The Walgreens path to omnichannel success
If you haven’t been paying attention to Walgreens of late, you might be surprised to see that this 112-year-old (and No. #32 on the Fortune 500 list) company has in fact transformed itself to be a model 21st-century retailer and leader of multichannel convergence and “omnichannel." At Shop.org's First Look at Retail's BIG Show 2013, Walgreens Vice President of e-commerce Miguel Almeida explained why it's strategically important to the company’s future, shared a glimpse inside the company’s omnichannel strategy, and gave his take on what it takes to make omnichannel retail a reality.
For Walgreens, omnichannel is imperative. “Omnichannel is incredibly important strategically to the company,” Almeida said, noting that Walgreens has weathered countless economic cycles in its history. Surviving through tumultuous times is no doubt tied to a long history of innovation, including introducing the self-service store in 1950 and offering child-resistant containers in 1968, linking pharmacies via satellite in 1981 and offering refills by scan in 2010. Firmly rooted in its core values – helping people live healthier and happier lives, and being a good part of the community – the company now engages with 6.6 million visitors weekly across its web properties, which includes Walgreens.com, Drugstore.com, and Beauty.com among several others. Almeida noted that every week, Walgreens' mobile sites support 3.2 million visits, while 42 million users engage with the company on social media. The payoff: customers who shop in both the stores and online spend 3.5 times the average of a store-only customer. For most companies with an omnichannel presence, that’s a good stat. But digging deeper in to the data tells a greater story. Walgreens customers who shop across all three channels - store, mobile and web - actually spend an average of six times as much as store-only customers.
“The power of 8,000 stores – and the convenience of digital.” In pursuing omnichannel success, Almeida quipped that, “You’re only as strong as your weakest link." As a result, Walgreens has been investing heavily to create one-of-a-kind online and offline experiences. For Walgreens' in-store shoppers, think new or remodeled stores in prime locations. Stores in Wicker Park in Chicago, on the corner of Sunset and Vine in LA, and on Wall Street in New York are considered “flagship” sites that offer a strong product selection and a revamped customer experience. Don't be surprised to find an eclectic mix of sushi or a 700-bottle wine selection in Chicago, for instance. Online, the company offers best-in-class websites that they continue to make better every day via an extensive product assortment, personalized offers, fast shipping options, and a great customer experience. SoLoMo initiatives – from in-store mapping and a significant social presence to prescription refill by scan and mobile-based “QuickPrints” photo service – fill customer needs further.
“Become comfortable in uncomfortable situations” and "Be where your customers are." The aforementioned investments are well and good – but creating a truly omnichannel customer experience offers both challenges and rewards. Walgreens has worked diligently to make the integration across channels seamless for shoppers, and to create new or enhanced fulfillment options to meet customer needs, such as site-to-store shipping, web pickup, same-day home delivery. Almeida outlined that the three main challenges Walgreens encountered on its omnichannel path include pricing models, technology and operations, and channel conflict. Almeida counseled retailers from his own experience with three tips for those beginning their own path to omnichannel retailing:
- Be user-centric. “Obvious, yes, but start with the user, build the vision, then figure it out,” he said.
- Test and learn. “Everything is so complex ... break it down and put it in front of customers," and then retailers can use feedback and lessons learned to determine next steps.
- Innovate across the chain.
- “You can’t just think about this from the customer’s perspective. There’s [also] a lot of innovation that can be applied to the supply chain."
- Omnichannel success requires retailers to be bold, courageous, and make very uncomfortable decisions, Almeida said. “It's not about forcing customers to go to something they’re not comfortable with – but [it is] certainly about being where the customers are.” That's just one of the essential truths in today's digital age.