A prescription for success – omnichannel transformation at Walgreens Boots Alliance
The goal is to support the patient journey across the continuum of care with an omnichannel solution.
This is the mission statement formulated by Rosalind Brewer, CEO of Walgreens Boots Alliance. In reality, the company is an example of mixed fortunes on both sides of the Atlantic even as Boots sales in the UK become a hot topic.
Let’s start with the United States. For any non-US customer, a visit to a US pharmacy is not like a visit to a pharmacist in the UK, for example. Shelves stacked with all forms of products, from drugs to makeovers, from health products to family packs of junk food snacks. This has always been the case, although Walgreens’ vision has evolved. Brewer says:
We are moving rapidly to realize our vision of consumer-driven, technology-enabled healthcare solutions that extend far beyond the walls of the pharmacy. As we begin to deliver a care delivery experience that improves health outcomes and reduces costs for patients, providers and payers, we are well positioned to accelerate the creation of sustainable value.
Digital transformation plays its part here, she says:
We are transforming and aligning the core business and building a pharmacy of the future that will enable and support our healthcare strategy. We saw continued momentum online in the second quarter, with digital sales up 38% in the US. or 116% on a cumulative basis of 2 years. Same-day pickup orders accelerated sequentially to 3.9 million orders…We have 3 automated micro-distribution centers open and on track to have 22 by the end of FY24 , which will result in significant efficiencies and cost savings over time. We expect these centers to eventually cover 40% to 50% of prescriptions for the pharmacy served, removing routine tasks and excess inventory from local sites.
There’s also a lot of focus on digital marketing, she adds:
We also enrolled more than 96 million myWalgreens members, up nearly 11 million since the fourth quarter. We are now focused on engaging members through personalized omnichannel messages and offers. Additionally, our alternative earnings streams are performing well, including our media advertising business, which launched a year ago and is exceeding expectations. We continue to view digital media as an important opportunity for us.
Personalization is key, says President John Standley:
I think we’ve done a great job here. We have a lot of advantages with our program here and sort of where we go between this program and the Walgreens advertising group and the different things that we’re working on there. So I think from an omnichannel experience, some of the capabilities that we’ve developed and where we can go here over the next two years, I think there’s a lot of potential and exciting benefits for us.
above the pond
Meanwhile, in the UK, Boots’ fortunes grew. Founded in 1849 by John Boot in Nottingham, the brand has 2,263 stores in the UK. There have been a number of outlet closures over the past few years to balance this real estate, as more attention has been paid to creating that elusive omnichannel retail balance.
In fact, Boots has made promising progress here, according to Alliance chief financial officer James Kehoe. Sales via boots.com are up 60% from pre-COVID levels, with over 15% of total UK retail sales coming from digital channels, compared to around 9% pre-COVID. This digital expansion is crucial, as Kehoe notes:
Pedestrian traffic hasn’t fully recovered in the UK, I think it’s like 15% below what it was 2 years ago, just in terms of foot traffic…. Look at the quarter they just had, and foot traffic actually went up 52%, but it’s still about 15% below where it was 2 years ago, right ? So he hasn’t come back completely
Boots.com deserves more credit than it is given, he adds:
That’s 60% growth on a 2-year stack basis. I don’t think there are many retailers in the UK. who have a boots.com business that represents 15% of sales. So this is a company that’s used COVID as a time to really invent itself and come out much, much stronger than it went into COVID. So this is a company with massive momentum and a small position for the future, which has a large, fast-growing dot-com business.
This growing digital base will be a useful asset if the sale of Boots continues as seems inevitable. With increasing competition from online pharmacies as well as Amazon, having these online capabilities will be essential for future growth. That said, I personally think you can’t recreate the online experience of wandering the aisles of an American pharmacy.