The distinction led to Walgreens’ retrofitting of 1,800 stores with new beauty brands, a new care model, new positions and a new environment. Enveloping all that is the Beauty Enthusiast club, a digitally enabled accelerated rewards program for beauty and personal care customers.
In sum, “this is a great example of us engaging more experientially than we could have,” Ashworth says. And the chain’s new beauty consultants have “in-depth knowledge of beauty” and tremendous skill “at being able to apply products and talk about solutions and regimens” versus just saying what a new product is and how much it costs.
It’s too early to gauge the lift in beauty sales from the consultants, he added, “but not too early to know we have something with real potential here.”
Storewide, Walgreens is undertaking a complete redesign of its inventory replenishment system with SAP. “This is big because SAP has done large inventory and financial and accounting implementation for major retailers across the world,” Ashworth says.
The company is excited about recasting its infrastructure around retailing, he says. The work, which is expected in the near term, “will be a big enabler for us,” he remarks.
In the pharmacy technology arena, Walgreens is fashioning a new system to replace its Intercom Plus platform. Ashworth says Intercom Plus is “a fantastic, fast, quality-driven system, but we need to move it to modern architecture and modern technology.” Interactions of other health care players with Walgreens necessitate a more agile system, he adds.