Balance Rewards, expanding clinical outreach emerging as Walgreens' pathway to success

Walgreens posted a first-quarter sales increase of 5.9% to a record $18.3 billion. Front-end comparable store sales for the quarter increased 2.4% in the first quarter, customer traffic in comparable stores increased 0.2% and basket size increased 2.2%, while total sales in comparable stores increased 5.4%. Prescription sales, which accounted for 64.7% of sales in the quarter ended Nov. 30, increased 7.3%, while prescription sales in comparable stores increased 7.2%.

Front-end comps are up. Prescription comps are up. Business is good. And that's not the story. Rather, that's the kind of results you can expect from the story. The story is Walgreens is priming a three-pistoned growth engine that will quite likely drive what pharmacy will look like in the future — an efficient global supply chain beast that feeds a front-end that commands traffic in its own right, and a back-end that demands healthcare payers pay attention to how Walgreens can help improve adherence and patient care metrics. So, how can suppliers better align with Walgreens? 

Two things — Balance Rewards and Walgreens' focus on expanding its clinical footprint. Both represent opportunities for front-of-store suppliers, in particular, suppliers of health and wellness solutions. 

During Friday's conference call, Walgreens executives more than once noted how its Balance Rewards program, the members of which accounted for 70% of sales in November, would feed future promotion decisions. "While [our front-end comp performance] represents solid gains in our daily living business, as we go forward into fiscal '14 we will leverage our data and insights from Balance Rewards to improve the effectiveness of our promotional investment," Greg Wasson, Walgreens president and CEO, told analysts. "With more than 12 months of data, we are gaining valuable insights into our customer's shopping and purchasing habits, giving us excellent information to work with as we sharpen our category plans for the year ahead."

Balance Rewards presently boasts 74 million active members and 92 members enrolled. Suppliers who can ascertain how to drive more trips and/or more sales out of Walgreens' best customers will be the real winners here.   

Walgreens also touted its growing base of clinical services. "Through our Well Network, we have brought [more than] 400 healthcare clinics, specialty and infusion assets, hospital on-sites, centers of excellence and our other resources together with our 8,200 pharmacies and connected them with partners across the industry, including physicians, health plans, payers and [employers]," Wasson said. "Together we are pioneering new kinds of partnerships and models of care that will create better experiences for patients, improve health outcomes and lower the overall healthcare cost."

"We've made tremendous progress in our Well Experience journey to become the most relevant retailer in our space," added Wade Miquelon, Walgreens CFO and president, international, during the quarterly conference call. "But still, we believe we are just scratching the surface of ways we can leverage our best-in-class footprint with differentiated products and services to please and reward our most valuable customers, and gain new customers just like them," he said. "We're gaining share in retail pharmacy as we are finding new ways to please and attract pharmacy patients. But what gets us even more excited is the tremendous opportunity we have before us, to move from a traditional pharmacy, historically participating in about 12% of the healthcare market, to a company that is increasingly participating much more broadly in areas like specialty, home infusion, workplace health, vaccinations, diagnostics labs, hospital partnerships and primary care."

As those healthcare partnerships grow, the net result will be more patients into Walgreens' stores. For health and wellness suppliers, it's an opportunity to partner on merchandising and marketing programs that highlight both preventative solutions and offerings that can help maintain health after a chronic-disease diagnosis. And as more patients take advantage of Walgreens' clinical offerings, the end-caps and merchandising sets opposite the healthcare dlinic will become more strategic in nature. 

That's the story. And those suppliers who are best able to coordinate their initiatives against Walgreens' in-house learnings from Balance Rewards and Walgreens' focus on expanding its clinical outreach will join Walgreens on its pathway to retail pharmacy success. 

Login or Register to post a comment.