Retailer of the Year 2021: Walgreens seizes its omnichannel opportunity

With strengthened digital capabilities, a loyalty program built for personalization and a focus on customer-driven assortment, Walgreens is DSN’s 2021 Retailer of the Year

David Salazar

10/11/2021

Put the customer first and the rest will follow. That principle has guided Walgreens as it revamped its retail offering over the past 18 months.

Certainly, industrywide, the big story of 2020 and 2021 has been pharmacies’ ability to scale up COVID-19 testing until late 2020, when they began administering millions of COVID-19 vaccine doses. At Walgreens, the company is not satisfied to just be helping lead the charge of immunization. It has, over the last year and a half, transformed its retail offering to include a host of capabilities and initiatives that are positioning the company for the future.

In the early days of the pandemic, while stocking necessary personal protective equipment and rolling out same-day delivery through Postmates (and subsequently growing its stable of third-party delivery partners), Walgreens debuted drive-thru, curbside and in-store pickup capabilities. The retailer built new features into its mobile app and website, and unveiled its revamped loyalty program — myWalgreens.

Alongside its strengthened omnichannel infrastructure, Walgreens is working to build a constantly relevant assortment throughout the store — from health and wellness to beauty, seasonal and fresh. The company also has debuted a store credit card and a bank account product as it looks to grow its financial services capabilities.

For all these reasons and more, Drug Store News has named Walgreens its 2021 Retailer of the Year. In exclusive interviews with DSN, executives from Walgreens — which currently operates more than 9,000 stores in all 50 states — outlined the growth that the company has seen since COVID-19 surged onto the scene, and how its pandemic-era efforts have positioned it well in retail and prepared the company for future growth.

Ramping Up Digital, Omnichannel
Walgreens’ leaders are quick to point out the extent to which customer needs factor into any new effort they undertake.

This was particularly true last spring and summer when customers were looking for the convenience they typically expected from Walgreens while also wanting a shopping process that minimized their risk of COVID-19 exposure. In response, Walgreens sped up its e-commerce and omnichannel capabilities in a short timeframe while also positioning its ordering and fulfillment services for long-term success.

“A lot of the work from the last 18 months was able to accelerate due to the investments we made as part of our digital transformation journey, which began pre-pandemic,” said Walgreens president John Standley. “Through technology investments, our teams were able to work in a more informed manner and harness data and insights that aided in rolling out digital tools at scale to meet customer needs when it was most relevant.”

Stefanie Kruse, Walgreens vice president and general manager of digital commerce and omnichannel, echoed Standley. “Before the pandemic, we were definitely working on accelerating our digital services and piloting convenience offerings digitally. When the pandemic hit, we obviously realized the need to do that with an even higher sense of urgency and to find new ways to deliver for customers safely and responsibly. So the things that we were already working on, piloting and scaling, we accelerated, and then looked at new opportunities as well.”

These efforts include same-day delivery — beginning with Postmates and ultimately expanding to include Instacart, DoorDash and Uber Eats — and curbside pickup, the latter of which enables shoppers to collect their order in as little as 30 minutes.

“It’s a really unique offering because obviously the speed is best in class, but also the convenience and access points are best in class as well in terms of being able to do that from your car, which is really meaningful for a lot of our customers who are either mobility challenged or highly immunocompromised and cannot go in the store and interact with people,” Kruse said. “It really gives customers a lot of convenience and choice.”

To enable these omnichannel capabilities, the company built out its app and website — efforts that went along with the rollout of myWalgreens. Beyond enabling these convenience offerings, Pat McLean, Walgreens senior vice president and chief marketing officer, said myWalgreens creates the opportunity for a deeper customer relationship.

“For years, we have been offering resources for patients on our mobile app and website, but with the launch of myWalgreens, we’ve been able to take that a step further and find new ways to engage them with the resources most relevant and timely to them,” McLean said.

Standley noted Walgreens’ retail capabilities are able to be presented alongside its health-and-wellness tools with myWalgreens and its digital properties.

“With myWalgreens … we are able to seamlessly integrate our most powerful and unique assets, including more than 9,000 stores nationwide, expertise of more than 25,000 pharmacists, digital channels such as Find Care, 24/7 pharmacy chat and personalized insights to meet customer needs.

Identifying strong partners

Though Walgreens has many strengths as a retailer, one of the areas it has excelled in recent years has been its ability to choose partners that help bring new services and capabilities to its customer base.

From its work with third-party delivery companies and its growing union with VillageMD, building primary care clinics at Walgreens stores, to the Adobe and Microsoft partnership that supports its myWalgreens capabilities, the retailer works with partners that can help achieve its goals quickly.

“We work with top-tier service providers, whom we believe can help us enhance the customer or patient experience and ultimately provide ways to improve the health of communities,” said Walgreens president John Standley. “Leveraging this collaboration model allows our teams to test and try new initiatives and approaches, scale services quickly to meet changing customer needs, coordinate care amongst healthcare providers, and learn and grow from one another.”

Standley noted that the company’s partners “are household names who have distinguished reputations and expertise in their areas of business.”

In delivery, the retailer initially worked with Postmates, but in the past year and a half has grown its stable of delivery partners to include DoorDash, Instacart and Uber Eats.

“When we were doing that, a large consideration was how do we really continue to lead in convenience and be able to deliver products as quickly and efficiently, and as safely as we can for our customers,” said Stefanie Kruse, Walgreens vice president and general manager of digital commerce and omnichannel. “Our partnership approach really revolves around ‘What is the patient and customer need, and how would a partner help us meet that and achieve it faster than we could just by doing it on our own?’”

Working with Adobe and Microsoft has created the backend capabilities to strengthen the company’s digital and omnichannel build-out, according to Alyssa Raine, Walgreens group vice president of customer marketing platforms.

“It’s completely changed how we are working, and without question how we will work moving into the future,” she said. “As you look at customer experience, we are focused on our owned channels — whether that be in store, app, email, etc. — and Adobe and Microsoft have allowed us to move parts of our data to the cloud and then be able to leverage them to orchestrate holistic customer experiences versus them being siloed.”

In addition, the VillageMD partnership that has seen dozens of Village Medical at Walgreens locations open is part of strengthening the retailer as a healthcare destination.

“We believe that primary care provided by board-certified physicians that is anchored in pharmacy and enabled by digital tools will help transform the delivery of health care,” Standley said. “In today’s complex healthcare environment, this coordinated care model is more important than ever. By combining the expertise of both the physician and pharmacist together, patients may benefit from a seamless experience that saves them time and money, and helps to better their overall health and well-being.”

—D.S.

Standley’s acknowledgment that myWalgreens enables insights that can personalize the shopping experience gets at the heart of the effort, as Alyssa Raine, Walgreens group vice president of customer marketing platforms, describes it.

“We launched myWalgreens not as a loyalty cash program, but really as a customer engagement platform,” Raine said. “It’s not just about loyalty points, but it’s really about how can we help people improve their health outcomes and how can we do that in a way that is very inclusive, since we serve over 9,000 micro-communities that have diverse needs.” She noted that the ability to tailor a digital experience to the individual shopper is something that strengthens the company’s relationship with patients.

“As soon as we offer more personalized experiences in any of our owned channels, we see that the engagement with our customer increases considerably,” Raine said. “We’re increasingly focused on how we can be building out these personalized touchpoints and experiences for our customers because it works. People know that you understand them better, that you’re taking care of their needs, and that you see them for the person they are and you value that.”

Delivering on Health Needs
Even the most robust digital and omnichannel capabilities are only as good as a retailer’s actual product offerings — which have had to evolve across the store as consumer behavior changed over the course of the pandemic.

We always put our customers first and continue to listen to their needs as we work closely with our suppliers and owned brand to pivot offerings across categories,” said Kirk Hanselman, interim chief merchandising officer. “In the early days of the pandemic, our teams moved quickly to ensure our customers had the necessary masks, hand sanitizers, acetaminophen, thermometers and cleaning suppliers they needed. We also realized families would gravitate towards family-focused activities like games and puzzles, so the team quickly leaned in that direction and that’s an area we continue to push towards. From a health-and-wellness perspective, we moved quickly on immunity and, more recently, during the spring and summer, on COVID OTC testing.”

The company’s new digital infrastructure has played a key role in helping identify and deliver on consumer needs, Hanselman noted.

“Our omnichannel approach is an increasingly important part of our merchandising strategy,” he said. “We’re leveraging MyWalgreens as the central touchpoint with our customers, and we’ve developed strategies to allow for seamless shopping experiences.”

Robert Tompkins, group vice president and general merchandise manager for health and wellness, said one of the biggest trends he is seeing is proactive efforts on the part of consumers to stay healthy — and a broader opening of minds to try new things in various health categories.

“It actually is a really unique time in that folks are willing to try new things to support their immunity, to support their desire to get a good night’s sleep, to deal with the stress that they’re experiencing,” he said. “We’re seeing a lot of willingness to test and trial, which I think is a great opportunity both for us and for our innovative supplier partners.”

The preparedness mindset that drove trips in the early days of the pandemic is sticking around and is becoming particularly important among patients with chronic conditions who understand that tracking and managing their conditions will mean less frequent doctor visits and less potential exposure to COVID-19.

“Health testing really is an area that people are interested in — understanding their pulse ox levels, their blood glucose and blood pressure levels,” he said. “Obviously, we’ve seen adoption of in-home COVID tests, and I think that’s kind of opening a lot of customers’ minds to the availability of at-home health testing in a broader sense. Maybe they hadn’t done a home test before. Now they have and it’s really opened their eyes to this great ability to self-monitor your health through a lot of the products that we sell.”

Walgreens’ owned brands also play a key role in health and wellness by bringing innovative products that can deliver on customer needs and value. Andrea Collaro, Walgreens senior director of brand management and product development for private label health and wellness, said the current retail environment and shoppers’ focus on value is fruitful soil for its owned brands.

“Shoppers are looking for value, high quality alternatives and support for managing their health — and we can offer all of that,” Collaro said. “Whether it’s a national-brand equivalent or innovative item that meets an unmet need, we will continue to develop products at pace.”

As an example of where private brands can help capitalize on trends, Collaro said one of the biggest launches from the retailer in the past year has been a pulse oximeter that includes a respiratory rate monitor, delivering on the increased interest in home testing that Tompkins pointed out.

“We work very closely with Robert and his team,” Collaro said. “His team is charged with total category strategy for health and wellness, and then it’s a matter how owned brand comes to life and underpins and supports that strategy. … In general, whether you’re talking national brand or own brand, the products that we’re either developing or bringing in are always keeping that customer need at the center.”

She noted that the myWalgreens launch came with a 5% Walgreens Cash reward for purchases of Walgreens-branded products to encourage sales of the retailer’s brands. “We’re going to continue to drive that program,” she said.

Beauty and Beyond
As in health and wellness, categories throughout the store have had to adjust their approach to the ways that shoppers have evolved throughout the pandemic. Industrywide, the beauty category took a hit as people stayed home and sales shifted more to skin care. At Walgreens, Lauren Brindley, group vice president for beauty and personal care, said the retailer quickly removed testers in store and ensured its beauty advisors were following social distancing protocols while remaining available as a resource for shoppers looking at products they had never tried.

Virtual try-on options have been part of Walgreens’ digital beauty strategy

“It was a great moment for us to demonstrate our expertise and make sure we were there for customers in a way they were comfortable with,” Brindley said. “There were lots of questions around the health and hygiene of our customers’ skin and this continues to be a big area of concern for customers. With people spending more time in their homes, they had more time to reconsider their skin care routines and they wanted to pamper themselves and de-stress.”

The company also leveraged its digital capabilities to make trial easier for beauty shoppers. It launched a virtual try-on feature for such products as color cosmetics and hair color, helping shoppers know what would suit them, even when purchased digitally. As in other categories, Brindley said myWalgreens has been a boon for beauty and personal care.

“MyWalgreens created a lot of new personalized digital capabilities and ways we could connect with our customers,” she said. “The ability to target groups of those customers with specific brands, products, solutions, ideas and value has been a major win for beauty in particular, where one size definitely does not fit all. We’ve seen fantastic sales momentum using these new personalized tools to connect the right customer with the right solution in the right way at the right time. And we believe we’re only scratching the surface of what is possible with this new digitalization and personalization of our database.”

Elsewhere in the store, areas like seasonal and fresh were revamped for the pandemic.

Heather Hughes, group vice president and general merchandise manager for seasonal, general merchandise and photo, who also is leading Walgreens’ fresh merchandising on an interim basis, said both fresh and seasonal have shifted over the past 18 months. With fresh, Walgreens is working to continue to be a resource for fill-in trips in areas like dairy and eggs, as well as in convenience-driven purchases like instant-consumption products and prepared food.

“Retail doesn’t turn on the dime, but one area where you can move faster is in that grocery space, so it has allowed us to shift a little faster as we’ve seen customer dynamics shift,” she said, adding that instant-consumption products, typically bought on in-store trips, have increasingly been going into digital baskets following the rollout of the enhanced digital offerings.

Seasonal and general merchandise also have seen changes, with homebound shoppers looking for more décor items and seasonal decorations.

“We saw this dynamic shift in how customers used to think of seasonal and then how they thought of it going forward,” Hughes said. “Our small format and safe environment as a healthcare provider made a lot of customers feel comfortable to be able to come in a Walgreens, get those key items that they needed to support their families within the seasonal business — to continue to have fun and support their mental health.”

Hanselman said the company also stocks local assortments where appropriate. “We strive to create a more meaningful and localized shopping experience by sourcing products from our customers’ neighborhoods that they know and love,” he said.

Beyond merchandising, Walgreens has been building out its financial services offerings. The myWalgreens credit card and the myWalgreens Mastercard were the first of these to roll out. Via a partnership with Synchrony Bank, the cards are meant to offer rewards for the health-and-wellness purchases shoppers make anyway, with the myWalgreens credit card touting 10% Walgreens Cash rewards on own-brand products and a 5% reward on certain brands and pharmacy purchases. The company also has debuted Scarlet, a bank account and debit card offering that is powered by InComm Payments, with the debit card issued by MetaBank.

“We’re really focused on those consumers who are going to benefit from living their lives as healthy as they can based on their personal choice, and also enjoy a Walgreens cash as a reward incentive,” said Maria Smith, vice president of payments and financial services. “We’re also thinking about how to provide occasional cardholder benefits that also amplify what they’re doing with myWalgreens program.

Ready for the Future
Executives said the insights they have gleaned throughout the past 18 months will continue to inform the company’s efforts moving forward, with particular emphasis on further building out its personalization efforts.

“As we continue to evolve to meet ever-changing consumer needs, insights from myWalgreens will help inform our customer-first approach and the platform will enable us to deliver on those personalized insights through custom experiences based on behaviors,” Standley said.

As Brindley put it, the future of Walgreens “is really about continuing to be customer-focused in everything that we do. We have to understand where customers are expecting Walgreens to support them on their personal journeys and with their products and solutions, as they come out of the pandemic.”

Besides more sustainability and diverse brands, she said innovation and more expert services would continue to be a big part of the company’s offerings — all undergirded by its new personalization infrastructure — which Kruse said will continue to grow.

“We’ve seen very positive results as an effect of all of the personalization capabilities that we’ve rolled out in terms of being able to talk to customers much more effectively,” Kruse said. “We’ll continue to build upon the capabilities, and we’re doing so right now through additional investments in marketing, technology and capabilities there that are going to bring even more personalization to the customer experience.”

Identifying strong partners

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