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Revolutionizing the mass market beauty world

BY DSN STAFF

With an army of 26,000-plus beauty advisers, the expansion of the LOOK Boutique concept, the expertise from its online beauty engine Beauty.com and the Walgreens-Alliance Boots transaction, Walgreens is giving the U.S. mass market beauty world a makeover like no other. 


Going back even as little as a few years ago, Walgreens wasn’t exactly making waves in the beauty industry, as its beauty department was quite typical of that found within a traditional U.S. drug store. How times have changed.


Walgreens’ journey to transform the beauty experience within its stores to create a “best in class” beauty department focused on improved design, customer engagement and experience, really shifted into high gear following the 2010 acquisition of Duane Reade. The latter, under the guidance of visionary Joe Magnacca, then SVP and chief merchandising officer of Duane Reade, was turning the drug store beauty experience in Manhattan on its head by bringing a bit of European flair to the market with its upscale LOOK Boutique.


“The past three years have been the most exciting professional journey for me and our beauty team,” said Shannon Curtin, Walgreens divisional VP and GMM for beauty, personal care and seasonal. “As our beauty team embarked on a reinvention journey, we understood the importance of understanding our past successes and spent countless hours studying the present competitive landscape.” 


In recent years, the innovation within beauty at Walgreens has shown no signs of slowing. In fact, it is gaining steam as Walgreens now works to expand the LOOK Boutique experience at select locations across the nation. While the number of LOOK Boutiques within both Duane Reade stores in New York City and Walgreens stores nationwide continues to grow, a shining example of the retailer’s true beauty prowess can be found at the Duane Reade flagship store at 40 Wall St. in downtown Manhattan.


Within this flagship location, beauty mavens will find an expanded LOOK Boutique with exclusive, higher-end beauty products; an automatic fragrance sampler so shoppers can try before they buy; a nail salon offering manicures, gels and the latest nail color shades from OPI and Essie; a hair salon by Phyto Universe offering such services as hair/scalp analysis, blowouts and styling; a Ramy-branded brow bar for in-store brow-shaping services; and a virtual makeover tool for “trying on” makeup.


Various components of the LOOK Boutique, such as the Ramy-branded brow bar and nail salon, are being rolled out to additional store locations where it makes the most sense. “You’ll see the brow bar in most LOOK Boutiques that we open now, for both Walgreens and Duane Reade stores,” said Paul Tiberio, Walgreens divisional VP procurement and inventory strategy. “The nail salon is a perfect example of expanding beauty services. It was born in the Wall Street store, and based on its success, other locations have followed including the State and Randolph store in Chicago. You can also find one in Puerto Rico at a flagship store that recently opened.” 


“Our ‘masstige’ product lineup is starting to rival department stores when it comes to prestige beauty, as well as skin care. We can perform skin analysis on consumers to help them find the right skin products for their complexion, an area that has become popular based on the repeat purchases we are seeing,” Tiberio added.


Echoing that sentiment, Magnacca said that, based on the successes the retailer is seeing on the test concepts within its flagship stores, the learnings from its LOOK Boutiques now are being applied back into Walgreens’ Well Experience stores. One new concept Walgreens is testing in beauty that Magnacca gets excited about creates a multi-channel play inside the store, tying into some of the e-commerce assets the company acquired in 2011 in the Drugstore.com deal, he explained.


“State and Randolph is a good example of that, where you can actually kiosk the Beauty.com business. We think that has tremendous horsepower in terms of differentiating ourselves, and leading the traditional drug store space,” said Magnacca. “A lot of the elements of that have already made it into the Well Experience stores,” said Magnacca, who now serves as president of daily living products and solutions at Walgreens. “For example, taking nail from a traditional in-line category and putting it on a unique fixture in the front of the store is now a standard in our Well Experience stores moving forward.”


“If they’re out filling prescriptions or shopping for everyday essentials, customers at these locations have the convenience of shopping for themselves without making additional trips to department stores or specialty stores for prestige products,” said Marcia Gaynor, Walgreens GMM for LOOK Boutique. “When you add our trusted beauty advisers to the mix who field questions and suggest products, that customer walks away with an exceptional and memorable experience.”


If its acquisition of Drugstore.com and Beauty.com helped it step up its game in beauty, Walgreens’ latest acquisition has the capability to be a complete game-changer for the company. Serving as a powerful accelerant to its existing beauty strategy is the recent merger with Alliance Boots. “We’re very serious about beauty and so are they. So, I think we link up in a very big way,” said Magnacca, who stressed Walgreens’ commitment to its 26,000-plus beauty advisers and also noted that Walgreens will be launching its Beauty Awards program in the fall. 


“We are heavily focused on prestige skin care at this point — we’re trying to advance the skin care segment. We also want to move more into the color cosmetics side of our business, and we just believe [Alliance Boots] will be an accelerant for us in terms of their learnings through their existing relationships and through their successes.”


There’s no doubt that Alliance Boots’ successes within beauty will benefit Walgreens. For example, while Walgreens currently has no significant private-brand presence in color cosmetics, Alliance Boots has seen great success with its No7 brand — a top-selling brand in the United Kingdom for face, lip and eye makeup.


To date, the changes within beauty at Walgreens have been significant, but there’s no denying that the best is yet to come as this transformer further taps into its deepened well of resources and opportunities, and forever changes the way the U.S. drug store industry approaches beauty.

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Well Experience adds new facet to OTC biz

BY Michael Johnsen

For the more than 100 years that Walgreens has been in operation, the company has been focused on helping its customers, communities and patients feel well. And now, it is poised to transform the traditional drug store into a health and daily living destination. 


“The traditional drug store model is very much about treatment and about ‘how I feel right now,’” from a customer perspective, noted Robert Tompkins, Walgreens divisional VP and GMM health and wellness, front-end services and general merchandise. “What we’re trying to build is a health and daily living destination that also services the need of ‘how I take care of myself,’ … from a prevention and enhancement perspective. We’re offering a unique solution set to help people get, stay and live well.” 


One new example of this evolving focus can be found in the Health Guide position at select Well Experience locations. “When you go into our new format stores, the Health Guides are stationed in front of the pharmacy but are proactively engaging customers throughout the healthcare space,” Tompkins said. The Walgreens Health Guide represents a way to help bridge patients between the various health and wellness services and solutions in the pharmacy, the Take Care Clinics and front-end products. The investment behind the Health Guide — getting the right person into that position and arming him or her with the right resources — is significant. “We’re getting beyond just product, and customer feedback has been very positive,” Tompkins said. “OTCs are some of the most difficult-to-shop categories in the front end and in all of retail — having somebody who can help navigate folks to the right products and solutions is very helpful. We’re seeing great results from that element of the Health Guide role.”


“The research that we’ve done is very clear. Patients and customers are looking for more than just a store; they’re looking for a trusted relationship,” Tompkins said. 


Another way Walgreens is helping to form and strengthen meaningful relationships with its customers and patients is through another innovative feature at its new concept stores whereby the pharmacist is more accessible. “The way we’ve brought the pharmacist out from behind the counter in the Well Experience stores is a unique way to bring a highly trained medical professional from behind the counter to interact more directly with patients and customers.”


Factor in the nurse practitioners in those locations that feature a Take Care Clinic, and you have an entire team of healthcare professionals who are all readily accessible. “What is happening is that you have a team of healthcare professionals that know and trust each other … and that’s incredibly powerful. When our customers and patients see that there is a connected health team, the right services and the right products including prescriptions, OTCs, and immunizations, that’s a powerful combination!” Tompkins said. 


And that commitment to being a healthcare resource extends throughout the store, Tompkins said. “Sometimes it can be something as simple as our ‘Answers at Walgreens,’ store signs and brochures on given disease states. And if [the customer] wants to go deeper, at her leisure she can go to Walgreens.com and access a more detailed level of information, including Pharmacist Chat. And of course, she has our pharmacist in her Walgreens store. We want to deliver the information, services and products our customers have come to trust us for when, where and how they want it.” 


This creates unique opportunities for vendors to work with Walgreens on programs that go beyond the shelf to create more of an integrated experience for health and wellness. One example is a video endcap display in the company’s State and Randolph flagship location in Chicago. The display encourages walkers-by to quit smoking. The touchscreen monitors, which have been rolled out to Walgreens flagship stores through a partnership with GlaxoSmithKline, help set the store apart from traditional retail pharmacy experiences. The interactive display directs in-store patients to the retail pharmacy’s trademarked “Answers at Walgreens” feature on Facebook, boosting its potential touchpoints with customers through its expanding social media platform. That application was launched a year ago together with Sharecare, an expert question-and-answer online platform addressing health topics.


Tompkins also mentioned the healthier choices available to customers throughout the Well Experience store, such as fresh fruit in the consumables area, and all-natural beauty products in cosmetics. “We want to make sure we can support and encourage healthy daily choices.”


Healthcare reform, and where the market is going, is a critical driver to the Well Experience. “Patients, customers, employers and payers are more and more interested in preventive health,” Tompkins said. “As we see wellness really starting to evolve into something very tangible, we’re in a position where we will play an important role in the communities we serve.” Without a doubt, with its Well Experience stores, Walgreens has created a place for patients and customers to find the healthcare information, services and products they need to get, stay and live well.

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Changing the game of drug store merchandising

BY Michael Johnsen

"You’ve got to skate to where the puck is going, not to where it’s been.” 


That’s how Bryan Pugh, who is Walgreens’ VP and chief merchandising officer, described how the merchandising department functions at Walgreens. It’s a fast-moving game. It’s got to be fluid. And if you lose focus for even one second, you stand the chance of being railroaded into the boards and becoming less of a force in the game. 


Walgreens has been actively identifying possible category opportunities by store segment and testing those categories across a manageable sample set of stores. If appropriate, the company identifies how best to roll those new opportunities across its almost 8,000-strong store base. 


Beth Stiller, Walgreens division VP for category strategy, innovation and space management, does a lot of the heavy lifting in optimizing the merchandising to the stores. “Good retailers always have someone reporting into the merchant that is a neutral entity,” Pugh said. “When we look at remodels or we look at new stores, her division [reviews] the data and then sits down with the [merchant] teams,” he said. From there, they match the best mix according to store location, projected volume, selling space and customer demographics. 


Pugh added, “I am very thankful that we have a very solid merchandising team with solid leadership in the GMM roles: Shannon Curtin on beauty, personal needs and seasonal; Robert Tompkins on health and wellness; and Steve Broughton in food and convenience goods. Our category managers and category specialists are making tremendous progress over the last year, and we are looking forward to continuing to change the traditional drug store into a health and daily living destination.”


With two-thirds of Walgreens’ locations being suburban stores at great corners with a drive-through pharmacy, Pugh and his team help other locations stand out, Pugh said. “There is a grocer on the same corner. There is a dollar store down the street. The competitive set is very similar,” he said. 


The remaining third of its store base is very different, Pugh said. “It’s Times Square. It’s the beach store. It’s the Arkansas marina store [that’s] down the street in a little town close to a lake, and during the summer months, you do incredible float business, offer coolers, cookout gear.” These stores trade very differently, Pugh said. 


The drug store company currently has four flagship locations, including a Duane Reade at 40 Wall St. in New York, State and Randolph in Chicago, Harmon Street on the strip in Las Vegas and a location in Puerto Rico. Walgreens plans to announce approximately a dozen additional flagship stores over the next 18 months. “When it comes to these stores, Mike Defazio — who is our primary store designer for flagship locations — is a great talent to have here at Walgreens,” Pugh said. “He and his team have made great progress, and we’re excited to hear what our customers think.”


“If you truly want to unlock the opportunity — content relevancy — it comes down to location,” Pugh said. That means knowing the local environment on a store-by-store basis. It’s the right offers in the right doors, Pugh said. It’s knowing the neighborhood — residential, office or tourist area. And it’s about knowing what roles pharmacy and wellness can play in those locations. “It’s just not stamping out the same thing,” Pugh said. “It’s taking the content of the entire box, not just my section of the front-end, and saying, ‘Where do we play and what is the best way to leverage that box to [realize] the maximum return?’”


Fresh is a good example of how to best match the right offers to the right door. “[In each market,] we’ve got a sandwich manufacturer, we’ve got a salad manufacturer, and those goods come from a closer proximity [and] go into a [third-party] centralized distribution center,” Pugh said. Stores carrying that merchandise get shipments regularly during the week. “That’s what that model requires. … It brings a lot of complexity,” he said. “How do you get it there? What do you sell? How much space do you give it? That’s the organizational structure changes that we’ve been making.”


What’s written between the lines, of course, is that if one category is folded in, that usually means another category is losing linear feet of selling space. That’s part and parcel to knowing where the puck is at all times. 


The recently launched loyalty program, Balance Rewards, will help Walgreens further hone its mix with right-sized offerings in the appropriate settings. The loyalty program will give Walgreens a deeper look into who’s shopping their stores and why, help identify who is cross-shopping pharmacy and front end and help delineate possible nontraditional category synergies. 


“Loyalty helps you get to a better place to make real estate decisions because you actually know who’s traveling from where,” Pugh said. “We have stores that have 70,000 cars a day that pass them, because they happen to be on a commuter route either going home or going to work. Those types of stores will have a much bigger trade area than a store tucked away in a community that is [only] 15,000 cars per day, but they’ve got 8,000 people within a small trade area,” he said. “[Those stores] don’t survive on car traffic, but then you have a much tighter net; you know 90% of your sales will be coming from a much closer proximity.”


The consumer insights culled from loyalty also is expected to help improve Walgreens’ merchandising of its store brands. Private brands play a big role in the merchandising mix, Pugh acknowledged, and for good reason — it helps the retailer better compete for what has become a more post-recession, value-conscious consumer. Keeping abreast of how a particular category plays in-store is a big part of Walgreens’ private-brand strategy. “We’ve had a huge emphasis on private brand, whether it be Nice! [or] Delish. You can see a lot of the new Studio 35 beauty that’s just coming off the line right now,” Pugh said. “We’re also seeing more customers reaching for our PetShoppe products, which are giving our private brand a boost.” 


Moe Alkemade, VP retail brands and global sourcing, manages Walgreens’ private brand strategy, and he works with Pugh and Walgreens’ GMMs to develop forward-looking action plans for how private brand plays in each category. “How do we do more sales, grow topline, but at the same time grow profit dollars faster than sales dollars?” he asked. “You’ve got to do what’s right for the business and get the best return for the shareholders and offer the best value for the customers. Otherwise, that kind of renders you irrelevant to consumers.”


For noncore businesses like paper, which represents a convenience play, the strategy is to generate volume with the larger vendors in that space and position private brand as the value proposition rather than competing on a broader assortment against mass and supermarkets, which can move paper more efficiently — a learning from Customer Centric Retailing. In other categories? “Brands are more important, so you’ve got to be careful not to move too much. But there are some categories where you can really change the game,” Pugh said. 


That’s what all of Walgreens’ merchandising efforts really boil down to — changing the game. 


So with all of Walgreens’ ever-evolving market strategies — from CCR to a greater presence in fresh, the Well Experience stores, the flagship locations, Balance Rewards loyalty and even private brand — it all comes back to keeping your eye on the puck. “If you keep doing the same thing and the world is changing, you’re doing [something wrong],” Pugh said.


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