By Bob Cinq-Mars and Bryan Stuke, Simpactful Senior Partners

Walgreens held its eagerly anticipated Supplier Summit meeting on November 15, 2023. It’s been a tumultuous stretch for the company on the heels of opioid settlements, softening business performance, and a CEO change. The stock is off its 52-week high point by over 50%. Efforts are underway to free up cash quickly, shore up the P&L, and improve operations. This includes cutting HQ bonuses, plans to close 150 stores, a transition from a centralized DC to store-based eComm, and executive personnel changes. There is a parallel focus on profitability and trips.

At the Supplier Summit, Tracey Brown, EVP, President & CCO of Walgreens Retail, announced that she is taking the company back to core merchandising focus areas with a commitment to improved organization, an operational focus, and showing up as a strong Retail partner. Once the company has first restored the fundamentals, it will focus on these three key areas to drive growth: 1) Simplification – Improve customer experience & create cash efficiency; 2) Convenience – Reclaim authority and grow through omni/digital/stores; 3) Engagement – Expand customer reach with myWalgreens, WAG, and Owned Brand.

This is a lot of change in a short time, and Leadership Teams are questioning how they should approach the year ahead with Walgreens. To give perspective on how best to navigate challenges at this critical time, we pulled in Simpactful experts who have combined experience both leading businesses at Walgreens and leading sales teams responsible for selling into the retailer. Former Walgreens Merchandising Executive Bob Cinq-Mars, and former NACDS Chair and Procter & Gamble Drug Channel leader Bryan Stuke, share their perspective.

They agree that the immediate focus on fundamentals makes sense but that brands need to shift their approach to win as Category Directors, DMMs are going to refocus on new leadership priorities. Brands should take this opportunity to strengthen their focus on Walgreens and tailor plans based on the current environment. Here is where we would recommend focusing attention immediately:

Align Your Strategy with What is Required Today

  • Understand the evolving power dynamics and organize to win: Expect that Senior Director DMMs will have more strategic accountability and decision-making power given the executive restructuring and that the bar is quickly rising for Joint Business Plan Partners. Ensure there is sufficient selling focus on Senior Director DMMs and consider ways to expand your influence footprint to non-merchandising functions.
  • Prepare for inventory reductions: Expect a significant focus on reducing inventory to free up cash.

 Meet What They Measure

  • Focus on Profitability: Ensure the base business and all new innovation is designed to drive incremental volume and profitability.
  • Drive Trips: Bring trip-driving ideas to the table. Consider strategic interventions, assortment, and offsite marketing plans that drive traffic in-store and online, as well as invest in WAG media to create scorecard value.
  • Get Analytic About SKU and Merchandising Event Performance: Brands should ensure SKU volumetrics are on track for all per store volumes with the right assortment, pricing, and support plans. Measure merchandising events holistically to understand ROIs and reinvest to anniversary the most impactful programs that benefit both the Brand and the Retailer. Implement Targeted Merchandising and Marketing Plans to address gaps in SKU volumetrics.
  • Dial Up Operations: Brands need to evaluate all aspects of their plans and execution through the lens of Store Operations to determine ways to bring forth plans and execution that will drive performance and reduce complexity.
    1. Deliver in-stock, on time, and in-full.
    2. Understand SKU on-shelf availability and in-stock issues and quickly address root causes. Optimize promotional plans to drive incrementality and reduce labor.
    3. Stay close to the evolving Walgreens approach to navigate continued shrink challenges. While this was not discussed on the call, it has continued to be a hot topic for Walgreens and most other US retailers.

Be Prepared for What is Ahead

  • Simplification, OmniCommerce, and Engagement: Incoming CEO, Tim Wentworth, brings a bevy of healthcare and transformation experience. His executive leadership roles at Express Scripts and Cigna alone provided a honed ability to think not only about the payer and pharmacy space but also how to leverage IT, OmniCommerce, supply chain, IT, and new approaches to Human Resources to root out cost and complexity, while creating simplified, seamless patient experiences. Brands should expect to see him bring this same rigor to Walgreen Boots Alliance once the retail fundamentals have been restored.

Teams should evolve with Walgreens and ensure brand priorities align with what the Walgreens buying team will require to optimize retail performance and support the company’s longer-term priorities. Simpactful has skilled advisors with experience from both the buying and selling sides of the desk.

Simpactful can help! If you need help with your approach at Walgreens or other retailers to learn more about Bob, Bryan, or Simpactful’s team of industry experts, contact our team today at contact@simpactful.com or 925-234-6384.

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