Walgreens makes more stunning changes

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Change never comes easily, especially for a company blessed with success. Why change, the thinking goes, when what we’re doing apparently works so well? That’s been Walgreens’ dilemma.

Very few retailers, and no drug chains, have enjoyed the success Walgreens has found over the past 30 years. During that time the company’s sales have advanced from $1.74 billion to $72.18 billion, while its earnings have blossomed from $42.1 million to $2.71 billion. Over that period Walgreens’ store count has ballooned from 847 units to 7,779.

Why change, when the formula that produced these numbers appears to have worked so well? Indeed, in that kind of environment, only the visionary leader considers change.
So it comes as no small surprise that Walgreens has just announced a restructuring of its merchandising department — unless you know Greg ­Wasson.

In his relatively short tenure as Walgreens CEO — he was awarded the job just two and a half years ago — Wasson has sanctioned change as few retailing executives — Sam Walton comes most readily to mind — have ever done. He has brought talent from outside the organization, shifted personnel within the organization, supported the reassignment or termination of people who were not, according to their supervisors, contributing sufficiently to the organization. In short, he has not feared change, but embraced it.

So it was that, last month, Walgreens announced a restructuring of its merchandising staff. The realignment, according to Wasson, was mandated by the opportunity to more effectively integrate and accelerate the retailer’s strategy of becoming “America’s first choice for health and daily living needs.”

Specifically, Walgreens has reduced the number of general merchandise managers reporting to chief merchandising officer Bryan Pugh by one, from four to three. The three are the following:

• Steve Broughton, with responsibility for food, beverages and consumables.
• Shannon Curtin, formerly Petree (the name change was eventuated by her recent marriage), who is responsible for beauty, personal care and seasonal merchandise.
• Robert Tompkins, who will oversee health and wellness, front-end services, and general merchandise.

Below this layer, the retailer’s divisional merchandise and category managers have been given new duties.

Of particular significance, Walgreens’ new structure will facilitate the retailer’s accelerated commitment to regional buying, in itself an effort to more accurately customize the merchandise mix to the store and the community.

Initially this program will be tested in three markets, and then it will be rolled out nationally. The Walgreens executive leading the program is Mark Scharbo, the retailer’s vice president of inventory strategy.

Elsewhere in this restructuring, the responsibilities of Joe Magnacca, Walgreens’ president of daily living products and solutions, have been expanded, as has his leadership team. Under the restructuring he will get two new direct reports: Moe Alkemade, vice president of retail brands, and Rachel Bishop, vice president of daily living strategy and business development. These are expanded roles for both executives.

Other changes have been announced as well, specifically regarding reporting responsibilities as they relate to the individual general merchandise managers. Some names familiar to Walgreens suppliers remain, including Barb Larson, Mike Spear, Rudy Kucera, Steve Lubin, Linda Conway. Others are new.

Finally, Walgreens has created a new category of merchant, that of category specialist. Reporting to the retailer’s category managers, each will be charged with supporting the business or a particular segment of the business.

These are stunning changes, changes that will exert a significant influence on how Walgreens does business and goes to market and how, for suppliers, the business of doing business with Walgreens will change in the months ahead.

But the real meaning of this new direction is not so much that peoples’ jobs and responsibilities will change, but rather that the company will change — for the better. That change will impact the vendor community to some degree, but that impact will be as nothing compared to the impact the Walgreens shopper will come to see and feel in the coming days. That, at any rate, is the hope and expectation of Greg Wasson and his senior staff.

The feeling here is that they will not be disappointed.


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