CHICAGO — Walgreen Co. has made major progress in a transformation for long-term sustainable growth and value creation, president and chief executive officer Greg Wasson said at the company’s annual shareholders meeting.
Addressing nearly 2,000 shareholders at Navy Pier, Wasson discussed Walgreens’ gains since announcing its “plan to win” in 2009.
The plan was “a journey to innovate and reinvent Walgreens,” he said. “Toward that end, we slowed new store growth to invest more in our existing store base. We looked at new, innovative retail concepts both in the U.S. and around the world. We made major acquisitions such as Duane Reade in New York City and drugstore.com, forged a strategic partnership with Alliance Boots and began a long-term strategic relationship with AmerisourceBergen. All of this culminated in a year of solid progress in fiscal 2013 and a five-year total shareholder return for our stock of 145%.”
The company is in “two dynamic industries — retail and health care — that are converging” as consumers become more involved in shopping for their care, said Wasson.
U.S. health care spending is projected to grow from 17% of gross domestic product to 20% by 2020, driven by an aging population and the Affordable Care Act, which is expected to bring 30 million more people into the system, he said.
At the same time, health care is beginning to see a shift in payment models from fee-for-service to pay-for-performance. That’s good for Walgreens and community pharmacy, as the company is well positioned to play a greater role in these emerging models and expand its role beyond the pharmacy market to the much larger $2.6 trillion health care market.
On the retail side, consumers continue to seek value and service in the aftermath of the Great Recession, and Walgreens introduced 2,000 private label items last year to meet growing demand for store brands. In addition, more opportunity in categories such as beauty and fresh foods is opening up to the chain as consumers shop across channels, Wasson said. And digital commerce is expanding rapidly and driving major change in both retail and health care.
Walgreens is seizing the opportunity created by these trends by focusing on its three strategic growth drivers: creating a “Well Experience,” advancing community pharmacy and establishing an efficient global platform.
Beyond enhancing the physical store, Well Experience means a highly engaged employee delivering extraordinary service with the right products. Walgreens has expanded the number of stores incorporating its Well Experience concepts from 400 at the start of fiscal 2013 to 600 today.
The company is making it easy for shoppers to get in and out of its stores with what they need, elevating its beauty offering and accelerating the convergence of retail and health care by pulling together its pharmacy and health care services with its over-the-counter products into more seamless offerings.
Boosting the Well Experience was last year’s rollout of the Balance Rewards loyalty program, which now has 74 million active members, making its introduction one of the most successful loyalty program launches ever.
Now Walgreens is advocating a greater role for community pharmacy to offer unparalleled access to innovative, high quality, affordable health and well-being services. The company believes its pharmacists and nurse practitioners can help fill the gap in primary care, expand health and wellness and lower overall health care costs by practicing at the top of their professions.
Wasson said Walgreens is well positioned to serve the growing demand for pharmacy-led health and well-being services by delivering comprehensive care by leveraging its community presence in all 50 states, providing a differentiated experience that competitors can’t easily match, and building strategic partnerships.