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Walgreens upping ante in beauty

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DEERFIELD, Ill. — Walgreens Boots Alliance Inc. (WBA) is reaping success with its beauty differentiation program and is now planning to expand the initiative to more than 1,000 additional Walgreens stores by the end of 2017 while introducing more exclusive brands into the assortment.

The first phase of the Walgreens beauty differentiation program’s rollout called for it to be implemented in more than 1,800 stores, a threshold it reached during the second fiscal quarter, which ended ­February 28.

During a recent conference call with analysts, WBA chief financial officer George Fairweather said Walgreens gained market share in beauty, health and wellness and personal care in the 13 weeks ended February 25, according to Nielsen data.

WBA co-chief operating officer Alex Gourlay describes the Beauty Differentiation initiative as a multiphase, multiyear effort focused on three elements: enticing products, an engaging retail presentation and a level of service — including trained beauty consults — that is not typically encountered in a drug store.

Playing a central role in the enhanced beauty offering are Walgreens’ own brands, particularly brands developed within Boots, Boots No7 and Soap & Glory. According to Fairweather, they currently account for more than 15% of beauty sales in the stores that have the program.

“Repurchase levels of No7 products have been very encouraging, and Soap & Glory has also gotten off to a good start,” Fairweather says. “Following the successful introduction of No7 and Soap & Glory, we are planning to introduce another of our own brands, Botanics, into our existing Beauty Differentiation stores in the next six months.”

Fairweather added that sales of the No7 brand have been aided by the deployment of 1,800 specially trained beauty specialists in the stores that have received the Beauty Differentiation program.

WBA executive vice chairman and chief executive officer Stefano Pessina acknowledged that the current retail climate is a challenging one in which to revamp product assortments, and he emphasized the care with which each change is made, balancing space allocation against customer ­experience.

“The growth we have seen in the health and wellness and beauty category sales and underlying margin in our stores is encouraging,” he said. “Our decision to expand the Beauty Differentiation strategy reflects the positive response we have had from our customers. With the evolution of our Walgreens beauty offering, we expect to see leading third-party beauty brands form part of the growing range in our stores.
“Of course, our work in beauty is only part of the changes we intend to make to the retail mix and offering across our stores.”


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