Walgreens CEO: Retailer seeing the results of its front-end transformation

NEW YORK — Walgreens Boots Alliance needs to “rethink its approach and do something radically different” in the front end, EVP and CEO Stefano Pessina said Tuesday during a question-and-answer session at the UBS Global Healthcare Conference at the Grand Hyatt here.

“When customers come into the pharmacy, they come with a clear shopping mission,” he said. “They generally don’t buy from the front end.” One of Walgreens’ goals is to attract pharmacy customers to shop at the front end and vice versa, and make it a natural process for customers to do so, said Pessina.

Walgreens is already attacking this head on, as Pessina stated the global retailer has already made changes in the front end, focusing more on health and wellness, and has “seen the results,” with margins increasing due to this shift in focus.

“We have a better supply chain, have refreshed stores and hired beauty consultants,” he said. “… We have to create the environment.”

He added Walgreens’ stores will continue to see improvements to serve the customer even better, but acknowledged not all changes will be noticed immediately.

Walgreens’ CEO added however that service at the stores is a great strength. “We have fantastic service,” he said.

Pessina was also asked to discuss its relationship with Express Scripts. As Drug Store News reported on May 18, Express Scripts, through its wholly-owned subsidiary Innovative Product Alignment, announced it will participate in the Walgreens Boots Alliance Development group purchasing organization.

“We have a great opportunity to work together,” said Pessina. “We are both big players in the generic market. There are benefits for both sides [and we hope to] extract benefits from both organizations.”

Shifting to the pharmacist, Pessina stressed the importance of reducing bureaucratic requirements for pharmacists, and instead utilizing this time to meet the needs of the customer. He added the American health care system is “quite complicated” and he is in favor of “more simplicity.”

Financially speaking, Walgreens saw excellent script growth in its most recent fiscal quarter, and Pessina said he expects to see even better things for the retailer in the second half of 2017.