When one of the retail pharmacy industry’s best-known merchandising gurus is pulled away from the front end of the store and put in charge of purchasing and new cost-saving efficiency programs behind the pharmacy counter, you know big changes are afoot.
Such is the case with Walgreens. When Walgreens abruptly announced early this month that it was shifting its top merchant, 27-year company veteran George Riedl, from head of merchandising to overseer of pharmaceutical purchasing and “pharmacy innovation” – and that the move was effective immediately – it put an exclamation point on the company’s ongoing overhaul.
Riedl, who led the company’s purchasing and merchandising departments since 2003, has gone from executive VP marketing and merchandising to a completely new position: senior VP in pharmacy services. The management change is as big as any made at Walgreens since last October, when the company announced the retirement of former CEO Jeff Rein and embarked on a massive renewal effort.
Riedl is now charged with rejuvenating sales and profitability at the pharmacy counter, partly through a new initiative called “PowerRx” that relieves store pharmacists from some time-consuming dispensing duties – like adjudicating prescription claims and verifying scripts with doctors – by shifting those tasks to centralized “hub” pharmacies. The huge job of overseeing the ongoing rationalization and revitalization process now underway throughout every department at the front of the store now falls to a relative outsider, Wal-Mart Stores and Tesco veteran Bryan Pugh, who joined Walgreens just two months ago.
For 34 consecutive years, Walgreens has ridden its stick-to-the-basics “hedgehog” strategy – and its reliance on company-bred management, technological innovation and a time-tested formula for convenience-oriented marketing – to an unbroken string of record-setting annual sales and profits. But in the midst of faltering sales and profits, a worldwide economic tsunami and a crisis in health care delivery and funding, company leaders have signaled clearly that business as usual will no longer do.