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Talented vets, free agents comprise innovative team

BY DSN STAFF

Early this year, chairman Alan McNally described the striking changes that have swept through Walgreens’ leadership, from the top executive ranks to the VPs in charge of operations, marketing, technology and merchandising. The company, he said, has shifted from a “strong, home-grown management team” to “a culture of worldclass innovation,” built of both Walgreens veterans and leaders from other industries.

The shift has spawned “a culture of new thinking, innovation and momentum throughout the organization” with a “clear, compelling strategy of drawing more from the core of our business,” McNally asserted.

For generations, Walgreens was known for its ability to develop a deep bench of talent, largely drawn from within its own ranks. Top leaders typically were groomed through decades of experience in store operations, often rising through the ranks from store manager, district manager and regional VP before moving to headquarters to gain experience in such areas as merchandising, marketing, finance and, in recent decades, information technology.

It was a system that bred decades of success. But Walgreens now faces unprecedented competition from a host of sophisticated drug store, big-box and supermarket pharmacy rivals like Walmart, CVS, Target, Kroger and Costco—not to mention the challenges posed by mailorder pharmacies, pharmacy benefit managers, growing supply-chain and real estate costs, and a healthcare system in crisis. Add to that a ravaged economy and a fragmented consumer base, and it became clear to Walgreens’ board of directors two years ago that the company needed an infusion of outside expertise and a fresh perspective.

The result has been a dramatic shift in the makeup of Walgreens’ leadership since the departure of former chairman and chief executive Jeff Rein in October 2008. After a nationwide search for a successor, Walgreens turned to a skilled company veteran and Rein’s second-in-command, then-president Greg Wasson, to take the helm as president and CEO, assuring continuity going forward as the company navigated a turbulent economy, a new retail mission and a sweeping overhaul in management.

Also retaining key positions through the change have been such veteran talents as Kermit Crawford, recently promoted to EVP pharmacy services; Mark Wagner, a 31-year Walgreens veteran who, as EVP store operations, oversees the activities of some 30 regional VPs; Randy Lewis, SVP supply chain management; 30-year Walgreens veteran John Spina, who now is corporate VP retail integration and new format development; Don Huonker, who joined Walgreens as a pharmacist in 1995 and now heads healthcare innovation; Robert Tompkins, general merchandise manager of health-and-wellness purchasing; Denise Wong, a 17-year veteran who is a corporate VP, as well as chief information officer; and 20-year company veteran Mike Arnoult, tapped to replace Chong Bang as VP Customer Centric Retailing after Bang left to join Shoppers Drug Mart in December 2009.

Other well-known Walgreens veterans have departed. Among the highest-profile: George Riedl, longtime head of merchandising, and Dave Van Howe, whose last position was corporate VP in charge of new business development.

Many other faces in the executive wing are relative newcomers, and some of the posts they occupy are new as well. They hail from a wide range of backgrounds in such areas as mass merchandising, consumer packaged goods and information technology. Among them:

Bryan Pugh, a Walmart veteran who, as VP merchandising, is now the company’s top merchant;

Steve Broughton, another Walmart veteran, in charge of the consumables category;

Kim Feil, who brought the expertise she forged at Sara Lee and Kimberly-Clark to her role as chief marketing officer, another new post;

Sona Chawla, who came to Walgreens by way of Dell and Wells Fargo last July to take the new post of SVP e-commerce; and

Colin Watts, who joined Walgreens in late 2008 after working at Campbell Soup and Johnson & Johnson’s McNeil Consumer division. As VP and chief innovation officer, Watts is leading efforts to wring new opportunities and new patient-service models out of Walgreens’ core healthcare and business units.

Big changes also have occurred within merchandising and category management. The newest: the hiring in January of Jim Jensen, a veteran of Tesco and 7-Eleven, to fill a new post as divisional merchandise manager in charge of the chain’s expanding reach into fresh foods and prepared meals.

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Bashas’ rejects Albertsons’ buyout bid

BY Alaric DeArment

NEW YORK Bashas’ has turned down a nearly $300 million buyout offer from Albertsons, according to published reports.

According to an American City Business Journals article, the Chandler, Ariz.-based Bashas’ was uninterested in a buyout offer of $290 million for the chain.

Bashas’ filed for Chapter 11 bankruptcy protection in July, announcing the following month that it would close 14 stores. Still, the published reports quoted an attorney representing the company as saying that the reorganization plan would ensure Bashas’ remained in the hands of the Bashas family, which has owned it since 1932.

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Shoppers’ new initiatives sets chain up to become retail giant

BY Michael Johnsen

WHAT IT MEANS AND WHY IT’S IMPORTANT While the decision to move in this direction may have been made before Chong Bang crossed the border, there is no questioning that industry watchers will be focused on what SDM’s new top merchant will do to further improve the stores.

(THE NEWS: Shoppers Drug Mart takes a page out of CCR playbook. For the full story, click here)

That has a lot to do with Bang’s pedigree — he’s directed a significant merchandising program at Walgreens, one of the leading pureplay pharmacies in the United States. And now he’s at Shoppers, the leading drug store retailer north of the border.

Bang will be armed at Shoppers with the sales data generated by 9.7 million members of the pharmacy’s Optimum loyalty program, 80% of whom are women. When you consider that there are only 34 million Canadians, that means that almost 1-in-3 Canadians are members of Shoppers’ loyalty program, and almost 1-in-2 Canadian women.

Presently, Shoppers plans to grow its square footage at a clip of 8% to 9% with a new distribution center slated to open in 2010 to help support that growth. And that’s really going to be Bang’s merchandising challenge — finding a way to slip one more item into that Shoppers marketbasket in a saturated marketplace. Bang certainly can’t build front-end sales by attracting new customers. There just aren’t that many Canadians who don’t already shop at Shoppers.

For Bang, it’ll be a question of optimizing categorical synergies and in doing so help drive impulse purchases. Similar to Walgreens, Shoppers is on a mission to make a good shopping experience better, and Bang’s expected to help realize that goal.

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