Walgreens aims to up the ante in pharmacy

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President Alex Gourlay outlines chain's strategy at Analyst Day event

4.15.15 Walgreens


NEW YORK — Walgreen Co. is revamping its customer experience and cutting costs to recapture its position as America’s “most loved” pharmacy, chain president Alex Gourlay told analysts at the first Walgreens Boots Alliance Analyst Day event here.

“The reality is we’re no longer No. 1 in pharmacy volume. And no one here is okay with that,” Gourlay said at Thursday’s event, held in Manhattan’s Ritz Carlton Hotel Battery Park.

“To get back to the position we’ve held for many years, we took a hard look at our business, to understand our strengths, what’s working and what isn’t, and how to move forward,” he said. “We’ve developed a plan that begins and ends with the customer. It lays out clearly and simply where we’ll play, and how we’ll win.”

Walgreens’ mission is “to be America’s most-loved, pharmacy-led health, well-being and beauty retailer,” according to Gourlay, who’s also executive vice president at Walgreens Boots Alliance.

“We’ll win by creating an integrated, back-to-basics approach: pharmacy and front of store that delivers ultimate convenience, customer loyalty and extraordinary customer care,” he explained, adding, “and we’ll support that customer experience by creating a sustainable cost model that is incredibly efficient.”

To bolster its pharmacy business, Walgreens aims to offer the best customer experience, including a robust online and mobile component, while strengthening its partnerships with payers, noted Gourlay. The chain will also focus on services that support core dispensing and generate incremental revenue, while optimizing the clinic model.

In the front end, Walgreens has focused on efficient retailing to expand margins. It is simplifying the supply chain to improve the on-shelf availability of products while driving inventory productivity. Other efforts include leveraging its Balance Rewards loyalty program, which will be enhanced soon with additional ways for consumers to earn points and rewards.

Walgreens is also determined to control costs, Gourlay said. The company committed last August to achieving $1 billion in cost reductions by 2017, and to that end Walgreens has implemented a corporate hiring freeze and is changing its policies on travel and expenses and the use of management consulting and temporary labor. There has also been a pay freeze for top executives in the United States, and the company has increased its cost savings goal from the initial $1 billion to $1.5 billion.

These and other moves are intended to create a sustainable cost model for Walgreens, Gourlay said, allowing the chain to save money that can be reinvested in key areas — including information technology, store formats, customer service support, and personnel training and development — that will help drive further growth.



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