Cornering Growth the Walgreens Way

Wal-Mart may beckon droves of consumers to the edge of town with tantalizingly low prices, but that's just fine with Walgreens. The same droves will often feel too harried and hassled to make a long drive, and that's where the Deerfield, Ill.-based drugstore giant hopes to step in.From 1999 to 2001, Walgreens opened more than 600 new stores, often in convenient corner locations that make it easy for shoppers to stop, shop and get on with their lives. Ambitious growth plans call for a total of 6,000 stores by 2010, up from 3,520 as of August 2001.Craig Sinclair, vice president of advertising, says the company's current ad campaign reminds customers that Walgreens offers a wide variety of products they may need at the last minute, such as film, milk, or even school supplies for their kids' late project.Prior to joining Walgreens in 1991, Sinclair held positions in strategic planning, acquisitions, operations and market development at CIGNA Corp., Philadelphia, and SCM Corp., Dayton, Ohio. He served as vice president of marketing for the Thrift Drug Division of J. C. Penney Co., Plano, Texas, from 1987 to 1991.Besides leading Walgreens' newly formed visual merchandising group, Sinclair's responsibilities include corporate advertising, sales promotion, package design and direct marketing. He is co-founder of the Retail Marketing Institute and has been named to Newsweek's and Advertising Age's "Marketing 100."P-O-P Times spoke with Sinclair in anticipation of his keynote address at The P-O-P Show/Chicago, to be held June 19-20 at Chicago's Navy Pier.What role do you play in determining how vendor-supplied point-of-purchase materials are used in Walgreens stores?In the past year we've put together a visual merchandising group of five people. What that group does is try to coordinate the efforts in terms of fixturing, signage and displays. Previously those areas were broken out, and the responsibilities were scattered throughout the organization.We're trying to get this group to coordinate those efforts. They also will offer some leadership in terms of where we can go and the benefits that we can bring forward for the consumer.How many different store formats and footprints does Walgreens have, and how have those formats changed over the years?Our basic store format is around 12,000-13,000 square feet, based on real estate that's available in a given market. The format has been constantly altered and refined, but the basic free-standing store that has a drive-through pharmacy, plenty of parking, and a corner location has been standard for the last 10 to 15 years.Are the layouts standard and the shopping experience pretty consistent across the country?Yes, they really are, and we try to keep that as consistent as we can. The best way to describe our merchandising is that it's dynamic and constantly being evaluated almost on a daily basis. We get a great mixture of input from all levels -- from the stores, from the operations executives, from the merchants. The numbers and ideas we glean come through in a very organized way, and we're able to react pretty quickly either to opportunities or to things that might not have gone too well.What changes do you see in consumer buying habits, and how is Walgreens responding with its current retail strategy?One of the trends that we picked up on a long time ago -- and I guess the expression is kind of tired now -- was the "time starved" consumer. Really, people are more in the mood of shopping for convenience on many, many goods these days. We've picked up on that and the fact that you won't see our stores as part of a strip shopping center anymore. You'll see us located on a corner. You'll see us with lots of parking. Probably 20% of our stores are open 24 hours a day.We don't want to get confused with the term "convenience store" because it implies higher prices, and our prices are pretty decent. We've found it's been a winning combination when you can offer a consumer a chance to come to the store, buy three or four things, and get in and out pretty quickly.Are there specific guidelines governing the look and feel of Walgreens stores and the use of P-O-P?We're starting to pull that together a little more tightly. Our emphasis probably in the last 10 years was to organize the stores, keep them very neat. That would entail things such as no floor displays or things of that sort that would interrupt the consumer's shopping experience.I think what we've found is perhaps we've made it a bit too organized and that we're trying to go back and put a little bit more excitement, a little bit more sell in some of the displays while keeping the store neat and fresh.Would that happen on endcaps or in-line displays?It's both. You'll see us trying to add a little bit more color, a little bit more organization, and a little bit more information. Color blocking helps consumers find merchandise easier and make decisions, whether it's in the cough and cold department, where they might need a specific product for a specific symptom, or if they're comparing a private brand product versus a national brand. All those opportunities help us inform and be part of that purchase decision.Your annual report says Walgreens is increasing sales of cosmetics and other promotional items by lowering prices, grouping products in new ways, and promoting hot items more aggressively. How is that reflected in your merchandising?I think we're trying to stay up on pricing. We've reevaluated prices in key departments like vitamins, cosmetics and skin care, and we've responded appropriately. In other areas like in-and-out promotional prices each week, we've looked at making sure we have a pretty good list of products that would invite the customer into the store to create that traffic. We've gone back and looked at that, especially given the fact that the economy has been under a bit of stress the past year or two. So we're making sure we offer the best value we possibly can to invite the customer into the store.One beverage marketer recently noted that drugstores were adopting some of the more aggressive merchandising techniques of c-stores or supermarkets at the checkout. Would you agree with that?I think that's probably a fair statement. I think you'll see drugstores recognizing the power of that location and making sure it's the right assortment of items. So, yes, I think the industry is paying more attention and folks are being a little more aggressive on what they put up there.Is there a uniform procedure for getting display programs placed and executed at Walgreens?That's in the process of evolving. The point of contact today might be through one of our buyers or it might be directly through the visual merchandising department. It may also be an opportunity that someone in operations has brought forward. What we're trying to do is focus those in a single place to come up with the best solution. It allows us to coordinate and bring forth the best ideas and to really try to speak with one voice in the store when presenting to the customer.Are all decisions about P-O-P made at the corporate level or do individual store managers have some autonomy in deciding what P-O-P to accept and set up?One of the great things about Walgreens is that the store manager has always had a lot of autonomy to run his or her business as a small business. They have the discretion to alter merchandise, alter pricing and alter displays pretty much as they see fit. What we try to do is offer general programs that are consistent across the country while allowing local store managers the flexibility to alter that. It would be a mistake not to allow them the opportunity to do that. We're confident in the fact that we have some good merchants out in our stores and they can respond to local needs.In terms of merchandising products, how can manufacturers become better partners with Walgreens? What ideas would you like them to bring to the table?In general, probably the one thing I can say is to just keep the thought of partnership on the top of their minds. The best relationships we have are those where the vendor approaches us with an idea first, and we're able to work together to execute it. It's not always possible for every vendor to do that, but in major programs it's really great to be able to work together. Because ultimately, if we put together a display or fixture and the store manager's not behind it or a solution is presented that's not feasible in the stores, a lot of money is going to be wasted and a lot of lost sales are going to be left on the table because the idea wasn't thought through.You really have two customers. The first one -- not the most important but very important -- is the store manager. If they don't support that display, you're dead. Of course, once they support it, the consumer is going to have to be motivated and stopped to take some action. It sounds very basic and fundamental, but it's a two-step process that some of us overlook when we're putting out a major program.So when a vendor approaches Walgreens with an idea do you send out the ideas or prototypes to a set of store managers?For any major fixturing or programs we'll certainly look for their input. For day-to-day programs I think a smaller group between the advertising and purchasing programs will discuss it, and sometimes with operations, before that program goes out. But if there's any question, we'll certainly look for more input. Usually, however, we're able to know how the stores are configured and know what's workable and what isn't.Do manufacturers have any common misconceptions or make any mistakes you think could be avoided?One of the things vendors could do -- and some of them are good at this and some aren't -- is really look at the fixtures and displays they're putting together through a consumer's eye. If they haven't exposed them to at least an informal group of consumers, they probably should.Many times we come up with displays or fixtures that just have some challenges. I just saw a side panel the other day with hardware in front of it that made it difficult for the consumer to reach in and grab product. It doesn't usually happen -- most of the programs are good and well thought out -- but it's always interesting that you'll see some displays that are counterproductive. And you'll ask the question, "Did a consumer really get a chance to give input on this display?"Which criteria are most important in Walgreens' decision to accept or reject P-O-P materials?The bottom line is, "Will this help to sell products?" If that answer is anything other than a strong "yes," then we're probably not going to do that. Clearly, new products should be of interest to consumers. They're of interest to stores because the sales should be strong, the margins should be better than average. The customer will be seeking out that product if it's been supported through advertising. So it's in our best interest to display that prominently in the store.In your opinion, in what instances do branded P-O-P displays make the most sense? Are there particular categories or types of products that really work well?I can't say there's any one category because I've seen tremendous successes across all categories. I think it's a limitation sometimes that people believe some products perhaps lend themselves to point-of-purchase displays more than others. I'd have to disagree with that. It's just a matter of how creative you can be and what message you can get out there to compel the consumer to pick it up and buy the product.How has Walgreens' attitude toward in-store merchandising evolved over the years? Is there more or less acceptance of branded P-O-P materials now?I think we're more accepting of the materials today as long as they meet the guidelines for our stores. Floor displays are still out, but I think most vendors know that and work with that. As long as they meet the specs of our stores and we can fit them on an endcap or side panel or whatever, I think we're very open to any vendor support that we can get that's going to help move some product.So you can get behind the use of promotional displays in-store?I think they're worthwhile as long as they're effective. I see some very expensive displays that are very bad. Someone hasn't thought them through and they've spent a lot of money on them. Frankly, in those situations you would rather have the money to create your own display or an allowance on the cost of goods rather than put up a display that would look like that. We still deal with a few of those, although not as many as we have in the past. And again, I think the best partnerships are the ones where the vendor partners with us. We get information up front. We collaborate on a design, and we're all in agreement when we go out with it that this is the best look we can possibly put out there.

P2PI MEMBERS

JOIN P2PI

You May Also Like

AD Retail Media’s Transition In-House

Retail Media Summit Keynote: 'How to Win'