THE MESSAGE: A ‘laser-like focus’ on consumers
Walgreens is ready for its closeup.
After a two-year, top-to-bottom makeover — and a relentless focus on its core customers and its broad mission as a health, wellness and convenient shopping destination — the company that wants to “own well” has honed its message to consumers: Walgreens is ready to be the nation’s top wellness destination.
“Our No. 1 goal as a marketing team is to drive demand and to make Walgreens a routine destination of choice,” VP and chief marketing officer Kim Feil told Drug Store News not long after she joined the company as its first chief marketing officer. That required “understanding our customers better,” she added, which “allows us to target them better.”
Under the rubric of its Customer Centric Retailing initiative, the company has drawn a bead on its customers via focus groups, internal and external sales and replenishment data, and other tools. Its goal, president and CEO Greg Wasson said, is to base its marketing and merchandising activities on a “laser-like focus” on its customers.
Early on in Walgreens’ companywide renewal effort, Feil helped drive a new, data-driven customer segmentation process aimed at aligning marketing and merchandising more closely with the needs of distinct customer groups. Along with her marketing team, VP merchandising Bryan Pugh, other Walgreens decision-makers and outside advertising consultants, Feil has worked to distill Walgreens’ image and its multichannel health and convenience offerings to a clearly defined message that resonates with the nearly 6 million Americans who walk through its doors every day.
Within its new image ads, Walgreens presents itself as America’s “first choice for health and daily living,” offering “innovative health services, exciting products, sound advice and thoughtful daily conveniences” that are “surprisingly easy to access across channels.”
Walgreens now bills itself as the company that “sells well,” with “a trusted pharmacist” at the core of its retail offering, and a deep understanding of what its customers need “to manage well, get well, stay well and live well.”
In the stores, it means leveraging the company’s already strong reputation among consumers for convenience — and bringing all its resources to bear, including the health services at the pharmacy and all its front-end departments — to “reinvent the customer experience.”
“This is ‘Consumer Research 101,’ … to find out more what consumers would value that convenience for,” Wasson said.
In all its marketing efforts, Walgreens will pursue a comprehensive message that integrates the entire package of goods and services in its stores. “We’re looking at the total basket, the total purchase, the total customer,” Wasson said. “You’ve got to have that front-store offering, and the front-store offering has to have the pharmacy at the back of the store as well.”
One major focus of the new marketing drive is the company’s first loyalty card pilot program. For that, Walgreens is drawing heavily on the expertise of Duane Reade, the New York-based chain it acquired last year.
“With loyalty, we’re going to make sure we ‘crawl, walk, run’ on that,” Wasson told reporters in January. “The good thing is that in addition to what Kim Feil is doing, and the pilots we have in place — combined with the talent, the expertise and the data we have — we think we have the best of both companies” to move the loyalty program forward.
Feil also is deeply involved with the effort to boost Walgreens’ private-label opportunities. “We brought in a talented team of Bryan Pugh and Kim Feil to begin to look at our entire private-brand strategy a year and a half ago, and we are indeed looking at the entire strategy — everything from our OTC offering to our beauty offerings to our fresh-food offerings,” Wasson explained.
According to Feil, one priority was integrating the store-brand message and strategy with the entire Walgreens image. The company had more than 40 private brands in its stores, “but we weren’t treating them as a whole … or really organizing them around department categories, consumer needs, or around price tiers that would be relevant to them,” she said. “We’re still working through that strategy.”
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The vision: Walgreens wants to ‘own well’
Talk about a bold retail vision. Walgreens president and CEO Greg Wasson said the nation’s top pharmacy retailer wants nothing less than to “own well.”
He’s serious. Owning “well” — or, put another way, becoming the nation’s top retail resource for pharmacy and health-and-wellness services and products — is the kind of declaration few retail pharmacy executives would dare utter. But Wasson isn’t running just any drug store chain. He’s in charge of a re-engineered, 110-year-old retail pharmacy and health behemoth with more than 8,000 “points of care” around the United States, a clearly revitalized mission and store base, and a driving goal: to become the nation’s first fully integrated, nationwide provider of products and services for health, wellness and everyday needs.
At Walgreens’ annual meeting in January, Wasson and other top leaders laid out their vision for a company nearing the culmination point of a massive, two-year transformation. Walgreens, Wasson told shareholders, aims to be nothing less than the “first choice for health and daily living needs … [for] everyone in America.”
It’s a far cry from the stick-to-the-retail-basics “hedgehog” strategy that defined the company for decades, and it’s as bold an assertion as declaring that the company wants to “own well.” But Walgreens has spent decades and poured billions into its pursuit of coast-to-coast market penetration, and more recently into creating a formidable presence within the U.S. workplace. “We are on the front lines of health care with [more than] 70,000 healthcare service providers and growing,” Wasson said. “We have [more than] 8,000 points of care across the country. What we are building is the most complete national network of integrated healthcare providers and locations in the country.”
If Walgreens can achieve a true integration of all those providers and locations, it will wield a powerful arsenal. Decades of aggressive organic store growth — supplemented by a series of savvy acquisitions targeting the best regional chains — have given the company a dense network of 7,670 drug stores operating in all 50 states and Puerto Rico, at least one of which is within 3 miles of more than 6-of-every-10 Americans. What’s more, the chain has paid dearly to put its stores on “the best retail corners in America,” to quote chairman Alan McNally, making Walgreens “No. 1 or 2 in 215 markets across the country,” McNally added.
The network also includes more than 100 Walgreens pharmacies in hospitals and community care centers; some 350 in-store Take Care Clinics with an expanding menu of ambulatory care services; a powerful presence in specialty pharmacy, oncology, home infusion and other high-touch medical services; and more than 380 clinics operating within the employee workplace, some 40 of which include pharmacies.
Combine that unrivaled retail health presence with the ongoing revolution occurring at the front end of the stores as Walgreens pursues its Customer Centric Retailing initiative, and you have a company poised, in Wasson’s words, to exploit “the convergence of two great industries, retail and health care. Frankly, that trend is good for us, because we are located right at the intersection of retail and health care,” he said.
It’s no accident that more of the nation’s frayed healthcare system is moving into the retail space. Roiled by reform and hammered by unsustainable cost increases for health delivery, a growing shortage of primary care physicians and a funding crisis in state and federal coffers, the health system is turning increasingly to such lower-cost, patient-accessible providers as pharmacists and clinic-based nurse practitioners for front-line care.
Walgreens has transformed itself to align with that titanic shift. Its Power initiative to centralize dispensing functions and other efforts is aimed at freeing its pharmacists for more patient care and medication therapy management activities, and the chain has become the nation’s top nongovernment provider of flu immunizations.
With that realignment has come a reordering of priorities. Walgreens has cut its annual store-expansion rate to about 3%, from a peak of roughly 9% in fiscal 2008, and is “focused on making the 7,600 stores we already have more valuable, productive and relevant to customers and patients in satisfying more and more of their health and daily living needs,” according to McNally.
The effort has borne fruit. In line with efforts to make its stores and merchandise mix more productive, the company has whacked expenses and moved back into record-setting sales and earnings territory.
Given Walgreens’ recent strong earnings momentum and same-store sales growth, Wall Street has applauded the shift, although one retail analyst, Jack Russo of Edward Jones and Co., warned that Walgreens already has “over-saturated the U.S. marketplace” with its once-torrid store-construction program. More typical of recent comments is that of Meredith Adler of Barclays Capital, who noted that Walgreens is doing “a very good job” of managing its expenses and showing “a discipline about pretty much everything [it does] that was not there before” as the company cuts back on profit-draining promotions and progresses on its billion-dollar inventory-reduction campaign.
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Walgreens might want to stop selling cigarettes in that case.
Savient announces executive appointments
EAST BRUNSWICK, N.J. — Savient Pharmaceuticals announced changes to its management team as it gears up for the commercial launch of its chronic gout treatment.
The drug maker appointed Louis Ferrari as its SVP corporate development, Christine Mikail as SVP and Stephen Davies as chief information officer and group VP.
Savient said the new additions to its executive team will strengthen the company as it globally launches Krystexxa (pegloticase), which received regulatory approval from the Food and Drug Administration last September as a chronic gout treatment for adult patients refractory to conventional therapy.
Louis Ferrari, a pharmaceutical industry veteran, joins Savient from Centocor Ortho Biotech, where he served as VP oncology and nephrology, sales and marketing, responsible for sales of Procrit and Doxil. At Savient, he will be responsible for all commercial activities in North America.
Christine Mikail, who served as VP, general counsel and secretary for ImClone Systems, will be responsible for all of Savient’s business development activities and strategic planning, including the initiative to launch Krystexxa globally.
Stephen Davies served as VP information technology at ImClone Systems before joining Savient, where he was responsible for developing an IT approach to enable international expansion and improved infrastructure security. In his role at Savient, Davies will be responsible for building all global information systems support for the Krystexxa launch.
All three executives will report to Savient CEO John Johnson, who recently joined the company from Eli Lilly, where he was president of its oncology unit.
"We are pleased to welcome Louis, Christine and Stephen to Savient," Johnson said. "This is an exciting time for Savient, and these are three key additions that will help make for a successful commercial launch of Krystexxa. Today’s appointments will augment our already strong team of talented executives and employees, all of whom are committed to bringing this life-changing therapy to adult patients suffering from chronic gout refractory to conventional therapy. I look forward to working closely with Louis, Christine and Stephen and the entire Savient team as we embark on this next phase in Savient’s history."
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