Is Walgreens Trying to Do Too Much?

Discussion
Oct 08, 2013

As I listened to Greg Wasson, president and CEO of Walgreens and a 30-year veteran of the company, talk about Walgreens’ countless initiatives last week at Shop.org, I was impressed by all they are taking on. But I found myself thinking back to a book written by BrainTrust panelist Ryan Mathews, called The Myth of Excellence. The primary theme of the book is that companies can’t be great when they try to be great at everything — they must pick one thing to be fantastic at, a couple to excel at, and just make sure they are competent at everything else.

When I think of a few retailers the industry generally considers role models, they do that. Here’s my own select list of retailers who do one or two things super well:

  • Walmart – low prices
  • Costco – easy stock-up shopping
  • Nordstrom – no hassle customer service
  • Publix – great grocery shopping experience
  • Staples – easy office supply shopping
  • Trader Joe’s – funky, fun grocery shopping
  • Whole Foods – great natural/organic food
  • Target – trendy, cool stuff

We could argue about what each of these retailers stands for all day long, but they each seem to focus on doing one or maybe two things really well. In contrast, Walgreens, which many consider a great retailer, has so many initiatives and goals, it’s impossible to count. Here are some I noted from Mr. Wasson’s presentation:

  • Give customers what they want, when and where they want it.
  • Be the first choice in health and daily living.
  • Provide the best "well experience" via a new flagship format, with departments such as nail bars.
  • Partner with Alliance Boots (UK) to provide a global platform and sell Boots items in Walgreens.
  • Take advantage of digital innovation such as live chats with pharmacists via mobile apps.
  • Reinvent the drug store format.
  • Be the #1 provider of immunizations and vaccines.
  • Move pharmacists out from behind the counter.
  • Co-locate nurse practitioners in some stores.
  • Manage 10 apps and five websites.
  • Provide web pickup (in 900 stores, so far).
  • Manage a Balance Rewards program, which attracted 85 million members in one year.
  • Provide prescription refill and transfer by scan, refill reminders, pill reminders, and in-store mapping, all via apps.
  • Open many stores 24/7.

 

Do you think Walgreens is trying to do too much? Will all of its current strategies build toward one overall image? Which initiatives should Walgreens focus its attention on?

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19 Comments on "Is Walgreens Trying to Do Too Much?"


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Dr. Stephen Needel
Guest
8 years 7 months ago

I may not be as skeptical as Al (which is a pretty rare occurrence). While I’m not sure all of these are great ideas (nail bar, selling Boots products), in a lot of cases they may not be too much for a store to handle. That would be my criterion for overload – are we trying to make a store do too much at once, thereby diluting the quality of the initiatives. A lot of these are corporate-based and don’t require much from any one store.

George Anderson
Guest
8 years 7 months ago

Walgreens announced yesterday that it is rolling out Balance Financial, a suite of integrated financial services, built around a new prepaid MasterCard it will offer. The chain is going to start with stores in the Detroit, Milwaukee and Nashville markets and go from there to a nationwide rollout with more services by the end of next year.

Dick Seesel
Guest
8 years 7 months ago

My consulting colleagues at McMillan Doolittle would describe Al’s list of retailers as good examples of their “EST” model. In short, find something to be “best” at (cheapest, easiest, newest, and so on) and make sure you are “top of mind” here, while executing well on other aspects of your strategy.

It’s debatable whether Walgreens, or any company, can execute so many strategic initiatives at a high level at the same time. And the lack of clarity is reflected in the stores, which continue to be overassorted and hard to navigate.

Walgreens has already grown due to innovations like its drive-through pharmacy and its location strategy, but the store is now a confusing hybrid of a “health headquarters” (complete with clinic) and a neighborhood convenience store (complete with candy and cigarettes). It’s time for a clearer message.

Steve Montgomery
Guest
8 years 7 months ago

The umbrella strategy for Walgreens is to reinvent the drug store format. The rest of the list are tactics or initiatives to support the strategy.

Are there too many? Possibly. As Stephen indicates, the criteria for judgment is can they execute them at store level.

Max Goldberg
Guest
8 years 7 months ago

Walgreens has a bunch of tactics. It lacks an overall objective and the strategies to achieve it. To be successful, a brand needs to be relentless in its pursuit of an objective. What is Walgreens trying to achieve? “Give customers what they want, when they want it” and “Be the first choice in health and daily living” are great goals, but they are not quantifiable. They don’t give employees a tangible objective or give consumers a message that will be remembered.

Walgreens’ current ad campaign centers on “The corner of happy & healthy.” If that’s the desired objective, how are they going to achieve it?

Al’s examples all demonstrate competency and consistency in supporting their brand positioning. Walgreens needs to do the same.

Ken Lonyai
Guest
8 years 7 months ago

Consumers ultimately decide what a brand means to them as much as a merchant may try to define it. Certainly, the brand can choose to do things that influence the brand definition and sometimes it aligns consumer perceptions, sometimes not.

The Walgreens list runs the gamut from easy: “Move pharmacists out from behind the counter,” to difficult: “Manage 10 apps and five websites.” Execution will be important, but consumer response will be the key. Apple, Google, and other big names have tried products and services that failed and were quietly swept under the rug, so Walgreens should be afforded the same opportunity to take on innovation.

Doug Pruden
Guest
Doug Pruden
8 years 7 months ago

I would be interested to know how Walgreens’ management thinks they are positioned with consumers today, and then to compare that to an objective measure of what their most profitable current customers actually are thinking and telling others about Walgreens. Rather than trying to be everything to everybody, with that information they could focus on leveraging the key positives, and fixing the critical negatives that most important to a profitable future – and still have budget to complement that mix with a few new test initiatives.

Ed Rosenbaum
Guest
8 years 7 months ago

The initiatives directly related to store operations have a good chance to fail or at least come up short. Shopping at Walgreens is not exactly coming into contact with experienced retail personnel.

Raymond D. Jones
Guest
Raymond D. Jones
8 years 7 months ago

It is clear that Walgreens has a lot of major initiatives. Perhaps more than they can effectively implement. In some cases, Walgreens has been playing catchup on things like their loyalty program. In others, they are trying to keep with changes in the marketplace and new technology.

Long term, Walgreens will need to more clearly define their role to the consumer. Are they a broad-line multi-channel retailer? Or a pharmacy that also sells convenience items? Or are they primarily a health and wellness center? Does the consumer care if they are a global presence?

As a business, these initiatives may all be attractive or even necessary, but it can lead to confusion among customers.

Gene Hoffman
Guest
Gene Hoffman
8 years 7 months ago

Yesterday I was in a Walgreens and re-affirmed that while Walgreens is still a health-related and daily living drug store, it is also a candy store, a food store, a fingernail store, a “card” promotional store to divert attention from its higher price structure, etc.

Walgreens is trying too hard to do too much piecemeal and thereby losing its former, clearer identity.

What Walgreens used do best was being a leading drug and health related store and it was known for being to top retailer in that vital niche. Today, Walgreens can’t become what it wants to be by over expanding into becoming an “also ran” multiplicity retailer. So … Walgreens, “Give us a one great thing that we can remember you by.”

Roger Saunders
Guest
8 years 7 months ago

While I agree with Al’s positioning that all organizations have to narrow their focus to help associates clearly focus on the most important strategies – 4, 5, or 6 core strategies – it strikes me that a number of the points raised represent action plans. Examples might be 24/7 stores, nurse practitioners in some stores, etc.

Greg Wasson has Walgreens positioned on the “Corner of Happy & Healthy” for shareholders, a growing number of consumers (based on Prosper Monthly Consumer Survey data), and settlement of issues with a key Pharmacy Benefits Manager Group.

Key Strategies of import (you choose how to phrase):

1. Integrate Walgreens Technologies across consumer, store, distribution, and health care needs that sets industry standard of excellence;
2. Integrate Alliance Boots and Walgreens, and provide services and stores on an international basis;
3. Establish Walgreens as the 1st or 2nd choice for health and daily living needs in each of our chosen markets
4. & 5 – Etc.

Paul Stanton
Guest
Paul Stanton
8 years 7 months ago

They need to get back to basics: the customer is number one. All other initiatives are okay if they are first thinking about the customer as the number one priority.

Mike Blackburn
Guest
8 years 7 months ago

Most of the bullets are the usual list of tactics, initiatives or whatever most CEOs spout every quarter. Nevertheless, Walgreens is in the process of a very aggressive strategic shift in its business model. Not resting on its laurels in a retail sector that is still producing strong sales and profit growth, Walgreen is focused on transforming its business model, focused specifically on controlling the supply chain.

Key to this point are the transactions with Alliance Boots and AmerisourceBergen. Boots gives the company international presence through both its retail and distribution channel. Assuming this merger is a success, the AmerisourceBergen JV will then give the company the ability to effectively self distribute in the US as well as its global markets. Quite a contrast to CVS Caremark and its retail/PBM model.

Anne Bieler
Guest
Anne Bieler
8 years 7 months ago

Walgreens has done a great job in creating a better drugstore for consumers across the country, with focus on pharmacy and health products. They do run the risk of becoming crowded and confusing with add-on nail bars and expanded beauty options. It requires a larger store concept to execute these additional services well, as Shoppers in Canada has done with their elegant Beauty services “store,” adjacent to the drugstore in some locations.

Li McClelland
Guest
Li McClelland
8 years 7 months ago

This is a great article providing much to think about. And yes, they are biting off way more than they or any comparable company can realistically chew.

As a long time shopper of Walgreens, I’m sorry to say I have not been impressed with many of the recent innovations, remodels and add-on services they tout or are planning to implement such as financial services. The bullet point that they “attracted 85 million new members to Balance Rewards in one year” especially galls. Do they honestly not understand that many of their regular customers are annoyed, and quite frankly think that saying Walgreens “blackmailed” customers into the Balance Rewards program (just so they could get decent industry prices) is a more accurate description than “attracted”?

It’s particularly interesting that in my same market Jewel has recently ended their loyalty card program and is vigorously advertising low prices every day for everybody.

Larry Negrich
Guest
8 years 7 months ago

Vision and reality – every presentation needs a bit of both. I admire the modern executive that is brave enough to present a practical reality of what can be accomplished. However, it seems incremental steps towards success are out and only the seismic changes are seen as “visionary” (think JCPenney.)

That said, with the trend of an aging population making up a larger percentage of total population in the US, Walgreens’ initiatives to provide more healthcare products looks advantageous. The operation of 10 apps and 5 websites looks to be one area where contraction and consolidation might be in order.

Peter J. Charness
Guest
8 years 7 months ago

While the list is long, seems to me they are executing on a consistent strategy of exploiting a convenience location, with a convenience-oriented assortment all related to or anchored by a health care flavor and brand. From tobacco in the front, through candy, on to fresh fruits and vegetables, meet the nurse practitioner in the back and get your meds on the way out, all while earning points to do it again. Awesome.

In all seriousness though, while they are doing some experimenting to reinvent the drugstore, I think they have a winner on their hands. If I was a C-Store I’d be a bit worried.

Gordon Arnold
Guest
8 years 7 months ago

The medical industry has has evolved from tumultuous to chaotic and seems headed for disaster. Walgreens and the surviving competition know this and are facing these market problems in earnest with a simple desire to be open for business in the future.

The only practical solution to the uncertainty facing the medical industry is to keep all options open and to include market offers that can and will minimize the cost factors incurred with the medical industry’s many and unpredictable changes. We no longer live in a society that has a neighborhood pharmacy and single practice doctor or dentist. Even our hospitals are shutting down or reopening without an emergency room.

Walgreens and the competition appear to be in a battle for survival in spite of pending legislation and a poorly performing economy. But that’s just what I think!

Shilpa Rao
Guest
8 years 7 months ago

Well I think these initiatives are in line with their vision and tagline of “At the Corner of Healthy & Happy.” Being more than a drug store, they are making it easier for the customer to shop at Walgreens.

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