Image Source: Walgreens
How Speedy Does Walgreens Need To Be?
Lindsay Mikos, senior director of omnichannel strategy and programs at Walgreens, spoke about the retail pharmacy chain’s moves to build out and maintain its super-fast omnichannel fulfillment options, including 30-minute pickup, In a session at the Internet Retailer Conference & Expo in Chicago last week.
“It was at the height of the pandemic,” Ms. Mikos said. “Walgreens didn’t have a pickup program… We knew that COVID was happening, people were not able to go and shop in our stores, we needed to figure out a solution very quick.”
What would eventually become Walgreens’ 30-minute pickup program began with Mikos and a team of around 10 creating a microsite that gave customers access to 100 critical items through the drive-thru. The initiative gave proof of concept to corporate, overriding skepticism that a chain with an average store journey of eight minutes needed omnichannel solutions to speed transactions.
“Convenience is changing,” Ms. Mikos said. “[We observed] if we don’t offer these solutions, [customers] won’t continue to shop with us.”
The chain pushed itself to guarantee a 30-minute pickup time to do it “bigger and better” than competitors. Four months later, Walgreens launched delivery from store, with a target of two-hour delivery. Looking at the metrics on the program, Walgreens found that 80 percent of its deliveries were reaching their destination in under an hour.
Today, Walgreens offers 30-minute pickup chainwide via in-store interaction, curbside or drive-thru. It offers 27,000 items for omnichannel purchase and last year launched 24-hour delivery at hundreds of stores nationwide.
Walgreens aims to facilitate customers shopping retail and pharmacy simultaneously in the same basket.
Ms. Mikos pointed to a few factors that have led to its pickup and delivery success:
- Improved AI-enhanced on-site search experience, which offers recommendations based on purchase history and other characteristics;
- Giving store staff the right tools to allow for orders to be filled quickly (with 89 percent of orders filled within 30 minutes);
- A robust training model for staff;
- Being responsive to store staff on the positives and negatives of the picking/fulfillment process and solutions.
Discussion Questions
DISCUSSION QUESTIONS: How important are 30-minute pickup/curbside, one-hour delivery and other omnichannel enhancements to Walgreens’ value proposition and its competitors? Have these investments become table stakes in today’s retail pharmacy landscape?
Poll
Loading …BrainTrust
David Naumann
Marketing Strategy Lead - Retail, Travel & Distribution, Verizon
Bob Phibbs
President/CEO, The Retail Doctor
It is a nice-to-offer but is it needed more often than once in a blue moon? Worth the investment? Only for PR capital.
There is a very good argument that Pharmacy items need to be treated specially and very fast turn round is important, but at what cost to the company and the environment if they then spread that to other sectors. During Covid a lot of retailers had to implement special measures, that does not make them appropriate today. I do however, like the measures taken in training staff, giving then the right technology and being responsive to their feedback, but you do not need AI to deliver experiences based on purchase history, it just makes for a good story!!
The 30 minute pickup is quickly becoming standard, so Walgreens needed to do this – especially in their category. When customers need pharmacy supplies it is often a time sensitive purchase. While the under two hour delivery isn’t standard at this time, it’s a great competitive differentiator for Walgreens. Especially as Amazon increases the number of items it can deliver same day. Walgreens is also ahead of the curve in showing product availability in their search results – a tactic that can drive double digit increases in conversion rates. Well done Walgreens!
When you’re sick, you want your meds, and you want them fast. If Walgreen’s can get the word out to people consistently, I think 30-minute pickups have a chance to make a difference.
A lot of retail, perhaps propelled by Amazon, is still focusing on faster delivery and pickup times. In some cases, I think such a drive is misplaced as it’s open to debate how quickly customers need products to be available. However, with pharmacy and convenience items (which is the mainstay of Walgreens’ offer) speed is very important.
I want the 30 minute, curb-side pick-up parking spaces back! They’re always empty! The good news is that it’s an AI-enhanced search experience so consumers should be able to find what they want and what they had no idea they wanted. Maybe this is more “strategic FOMO” than anything else but, then again, stores used to be closed at night and on weekends; it could be a thing!
As we all know, quick commerce emerged during Covid with many large retailers and numerous start up companies leading the way with their 15-30 min delivery promises, but as Covid has waned and shoppers have settled back into their routines, speedy delivery has run into profitability tradeoffs and taken the proverbial back seat. Yet, I do see compelling value for Walgreens and other retail pharmacies to offer 30 minute pickup for prescriptions. Look, we’ve all been there, when you or your loved one is miserable due to illness or other issue, the only thing top of mind is to get that Rx as fast as possible. Consumers will seek out the fastest response time!!
Walgreens is a combination of a pharmacy and a convenience store, therefore, convenience is key. While 30-minute availability is not needed in most cases, it is nice to know it is an option, which elevates consumers’ perception of Walgreens. With consumers’ expectations for fast delivery or pick-up, driven by Amazon, fast fulfillment is becoming table stakes for most retail segments, especially for convenience items.
I agree with you on the value of “the [customer] perception.” Besides that, it can be an expensive proposition, unless one can piggyback other sources of revenue into the infrastructure required to do 30-minute pick-up/curbside and 1-hour delivery.
To have it available for customers is a really nice differentiator. A saw Ms. Mikos speak at this event and was motivated to move my prescriptions to Walgreens. Do I need 30 minutes? Most of the time no, but if I was a parent with a sick kid in the middle of the night, or if I needed something urgently, it is nice to have an option that would get to my door when I need it, on my terms.
In regards to the question around if these types of offerings have become table stakes, I think it’s still a moving target. Yes, you need to offer delivery options and BOPIS options, but the time-based thresholds are so dependent upon the right staffing model and business processes that I think we’ll see some push and pull around what the “standard” windows end up being for pickup and delivery. Cutting into bottom-line income by dramatically increasing your labor model won’t last forever if the resulting top-line spend isn’t there.
Except when you go to pay you’ll be behind someone the cashier wants to signup for their loyalty card. You can’t brag if not all systems are unified around speed. And to do that one has to ask, “at what cost?”
Thirty-minute pick-up/delivery is certainly essential in responding to particular ailments. Beyond that, it is just spoiling the customer.
How long will it be before we have a RetailWire discussion on the expense of 30-minute pick-up delivery as we often do on free delivery and free returns?
Well, that’s at least as long as many people have to wait on their drive-thru lines. I actually got fed up enough that I switched to CVS. Walgreens service is SO bad it has nowhere to go but up. Who is kidding who, here?
What a curious world: based on stories the past few days, one might guess the “30 minute window” Walgreens is talking about refers to instore shopping – i.e. the amount of time one has to wait for a shelf to be unlocked; well, no, but what they do seem to be talking about – driving to the store to pick something up – doesn’t seem much different. And getting back to fundamentals, I’m not sure how much sense any of this makes: Walgreens is a high volume, low cost seller; average tickets , I’m guessing don’t run more than a few dollars. It’s hard to see how lavishing all this attention on individual orders makes any financial sense,
I think fast pickup is definitely a competitive advantage without completely killing the cost structure, I am a huge fan as a customer. Cheaper to have associate pick up something on shelf and place it on standby than doing trying to do fast delivery which is high cost. Let the customers come into the store to browse after pickup. All this is contingent on accurate supply chain data in store so the associate can actually provide the item of course.
Jumping on the bandwagon of wanting this for prescriptions at a minimum. Just because we are past COVID being the main driver doesn’t mean that people don’t get sick, and who doesn’t want to feel better or help their loved ones feel better as fast a s possible.
Speed is a competitive differentiator. There are two places I do business. One gets me out within minutes. The other takes three times longer to go through their “check out” process. Guess where I’d rather go? (And so would most customers!) I’ve even commented to the “second” retailer, and the comment from the manager is, “Yes, we hear that complaint often.” So, why not do something about it?
Walgreens – and any other retailer – is no different. If I have to wait in line or sit for an hour while my prescription gets filled, I will cringe whenever I have to go there. Walgreens is smart to focus on convenience, and in this case, it’s speed.
And in today’s retail world, speed, efficiency, and convenience are table stakes – not just in retail pharmacy.
The Walgreens brand has equity on its on; 30min delivery should not change that for loyal customers (who are used to shopping Walgreens a certain way).
Still, this article does not mention last-mile partnerships that are needed to make 30min delivery work. Ensuring these are durable partners with equity themselves is equally important.
Instant gratification is becoming tablestakes for customers. If last-mile partners are not fully capable then this value proposition could backfire with customer dissatisfaction aimed at Walgreens (not the last-mile partner).