Walgreens puts a face to ‘CCR’ (Make that 35 faces, actually)

VERNON HILLS, Ill. —Walgreens’ massive campaign to rejuvenate its front-end merchandising strategy and wring more sales and excitement from its customers now has a face. Or, more accurately, some three dozen faces.

In recent weeks, the chain took the wraps off its newly designed “customer-centric” store prototype, quietly unveiling its new, easier-to-shop drug store concept in 35 Walgreens stores around the United States. Company officials gave Drug Store News an exclusive look at the new design in one of its remodeled stores in this northern Chicago suburb last month, highlighting the design’s dramatically lowered fixtures, lighter colors, new departmental adjacencies and signage, and slimmed-down assortment.

All those changes are the result of Walgreens’ customer-centric retailing initiative, dubbed the CCR project in company shorthand. Under the direction of project leader and merchandising veteran Chong Bang, CCR is a major initiative to rationalize and rejuvenate the merchandise mix, section by section, to weed out slow-moving and redundant product, emphasize the convenience products consumers really want, relocate departmental adjacencies to make products easier to find and spark additional impulse-purchasing and front-end demand.

“CCR is about streamlining assortments and reworking promotions. It’s not simply about SKU reduction, but about prioritizing categories and items within categories,” said president and CEO Greg Wasson.

“Our plan is to roll CCR out to about 400 stores this fall, and after a break for the holidays, we plan a nationwide rollout through calendar 2010,” Walgreens’ top executive told Drug Store News. “Besides the 35-store pilot program, we’ve completed optimized assortment resets for 36 of our first 40 product categories nationwide.”

Through that optimization process, Wasson said, the company already has eliminated 4,500 SKUs from the front end.

By reducing the SKU count, the company also opened up store shelving in some core departments for additional, high-demand items, allowing store managers to get more of the product that used to pile up in the rear storeroom onto the shelves.

One of the most striking features of the new design: vastly improved sight lines. By lowering gondolas to 66 in. and removing the high-stacked products that often topped those shelves, Walgreens’ store design team opened up the store’s interior, and made it far easier for customers to see such core perimeter departments as pharmacy from anywhere in the store, noted one employee at the Vernon Hills store.

Also aiding visibility: lighter wall colors, accented by departmental highlights, and improved signage to identify departments. Walgreens also has made it easier for customers to find what they’re looking for by taking a fresh look at product adjacencies; baby care items, for instance, are now grouped in a second location in the women’s health aisle for new and expecting mothers.

To give more space to such key health-and-wellness categories as like vitamins, OTC remedies and first-aid products, Walgreens’ CCR team also reduced such non-core departments as auto supplies and hardware, in some cases to just a few linear shelf feet of “must have” items as a convenience to shoppers.

Customers generally have embraced the new look, Walgreens officials said. “It’s too early to extrapolate any results, but these 35 stores are performing ahead of plan on all metrics,” Wasson said. “We’re encouraged.”