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Walgreens pilot brings together new approaches

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Stores in Gainesville, Fla., remake customer experience

GAINESVILLE, Fla. — Walgreens is launching a pilot program here that incorporates new approaches to pricing, promotions, product assortment and service offerings to create a new customer experience.

The program, which has been implemented in 17 stores in the Gainesville area, will be monitored over the next 12 to 18 months to gauge customer reaction and make needed adjustments, before rolling out elements of it to other locations across the country.

As part of the pilot, Walgreens is lowering everyday prices on more than 5,000 items across the health and beauty, personal care, grocery and household categories. In addition, the retailer is unveiling a new subscription program, Walgreens Plus, which will deliver an additional 20% savings on nearly all prices in the store every day, as well as savings of up to 60% on generic prescription drugs paid for with cash. Walgreens Plus members will also have the option of free, same-day delivery of their prescriptions through the walgreens.com website.

“Walgreens Plus is about more than lower prices,” said Alex Gourlay, co-chief operating officer of Walgreens Boots Alliance (WBA). “Walgreens Plus is about loyalty, about building deeper relationships with our ­customers.”

To underline Walgreens’ commitment to supporting the health and well-being of communities in the United States and around the world, a portion of each Walgreens Plus subscription fee of $20 will be donated to help provide clean water to a family in need. The distribution will be accomplished through the drug chain’s current partnership with ME to WE’s Give H2OPE to Others program.

Gourlay noted that the company is leveraging data and analytics derived from Walgreens’ Balance Rewards loyalty program, which now has 88.6 million active users. As a result, management has access to nearly three years of excellent insights.

Enhanced customer convenience through value-added service offerings is another important component of the Gainesville pilot. Through a new partnership between Walgreens and Sprint, consumers at eight of the Gainesville-area stores will be able to purchase mobile phones and plans from a trained Sprint representative. They will be able to choose from 10 different wireless phones, available in both prepaid and post-paid options offered through Sprint Express.

“We’re excited about the convenience our partnership with Sprint will offer to our customers,” Gourlay said. “This will enhance our learnings about what Walgreens customers want in this new digital world.”

The digital world is also the driving force behind a new approach to promotions that will be executed in Gainesville. Use of paper coupons will be reduced substantially in favor of digital marketing. Promotions will also be simplified, with a greater focus on key value items, according to Gourlay. Convenience, he says, has been redefined, in large part as a result of the impact of digital technology, and the shift to more digital couponing reflects Walgreens’ recognition of the importance of technology to modern concepts of convenience.

The drug chain is also extending its package delivery partnership with FedEx with an expanded selection of packing and shipping supplies available to Gainesville shoppers. Customers can already pick up and drop off packages and have them held for up to five days at more than 7,500 Walgreens locations through FedEx Onsite services.

In addition, the retailer is expanding its existing pilot with LabCorp to 10 Florida stores, including four in Gainesville. LabCorp currently operates six patient service centers in Walgreens stores in two other states. The patient service centers, which are co-branded as LabCorp at Walgreens, will be located near the pharmacy and offer specimen collection for lab testing in a secure, comfortable environment.

“When we think about how pharmacy will evolve over the next decade with test and treat and pharmacogenetics, there is a huge convenience benefit for the customer to have this in a retail pharmacy,” Gourlay noted.

The Gainesville project is the latest in a series of pilots that Walgreens has been conducting around new approaches to merchandising, format, supply chain and its beauty proposition, as well as new partnerships. As WBA executive vice chairman and chief executive officer Stefano Pessina told analysts during a conference call in January, this year will see the company deploy the first pilot stores that will incorporate all of the test work done to date in a new single store format.

As the chain has done with previous and current pilots, results from the new Gainesville format will be analyzed in depth, and the concept will be fine-tuned before it is rolled out further.

“This is about much more than just our retail offering,” Pessina said in January. “It is about rethinking and redefining our presence in and relevance to the communities we serve, and that requires us to rethink our supply chains, the services we offer to customers and how we deliver those services.

“This is why strategic partnerships, like the one we have with FedEx, are so important: It gives us an additional role in the community. It provides flexibility in how we physically move things in and out of our stores, and that creates a completely new way of thinking about how we interact with our patients and our customers.”

In an interview, Gourlay said the new format will eventually combine optical, hearing care and other as yet undisclosed services together with value, loyalty and supply chain initiatives. Many of the merchandising changes aim at rationalization of the product assortment and a reduced SKU count.

“We’re simplifying the store for really two reasons,” he explained. “First, we want to make it easier for customers to find the products they really want to buy, and secondly, we want to free our associates from handling product so they can spend much more time with the customers. That is fundamental to this change.”


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