Walgreens new flagship store sends clear message that the venerable chain is on the move
NEW YORK In many ways, Walgreens did a lot more than just open a new flagship store here this week, in the very center of the busiest neighborhood in the center of the busiest city in the entire world. It is a highly visible, impossible-to-ignore message to the 8 million residents of New York City, as well as the 40-plus million tourists a year that come from all over the world to take a bite of the Big Apple, Wall Street, Madison Avenue: Walgreens is on the move.
And make no mistake; it’s one hell of a drug store, too, by any standard. The store—all 16,000 square feet of it, spread out across the first three floors of the historic One Times Square Building—is a marvel both of store design and marketing strategy, anchoring a massive digital billboard that casts the Walgreens brand like a beacon into the sky, 341 feet above street-level, and visible for blocks from several different directions. At 17,000 square feet, the enormous 12 million LED-screen-powered signboard ranks as the biggest in America.
“With more than 1.6 million passers-by and countless media impressions daily, this sign represents a tremendous opportunity to catapult the Walgreens brand among the most recognizable icons in the world,” Walgreens president and chief operating officer Greg Wasson said.
But while the outside of the store is indeed impressive, it’s the store itself, and the shopping experience that awaits the customer within, that is truly noteworthy. Perhaps in a nod to the giant sign at the top of the building, which can be seen from three directions, the store features three separate entrances, with doors opening onto one of three busy thoroughfares: Seventh Avenue to the west, Broadway to the east and 42nd Street to the south.
And inside, the activity is just as busy—literally. On its first day in operation, Saturday, Nov. 15, the store ranked as the tenth highest-volume location in the chain’s entire 6,500-plus-store network, Walgreens executives told Drug Store News.
“We are not just here in Times Square to have a big sign,” said recently named chief marketing officer Kim Feil, the savvy, big-CPG marketing veteran who joined the company in September to help the venerable 107-year-old retailer recapture its mojo. “We are also here to serve the customers in this great area.”
In that sense, the Walgreens brand, Feil told Drug Store News, “stands for something different than the other brands that advertise in Times Square.”
While by no means a prototype, the new store clearly provides a glimpse or two at what the window into what the future could hold for Walgreens as it continues to reexamine the way in which it goes to market and reaches its customers. Walgreens has made major headlines in the business press in recent weeks, as the company’s top management has vowed to shake things up and pump new energy into its stores.
“Going forward, we intend to be quicker and more aggressive with our strategy,” asserted interim chairman and chief executive officer Alan McNally at an Oct. 30 analyst meeting.
One of the company’s primary areas of focus, executives have promised in recent weeks, would be rejuvenating store demand with new merchandising techniques aimed at boosting per-customer transactions and making the shopping experience easier—an effort that would lead eventually to a completely redesigned store prototype.
The Times Square store incorporates several distinct features that are a unique to that store, as well as few other new elements Walgreens will look to incorporate into to all of its stores.
While the Times Square store’s customer service center is unique to that location—a nod both to the need to help international visitors who are new to Walgreens as well as out-of-towners who have been shopping Walgreens for ages, navigate the three-level space—the move is clearly borne out of the company’s broader strategy to enhance service chainwide. According to Feil, the chain has invested in store-level technology to free up associates throughout the store from routine tasks and redirect their time and effort into dealing with customers.
“There is an assistant manager in each level of the store,” Craig Sinclair, divisional vice president of corporate advertising told Drug Store News. Each floor provides a signature destination for the key drivers of the store: food, consumables, souvenirs and assorted impulse merchandise on the ground floor; the wheel house, health and beauty, is on level two; and photo and general merchandise, on the third floor. While each space is distinct in its own right, certain key design elements follow the customer throughout the store, including liberal use of the chain’s recently-reinvented signature “W” logo, and multi-colored track lighting that serpentines along the ceiling on each level, alternating colors as customers pass below.
It is a key component of the “retail-tainment” strategy at play in the store, Sinclair explained. “We spent a lot of time looking at the in-store experience, and ‘how do you light up that space?’”
Signature Beauty DepartmentOne element of the store that will not be replicated in other Walgreens stores is the Signature L’Oreal Department, which the global cosmetics giant chooses to operate in just a handful of stores in major capital cities across the globes, including such high-fashion, multinational hubs as Barcelona and Lisbon. The Signature Department at Walgreens’ Times Square location, with its big, bright backlit, imported fixtures from Europe, creates a stage for beauty that is more like a department store than a drug store, and is more in line “with how women shop for beauty,” divisional vice president of consumer marketing Catherine Lindner explained during a walk-through of the store.
The Signature L’Oreal fixturing also incorporate electronic media, with screens on the shelf showing commercials and advising customers on how to use and select products. In-store media is being tested throughout the store.
The L’Oreal department features a special cross-functional display table with special mirrored panels that pull out to enable live product demonstrations in the store. In what promises to be a major driver of traffic, L’Oreal representatives will host special live events in the store. The first is planned for Dec. 10. Lindner noted L’Oreal—which also supports Walgreens’ in-store beauty adviser program throughout the chain, providing key education and training, as well as shaping the curriculum— also has invested in other merchandising features throughout the beauty department, including some special display signage on the shelf, which at the time of the opening, was being used to promote Olay and Neutrogena.
(For complete, in-depth coverage of the new L’Oreal department, log back onto drugstorenews.com later this afternoon for beauty editor Antoinette Alexander’s comprehensive look at Walgreens’ unique new beauty concept.)
Upstairs, a new look three-terminal photo kiosk configuration provides more privacy for users, and is still within view of the main photo counter where the technician is ready to answer questions. The store is over-indexing in such categories as food, which makes a great deal of sense given the store’s location, and in other categories that have been more of a surprise for Walgreens executives. Like vitamins—Walgreens officials still have not gotten their arms around why the new store is doing such volume in vitamins and supplements, but store associates and field executives told Drug Store News, “vitamins are literally flying off the shelf,” at the new store.
With twin coolers lined with beverages, and a selection of prepared foods like sandwiches—and, even more unique for Walgreens, a premium, pre-packed deli selection of meats and cheeses under the Citterio brand, which Walgreens is sourcing through a local distributor—the store makes a major statement in food. The store also features a 3-foot section of organic food products, which local Walgreens officials asserted is also doing extremely well.
Given the high number of tourists passing through the store, the new Times Square location also features such unique items as replacement luggage pieces and a simple baby stroller for under $25. These items, housed on the third floor along with travel-size HBAs, take the customer through every inch of the store and back again to the cash register, past an awful lot of very tempting merchandise, including a special 3-foot As Seen on TV that is fast becoming a feature in all Walgreens stores.
All of it plays well for Walgreens, as the company looks to an improved customer shopping experience to yield additional gross profit dollar growth. Indeed, as Walgreens’ new senior vice president and chief financial officer Wade Miquelon explained last month, “Just one more item per basket will add $1 in growth,” he told analysts. By that standard, the new Times Square certainly gives Walgreens a pretty good shot to get than one extra item in the basket.
By any standard Walgreens newest store here in Times Square—no. 11 in Manhattan since the chain temporarily closed up shop in the mid-80s—is one hell of a drug store. By Walgreens standards, the new store and so much about it, marks a 180-degree departure from the ultra-conservative, self-described “hedgehog” reputation it had carved out for itself in recent years. The new Times Square store is big and bright, and every bit as audacious as the backdrop that surrounds it, claiming an undeniable space in the public’s imagination that is every bit as valuable as the real estate it occupies.
This is where they drop “The Ball” on New Years Eve.
This is where that sailor kissed that nurse the day World War II ended.
And this is where Walgreens, on a cold November morning in 2008, began to redefine what its brand means to consumers, and how they come to regard the experience of shopping in a Walgreens store—not just Americans, but consumers from all over the world.
Study predicts natural products will continue to outperform in food, drug, mass
SCHAUMBURG, Ill. Spins, an information and service provider for the natural products industry, has found that natural products continue to outperform in conventional food, drug and mass outlets, and the authenticity of such products will be key to future growth.
“As evidenced by the performance in the natural channel, authenticity of natural brands and retailers continue to be one of the key factors in product performance,” said Spins chief executive officer Tony Olson.
“Authenticity extends beyond whether a product is free of artificial flavors and ingredients and moves into the realm of overall health and wellness, social and environmental sustainability, nutritional benefits and other leading factors. A brand or retailer’s ability to resonate with a consumer on this level is a strong indicator of success in conventional food, drug, mass channels.”
According to Spins research, the natural products industry posted sales of $13.4 billion on growth of more than 12 percent within conventional food, drug and mass retailers over the 52 weeks ended Oct. 4. Body care, general merchandise, and frozen and refrigerated foods continued to post double-digit growth rates. Organic products continue to outperform the overall natural products industry with growth of more than 13 percent compared with the previous year.
While the industry momentum has slowed in conventional retailers over recent weeks, the organic growth continues to be solid at 7 percent in the recent 12 weeks, Spins noted. While the top sellers will continue to attract the majority of sales, there are a number of fast growing categories that, according to Spins, will provide retailers and manufacturers with additional organic expansion opportunities, especially in body care.
Sephora gets support from RedPrairie for warehouse management
MILWAUKEE Beauty retailer Sephora has implemented RedPrairie’s warehouse management solution in its new Salt Lake City distribution center.
The warehouse management system will support the company’s multichannel business, directing shipments to retail outlets as well as customers purchasing on Sephora.com by mid-2009.
RedPrairie also supports the company’s Maryland distribution center, servicing 115 stores. The two distribution centers together will service 100 percent of Sephora’s North American output.
Sephora operates more than 515 stores in 14 countries worldwide, of which 227 are located in the United States.