Walgreens focuses on digital solutions to drive store traffic

When it comes to the digital technology business, officials at Walgreens understand the importance of building the connection between digital and brick-and-mortar, using a mobile-first mentality that also can drive in-store traffic and build loyalty.

That is what Joe Hartsig, the chain’s senior vice president and chief merchandising officer, told an overflow crowd at the Omnichannel and Digital Merchandising Summit in Chicago in late May. Presented by Walgreens, Mack Elevation and Drug Store News, the one-day summit took a hard look at what needs to be done to both capture the consumer’s interest with digital merchandising and convert that into sales and profits for the Walgreens operation.

Hartsig was quick to note that Walgreens is focused on how digital strategies can complement and enhance the customer journey by leveraging its Walgreens app to drive visits to its more than 9,500 stores.

“We continue to refine our customer segmentation, but the key thing here is, in general, our Walgreens customers over-index relative to the total U.S. population in terms of researching and purchasing products through digital technologies,” Hartsig told the audience of more than 300 retailers, manufacturers and industry observers at the J.W. Marriott in downtown Chicago during a session on Digital Commerce and Merchandising with Andrea Farris, the chain’s vice president of digital and head of customer value and business center of excellence. “That’s the point. It’s all about empowering our customers even more with digital technologies that drive a seamless experience throughout their customer journey. We have to show up where she wants to shop in all different touchpoints.”

Unlike some of its primarily digital competitors — and even some of its competitors with large physical footprints — Walgreens’ store locations, with 78% of Americans living within 5 miles of a Walgreens, offer a sizeable convenience factor.

“We have a very different trip mission than say our competitors online and in brick-and-mortar,” he said. “Just building on what some have said this morning, we’re not trying to ‘out-Amazon’ Amazon. That’s not our strategy for the type of retailer we are with 9,500 stores.”

He also said that the combination of a digital approach and a traditional approach to retailing is proving to entice more shoppers into a Walgreens unit, and helping them to make the shopping experience that much easier.

“Today, over 50% of our customers tell us after going to our digital properties, the very next thing they plan to do is visit a store” he said, highlighting the importance of a consumer’s phone to this process as he held up his own. “This isn’t just a cell phone, this is a digital tool to augment that journey.

“When the consumer gets to the store, almost 60% of them actively use [their phone] in some way, shape or fashion. It could be for mobile express with pharmacy that we just put into place to make it easier and more convenient for her to get in and get out. It could be for balance rewards to use our loyalty points. It could be scanning to get that digital extra value through digital coupons that helps us provide value to our customers.”

Hartsig used the photo and pharmacy operations as great examples of this strategy, noting that many consumers start the process with both categories online and come into the store to pick up the finished product.

“Over 50% of the engagement with photo is started online. More and more creative products are started in digital fashion, and 98% of those are filled in store. We’ve been doing this for years in the photo business and we’ve been doing it for years in the pharmacy business. We have been in the game, though we don’t talk about it probably as publicly as others do. But we’re pretty experienced in this way.”

Hartsig said another big focus at Walgreens is enhancing the entire experience from beginning to end through what he calls digital attribution. “It is something we’ve been focusing on, which forces us to think about the whole customer journey, not just when she goes online and makes a purchase, but the whole experience from beginning to end,” he said.
Walgreens customers’ journeys increasingly begin with its mobile app, Hartsig said.

“Our digital engagement, as measured through attribution, is growing significantly across many customer journeys. Our customer will go online to find out about the newest store, search for product information or clip digital coupons, all of which can drive customers into one of our physical stores,” Hartsig said. “Those are really key things, and we know that when the customer goes online, she’s going, most likely, to our store. We have the largest loyalty program in the United States, and that helps us to track the customer journey to see how our customer is researching products online and when and how she completes her purchase.”

Farris focused on the competitive landscape and how giving Walgreens employees the best tools possible was absolutely necessary to allow them to fight off all competitors.

“Our competitors are all just a click away or an app away,” he said. “We have to compete for that digital customer in the same fashion that we compete for the physical one. Voice and wearable technologies become very important. Then, on the employee side, it’s very critical that our team members have the same or better tools to do their job.”

Noting that the Walgreens mobile app is now 10 years old, Farris said rapid evolvement of the digital capabilities is vital to staying ahead of the curve. “We used to have new releases every 3-to-6 months,” he said. “Now, we are actually releasing every three weeks as our organization adapts to change and to meeting the continuous evolution demands of our customers. Now, we’re really taking an agile approach, and so every three weeks we are releasing new features into the app, improving the experience.”

Both speakers emphasized the importance of working with other companies to enhance the experience for consumers and, ultimately, bring more sales and profits to Walgreens.

“In summary, I would like to say that our partners play an incredibly important part in our digital strategy,” Hartsig said. “We know as a company we can’t do it alone. Digital is a river that runs through everything we do. It is a big investment, and that’s why we continue to build upon our already strong base and challenge ourselves to accelerate even faster with more investment and capabilities throughout the organization.”
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