For decades, Walgreen Co. was a model of operational excellence and organic growth, but recently, the company has wavered. At a time when the company’s domestic traffic and margins are stagnant or declining, company leaders chose to invest billions of dollars into its acquisition of Alliance Boots, rather than investing for domestic growth. We believe this merger has little likelihood of helping its core retail pharmacy business, and in fact, the changes spurred by the acquisition may exacerbate the company’s lackluster store performance.
Because reviving its U.S. retail operations is essential for the company’s success, Walgreen Strategy Watch is investigating the company’s in-store execution and retail operations. We are monitoring the company’s progress as it seeks to increase sales and regain competitive advantage. The original research and analysis provided here will give stakeholders an enhanced picture of the company’s strategy and operations.
Behind The Desk: Concerns About Walgreen’s New Pharmacy Model
A new report finds that Walgreen’s attempts to “revolutionize” the pharmacy may pose risks to patient privacy, medication accuracy and drug security. The new pharmacy model, named “Well Experience,” takes the pharmacist out of the traditional prescription fill work area and into a public space in front of the pharmacy. The out-in-front pharmacist remotely monitors the pharmacy technicians and checks the accuracy of prescriptions using photos and video displayed on a computer screen. Researchers made 100 visits to 50 Well Experience stores in Illinois, Indiana, and Florida to observe the model.
CtW’s investigation found significant problems related to this model, including:
- Increased pharmacist distractions. Field researchers observed nearly 150 distractions and interruptions to pharmacists—which are associated with increased medication dispensing errors—that were unique to the Well Experience pharmacy model’s design.
- Violations of patient privacy. In 80 percent of stores visited, sensitive, HIPAA-protected patient information, such as medical histories, was left unattended on or near the pharmacist’s desk and visible to customers in the pharmacy area.
- Inadequate medication security. Prescription medicine—in one case hydrocodone—was left unattended and within the reach of customers in 46 percent of stores visited.
- Low rates of patient counseling. Field researchers observed a consultation rate of 8.2 percent in Well Experience pharmacies, despite Walgreens’ claims that the model increases counseling. Academic studies of chain pharmacies using secret shoppers found a rate of 27 to 53 percent. Pharmacists are required by law to offer counseling for new prescriptions.
Study Finds Large Price Discrepancies at Walgreens
Chain drugstores are convenient, but are their prices fair and transparent? While savvy consumers know comparison shopping between physical retailers and online outlets is essential to saving money, new research reveals that comparing in-store prices at different locations of the same chain is just as important. Change to Win Retail Initiatives in partnership with the National Consumers League surveyed 485 Walgreens, CVS and Rite Aid locations throughout the country to see how consistent in-store pricing is within each chain and how shoppers can get the best deals.
Key findings include:
- Same neighborhood, different prices at Walgreens.
- Walgreens had the biggest price differences between its stores.
- Price differences at Walgreens often meant consumers were paying more.
Take a look at the results in Dallas-Fort Worth, Los Angeles, New York City and Orange County.
Consumer Poll Exposes Problems with Balance Rewards Program
A nationwide poll of more than 2,000 Walgreens customers raises concerns about the effectiveness of the company’s Balance Rewards loyalty program in changing consumer behavior. Despite Balance Rewards’ impressive membership growth since its September 2012 launch, the poll points to problems with the program’s design that may be limiting customer engagement.
Key findings include:
- No clear impact on changes in spending.
- Not creating new customers.
- Not meeting members’ demands for savings.
- Points redemption and accumulation difficult.
Read the full analysis of the poll here.
Off Balance: Out-of-Stock and Mislabeled Sale Items at Walgreens
A new report from WSW documents Walgreens’ trouble keeping sale items in stock and correctly labeled through a survey of 200 stores across the country. The report, titled Off Balance: Out-of-Stock and Mislabeled Sale Items at Walgreens, finds these operational problems may be undermining Balance Rewards, Walgreen’s new customer loyalty program and hurting the chain’s sales. Some key findings are:
- Out-of-stock problems persistent at more than three-quarters of stores.
- Certain items were consistently out of stock across markets.
- Unlabeled sale items common in nearly every store.
Read the report’s full findings here.