How Walgreens is Transforming the Traditional Drug Store

As a 112-year-old brand steeped in a traditional brick-and-mortar history, Walgreens isn't what you would consider a digital pioneer. Yet the drug store chain has been forced to evolve its business to remain relevant for today's digital-savvy consumers. The transition has admittedly been a slow process, but it's taking shape.

In a keynote presentation yesterday at the Shop.org Annual Summit in Chicago, Walgreens’ President and CEO Greg Wasson detailed how the company is embracing digital throughout its organization, from its e-commerce site to 10 mobile apps to its retail stores.

With the brand mantra of happy and healthy made easy in mind, Walgreens has identified three focus areas for its ongoing digital transformation: create a wellness experience; transitioning the traditional community pharmacy; and creating an unprecedented global platform. The final one is quite a sea change for Walgreens, Wasson said. Walgreens’ strategy for decades was to find the best corners for its brick-and-mortar stores. While that's still part of the company's plans today, fostering digital innovation has joined it as an overarching goal.

In 2009, Walgreens scaled back its new store openings from 8 percent to 9 percent increases year-over-year to two percent to three percent increases. The move freed up capital, bandwidth and resources that's enabled Walgreens to make digital innovation a priority. To help in its efforts to create a global platform, Walgreens entered into a strategic partnership with Alliance Boots, the largest drug store chain in the U.K. In addition, Walgreens partnered with pharmaceutical drug company AmerisourceBergen here in the U.S.

With its acquisition of drugstore.com in 2011, Walgreens now operates five e-commerce sites — Walgreens.com, drugstore.com, Beauty.com, VisionDirect.com and DuaneReade.com (which Walgreens acquired in 2010). The drugstore.com acquisition helped Walgreens to not only gain 60,000 more SKUs, but also seasoned e-commerce professionals and an extensive distribution network. Now with 8,000 distribution centers across the country, Walgreens is able to offer same-day delivery for many online purchases.

Focus on Customer Wellness
Dovetailing with Walgreens’ efforts to be a more digital-savvy organization is its focus on improving the health and wellness of its customers. The retailer's mobile apps are testament to that. Walgreens’ Refill Reminder app alerts its users via email or text message when their prescriptions are getting low, and gives customers the opportunity to refill them directly through the app. Its Pill Reminder app alerts users when they need to be taking their medication, along with which medication they should be taking. Walgreens has simplified the process of refilling prescriptions by enabling customers to complete the task by simply scanning the barcode on their prescription bottle with their smartphone.

We want to engage patients through e-health, Wasson said. This extends to Walgreens’ customer loyalty program, Balance Rewards. Launched a little over a year ago, the program already counts 85 million members. Balance Rewards is integrated with Apple's Passbook, and members can earn points from online and mobile purchases as well as in-store.

Digital Integration In-Store
With such an extensive brick-and-mortar presence throughout the U.S. — 76 percent of all Americans live within five miles of a Walgreens’ store — it was imperative that Walgreens’ digital technology was available to shoppers in-store. "Our goal is to blur the lines between channels," Wasson said. "We want to weave digital experiences in and around the store, giving consumers a single, seamless Walgreens' experience."

Steps made in integrating Walgreens’ store with its digital properties include providing store associates with the ability to order products for customers online if they're not available in-store; a shop online, pick up in-store program that's available at 900 Walgreens’ locations; becoming the first retailer to integrate point-of-sale coupons on foursquare; and bringing pharmacists, nurse practitioners and health guides, armed with iPads, from out behind the counter to engage with customers.

3 Lessons Learned
Wasson wrapped up his presentation by identifying three lessons that Walgreens has learned during its digital evolution that may help other brands as they embark on similar endeavors:

1. Learn how to organize. We realized we needed to develop a digital mentality throughout our organization, and to do that we needed to bring in people who had digital backgrounds and expertise, Wasson said. He cited the hiring of Sona Chawla, Walgreens’ president of e-commerce, as a stepping stone. In addition to her hiring, Wasson noted that it was up to him as CEO to clear the way for Chawla and her team to be able to implement a digital way of thinking into a traditional brick-and-mortar brand.

2. Make connections — both internally and externally. Our customers need to have a seamless experience when they interact and engage with Walgreens, whether it be in a store, online or on a mobile device, Wasson said. To make that goal a reality, e-commerce and store teams need to be connected and working together.

3. Innovate with a customer-crazed culture. During this journey of becoming a digital brand, it was vital that we kept a clear focus on our customers and overall company vision, Wasson said. Walgreens’ customers are evolving too, however. We're not your grandfather's drug store anymore, Wasson said, noting that 40 percent of Walgreens’ web traffic is coming from smartphones and 10 percent is coming from tablets. The company's median mobile customer is a 45-year-old women, not a 20-year-old college student.

"Our customers are leading the digital evolution," Wasson said. "But what hasn't changed is that we have to give them the three W's — what they want, when they want it and where they want it."