At a session at the annual conference of the Council for Responsible Nutrition held in Laguna Beach, CA in early November, Walgreens executive Robert Tompkins told attendees how the company has created a new category of employee, called Wellness Guides, to help drive sales of supplements and other health products.
Successful, but aging strategy
Tompkins, the group vice president of health & wellness merchandising, told the attendees that Walgreens has had huge success in pursuing a mostly real-estate based strategy to become the biggest name in the pharmacy sector.
“We are on track to record $76.4 billion in sales in 2014. We have 248,000 employees and 6.2 million customers daily. More than 75% of Americans live within five miles of a Walgreens store,” Tompkins said.
But even with that success, the company could glimpse the end of the road, Tompkins said. With real estate development only slowly rebounding from the financial crisis, the company’s footprint-based strategy is starting to show signs of age.
“By the end of 2014 our footprint will be 12,400 drug stores. We were opening a new store every 16 hours. That strategy was worn out. There was no place left for us to go in the US,” Tompkins said.
Breaking down firewall
The company decided what was necessary was to find a new way to engage with existing customers, to drive greater growth out of what they already had rather than to grow primarily by in effect pouring more concrete.
“We have been talking about breaking down the firewall between the back of the store and the front of the store,” Tompkins said. “We have been educating our employees so that they can engage with consumers in areas like vitamins.”
Tompkins said the changing health care dynamic and changing demographics will challenge all health product retailers. The personalization push is challenging in particular, but is a trend that offers a big upside, he said.
“The commoditization of health care is a massive challenge for a drug store chains. We wanted to be more than just a convenience store. It’s not enough any more. We have to build an emotional connection with our shopper. We need something meant for that consumer, specific to her, while still protecting her privacy,” Tompkins said.
Enter the Wellness Guides. This new program, which is being tested in select stores, puts in place a type of employee who is trained specifically to act as a bridge between the customer’s interaction with the pharmacist and her stroll through the supplement aisle. These employees offer the emotional connection that Tompkins said is so important, and are specifically trained to be able to provide information about products without crossing the line into dispensing medical advice. In effect, the strategy is borrowing the best customer interaction the health food store channel has to offer and transplants it into a pharmacy setting.
“Customers are deluged by healthcare information. What we have found is that she is not listening anymore. We want to make sure we can help her take care of her family and that we can connect her with the appropriate health care resources. The average consumer has about seven minutes to shop. The Wellness Guides have driven huge improvement in sales over control stores,” Tompkins said.
Tompkins said that while Walgreen’s personalization push is characterized by an old-fashioned personal touch, the company is not averse to connecting the idea to technology. For example, Walgreens is developing programs that will incentivize healthy behavior by offering discounts and other carrots to customers who make available data from Fitbit type devices. But the goal remains the same, to put the customer in the driver’s seat.
“There is a dramatic physician shortage in this country that is just starting and it is only going to get worse. Our role is to champion everyone’s right to be in charge of their own health care. 88% of Americans believe their health is entirely their responsibility. This is about being an asset to our customers,” Tompkins said.