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Atkinson to put stamp on front end as Walgreens optimizes CCR

BY Jim Frederick

WHAT IT MEANS AND WHY IT’S IMPORTANT — “The true ambassadors for the brand.” That’s how Walgreens president and CEO Greg Wasson now describes the company’s 244,000 employees.

(THE NEWS: Walgreens names chief customer experience officer, promotes three executives. For the full story, click here)

It shows the evolution of attitudes toward the people who are closest to the millions of customers who walk into one of Walgreens’ 7,655 drug stores or one of its health clinics or professional pharmacies every day. And it reflects the increasing investment the company is making to improve the retail environment in those stores.

It’s never been easy to create a fun, exciting and fresh shopping experience for customers in the confines of a neighborhood drug store. The palette is limited, both by the relatively small size of the selling floor and by the tight restrictions imposed by pharmacy, health and wellness, and convenience merchandising itself. The question has always been, “how do you create an experiential retail environment in a drug store?”

Walgreens has been out to do just that, through a massive transformation process now more than two years along. And on Jan. 17, it took the overhaul of its marketing, merchandising and customer loyalty-building strategy to the next level with the announcement that it had hired its first “chief customer experience officer,” United Airlines veteran Graham Atkinson.

The induction of an airline executive would seem a strange choice for any drug chain, let alone the nation’s top pharmacy retailer. But Atkinson, who was president of United’s Mileage Plus loyalty program, knows something about winning the hearts, minds and repeat business of customers. Announcing the move, Walgreens noted that Atkinson had been in charge of “one of the world’s leading customer loyalty programs with more than 50 million members.”

He officially begins at Walgreens on Monday, in charge of “developing and leading the company’s loyalty strategies, with a specific emphasis on the customer experience,” according to the company.

In a clear sign of just how critical management sees the role of “chief customer experience officer,” Atkinson will report directly to Walgreens president and CEO Greg Wasson. He’ll have unfiltered access to the company’s top decision-maker.

Walgreens’ drive to “reinvent the customer experience in our stores,” Wasson said, has been one of its “key initiatives” since Day One of the company’s reinvention process that began in late 2008. To that end, Walgreens already has converted more than 1-of-every-4 of its drug stores to its full “Customer Centric Retailing” format, and applied at least some of the CCR principles — a tighter, faster-turning merchandise presentation; a more analytical, data-driven approach to departmental sizes and adjacencies; improved signage; and a more flexible strategy for dealing with new sales opportunities in such areas as food and seasonal — throughout the chain.

CCR, Wasson said, is “designed to enhance the look and feel of the stores with new product assortments, better sightlines and a new in-store decor package.” Wasson added that Walgreens is moving forward with additional front-end opportunities, including enhancing its private-brand products, expanding fresh food offerings and piloting upscale beauty departments and a customer loyalty initiative.

The result, Wasson said, is that in its 2,100 CCR stores, at least, Walgreens already is “hitting on all four cylinders of our four-way win, which was to increase total sales, reduce our inventories, increase our store efficiencies … and, most importantly, to improve the customer experience.”

It follows that the next logical step would be the appointment of a chief customer experience officer to tie all those strands together and apply them throughout the chain, particularly as Walgreens aggressively ramps up its CCR conversion process. By this time next year, Wasson promised shareholders at the company’s annual meeting in Chicago on Jan. 12, “We will have converted or opened approximately 5,500 [CCR] stores, which is about 73% of the chain.”

Walgreens’ CEO hinted at “a lot of exciting opportunities” that the front end of those stores will offer in coming months and years. Those opportunities are sure to come from such areas as an already expanding selection of high-margin private-label products, customer loyalty cards — now in test in three markets — and in the rapidly changing beauty department, where company merchandisers are applying lessons learned from the Duane Reade stores Walgreens purchased last year. Company leaders credited Duane Reade for its success with both loyalty programs and beauty merchandising, and said that the retailer’s expertise is working its way into Walgreens’ vast store network.

Another emerging front-end growth category is food, particularly fresh food and prepared meals. The concept thus far has been aimed at “food desert” locations in Chicago, where local residents don’t have near access to a supermarket or other alternative. But there are plenty of “food desert” locations around the United States — as many as 400 or more — where the chain could offer a fresh food selection that rivals that of a small grocery store, company leaders indicated. And customers in any number of Walgreens stores likely are to see an enhanced food “experience” as Atkinson moves into his role and begins to put his stamp on the front end.

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CVS’ interim picks leave chain well-positioned for future

BY Antoinette Alexander

WHAT IT MEANS AND WHY IT’S IMPORTANT — After weeks of waiting to see how CVS Caremark would respond to Walmart’s successful bid to block the Hank Mullany hire, the company handed the keys to its retail stores to one of the most prolific merchants in drug store retailing and the man who has led its massive real estate machine.

(THE NEWS: CVS’ Bloom, Baker to lead chain’s retail business on interim basis. For the full story, click here)

For would-be pundits who may choose to second guess the "interim" tag, stranger things have happened than the possibility that one or both of these men could emerge as the permanent replacement to Larry Merlo when he becomes CEO this spring. Think about this: Walgreens chief Greg Wasson once held the "interim" tag.

Whether the company decides to stay with its in-house talent long term or again looks for outside expertise remains to be seen. Drug Store News salutes its recent announcement — in Bloom, Baker, Helena Foulkes, Jon Roberts, Per Lofberg and many of the other talented executives on the team Tom Ryan has assembled over the years, the company has left itself with a lot of options — ALL OF THEM GOOD.

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Retailers on Fortune’s list have recipe for success

BY Michael Johnsen

WHAT IT MEANS AND WHY ITS IMPORTANT — It’s no coincidence that Publix and Wegmans are two companies that also routinely wind up at the top of customer service surveys — testimony that satisfied employees who enjoy their workplace generally add that special ingredient to customer service. Having a totally energized work force, and knowing what it takes to keep them that way, that’s the "secret sauce" in retailing.

(THE NEWS: Fortune names Wegmans, Whole Foods, Publix top employers. For the full story, click here)

In June 2010, Publix and Wegmans ranked No. 5 and 13, respectively, out of 27 on Bloomberg Businessweek’s Customer Service Champs 2010 list.

The business news organization credited Publix for installing an auto-replenishment system in 2009 that improved out of stocks by 19%. But Publix also is one of the country’s largest employee-owned companies, and attaching $2,326 — the average amount awarded to employees holding Publix’ privately held stock in 2009 — to exemplary customer service can’t hurt the shopper experience, either.

Wegmans is another employer that invests heavily in its employees. Wegmans’ budget for customer service courses increased 13% in 2009 to $27.3 million, despite the fact that the country was in the middle of a recession. Another employee perk that hasn’t been cut because of a bad economy is tuition scholarships — 1,424 Wegmans employees explored higher education opportunities in 2009, Bloomberg Businessweek reported.

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