Walgreens Rolls Out Customer-Centric Retailing
March 29, 2010 8 Comments
There was an interesting article in the Chicago Tribune about Walgreens’ effort to improve its in-store experience. The company’s new store format, which it calls “Customer-Centric Retailing,” will be rolled out to more than 2,500 of its 7,000+ locations this year. According to Walgreens CEO Gregory Wasson:
As we move into the next phase, we’ll continue to build sales, take work out of stores, lower inventory and, most importantly, improve our customers’ overall shopping experience
Here are some elements of the new store formats
- Eliminated about 3,500 products from stores to focus on fewer, better-selling items
- Adding more food and wine and expanding beauty aisles and preparing this summer to bolster electronics.
- Lowering the heights of shelves
- Installing bigger and more colorful signs to help shoppers navigate the aisles
My take: Companies should take notice of Walgreens’ store redesign and those of other retailers like Wal-Mart, Michael’s, and Macy’s that are rethinking their in-store experiences. The days of shoving as much inventory as possible onto shelves and hoping that customers find what they want are gone. Companies are realizing that its much more profitable to offer fewer SKUs and make it easier for customers to find what they are looking for.
Not only is it more economical to carry less inventory (Walgreens eliminated $500 million of inventory as part of this effort), but it can also be much better for customers. As I’ve discussed in a previous post, consumers are often more satisfied when they have fewer choices.
And redesigning store layouts to help customers shop is also critical. It’s worth referring back to one of my old posts (from 7/07) called Why Don’t Stores Support Shoppers? that discusses four separate elements of the in-store shopping experience:
- Wayfinding: From walking into the store until you find the right area
- Browsing: Comparing multiple products within a category
- Studying: Evaluating an individual product or products
- Getting Help: Finding answers to questions along the way
Those components deal with selecting products, but you also want to make sure that customers go ahead and buy those items. So it’s also critical that retailers spend time revamping their checkout experiences as well.
The bottom line: Make it easier for customers to buy from you.
About Bruce Temkin, CCXP
Customer Experience Matters® 
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The thing is, when I need that totally random thing – for a school project or a holiday meal (its always something like that) – then those low selling skus are what makes the store useful.
Productfour: You raise a very important design point. Any store needs to decide it’s purpose. If Walgreens wants to be percieved as the place to go for obscure items, then it will need to carry a lot of different, low-volume inventory items. But there’s a trade-off of simplicity and find-ability for all of the hgher-volume items. Thanks for sharing!
This is a great posting Bruce. We’ve been working with Walgreens for over a year now and it’s evident that their focus on customer experience is really driving key decisions.
It is interesting to see the impact of SKU reduction on a company like Walmart. They’ve recognized that reduced SKU’s can actually reduce customers in certain cases as well. Here’s a good article about why they are bringing certain brands back: http://bit.ly/ant1wm.
Nice post! It echoes what we blogged about several months ago – that brands should reconsider how they design their websites to mirror successful offline storefront designs. An example we site is Wegmans Food Markets.
Here is a link to our post that your readers might enjoy:
Why We Should Be Designing Websites Like Grocery Stores
http://tinyurl.com/yhsjog2
Best,
Porsche Nguyen
Social Marketing Manager
Heardable.com
Bruce,
Nice post. It seams there may be a bit of a battle discussing whether more or less inventory is better from the sense of variety and availability. I just sat in a class where a guest speaker from Amazon.com sold the idea of e-commerce’s advantage of traditional retailing because they are better able to capitalize on the long tail effect, i.e., stock slow moving inventory at lower costs. He had a lot of charts showing that a big majority of their revenue comes from very slow moving items – stuff that would sell once a year or less in a traditional store.
Amazon would argue that Walgreen’s move to cut slow moving items, and thus reduce variety, is a signal to the market that they are no longer interested in serving customers that are variety seeking or demand some level of customization. Instead they are moving to the mass market appeal and will miss out on revenue.
I understand the choice paradox and tend to come down on your side of the argument, but the Amazon model is certainly provides a different customer experience driven by variety.
Thanks for sharing. Definitely un-stuffing the shelves can improve the shopping experience when desired by customers. Similar to productfour comment, I shop at Wallgreens for last minute xmas gag gifts and found their less conventional products to be quite handy.
Reducing B&M inventory, I’ve enjoyed how certain companies are integrating regional warehouses with their online store and quickly shipping products to the local branch. Less products on store shelves and timely delivery has kept me satisfied. REI (outdoor gear) is one store that I find does this well. Maybe that’s one element that such retail companies can drive toward.
Wahlgreens is showing how customer-centric retailing delivers results. Online retailers need to join this trend, applying the same techniques in the virtual world. The way to do this is to improve the convenience of retail sites, ensuring that consumers can find potential products and information quickly and easily. If it is difficult for consumers to find what they want they will leave the site and often not return. However, if the customer experience is as convenient as it should be then they will repeatedly return to the site.
A key method of improving customer service online is ‘intelligent searching’. Allowing consumers to type in what they are searching for without relying on keywords. This takes the hard work out of browsing retailers online. Mothercare in the UK has implemented Ask Carrie, a solution that provides fast, accurate answers to questions that shoppers ask as part of its ongoing customer service programme.