Las Vegas — Why the drug retailer has become the darling of triple-net investors and the consumer.
Gregory WassonLas Vegas — Walgreen Co. CEO and president Gregory Wasson gave Tuesday’s ICSC RECon attendees an insider’s perspective into one of the fastest-growing global retailers. The drugstore chain has been on fire since early 2010 when it made a few key acquisitions that threw the company’s growth initiatives into overdrive.
During that buying spree, Walgreen Co. purchased New York-based Duane Reade for $1 billion; Drugstore.com for nearly $410 million; and a 45 percent share in the UK-based drugstore chain Alliance Boots for $6.7 billion. It also managed to close a 10-year deal last month with U.S. drug wholesale distributor AmerisourceBergen that will allow the company to buy generic, brand name and specialty drugs. AmerisourceBergen said the deal was worth $28 billion in revenue in fiscal 2014 alone.
As the dust finally settles on all these transactions, Wasson was quick to note Walgreen Co. now maintains more than 8,000 Walgreens locations in the U.S. and Puerto Rico. It serves more than 45 million weekly customers and fills one in every five American prescriptions.
With all that said, it’s no surprise that Walgreen Co. was recently ranked as the No. 9 top global retailer by the 2013 Global Powers of Retailing report. To some, this flurry of activity may seem happenstance. Others may question whether the retailer is setting itself up for a bubble burst. But with the Baby Boomer population just reaching senior citizen status, America’s largest chain drug retailer proves why it’s become the darling of both triple-net investors and everyday consumers alike.
“Don’t think of us as your grandfather’s drugstore,” Wasson asserted. “[When the downturn hit], we needed to innovate in order to stay relevant. We slowed the rate of our new store openings, which freed up capital to focus on innovation in order to reinvent our footprint.”
This reinvention included trips to Japan, China, Thailand and the United Kingdom to view firsthand what worked and what didn’t. The result was a new concept that offered much more than cheap drugs in harsh lighting.
Walgreens’ 400 new stores and 10 flagship locations, which include outposts in Los Angeles, San Francisco and Las Vegas, became destinations of sorts. Suddenly, Walgreens was not just a drugstore but a sushi restaurant, juice counter, artisan store, coffee house, wine shop, and hair and nail salon all rolled into one.
“This is the future of Walgreens,” Wasson explained. “We stepped completely out of the traditional drugstore format we know today to make something completely unique. The retail channels are blurring, and we intend to accelerate that.”
Wasson cited three growth drivers that inspired the reinvention. The chain wanted to create a live-well experience, transforming customer service in the process. It also wanted to alter the role community pharmacies played in America’s retail landscape. Finally, Walgreen Co. wanted to establish an unprecedented global platform, which it’s achieving through its expansion plans and UK partnership.
Though Walgreen Co. is clearly interested in driving more business into its brick and mortar locations, the company did not overlook the ever-increasing importance of a strong online presence.
“We want to provide a seamless omni-channel source,” Wasson said. “We want to deliver our products where, when and how the customers want them.”
The store now has a smartphone and tablet app to complement its standard website. All three platforms allow consumers to refill their prescriptions, purchase products and schedule immunizations, vaccinations and health tests. Items purchased on Walgreens.com can be returned either in-store or by mail to minimize customer headaches.
Speaking of headaches, Walgreen Co. has also partnered with Take Care Health Services to offer in-store clinics. The Take Care Clinics can treat a variety of non-emergency illnesses, aches and pains. They can also manage ongoing health conditions such as diabetes, asthma and osteoporosis, among others. These appointments can be made online or in person. The clinics accept most major insurance providers.
“We are co-locating nurse practitioners and moving our pharmacists out from behind the counter to expand our scope of services even further,” Wasson said. “We’ve administered nearly 9 million immunizations and vaccinations. This shows that our customers trust our pharmacists and health partners.”
With all this under its belt, it’s hard to believe there’s anything left for Walgreen Co. to conquer. Though the chain clearly has its hands full, Wasson believes this is just the beginning.
“There are tremendous opportunities here and around the world to grow,” he said. “We are only standing at the beginning of the runway on the next stage of our journey.”
— Nellie Day