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Walgreens exec discusses omnichannel, “showrooming” and loyalty programs

5 min read


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Joseph C. Magnacca is president of daily living products and solutions at Walgreens, which he joined as president of Duane Reade in 2010. In his prior experience, he served as vice president of marketing for Loblaw in Canada from 1986 to 2002 and as executive vice president of marketing and merchandising for Shoppers Drug Mart in Canada from 2002 to 2008. He will be speaking at Retail’s BIG Show as part of the “Coca-Cola Opens Happiness for Consumers and Retailers” keynote on Sunday, Jan. 13, at 10:15 a.m.

What consumer trends are most likely to influence consumers’ decisions on where to shop and what to buy this year?

There are two that we are focused on. We believe that consumers will continue to evolve their shopping behavior and online shopping will continue to grow. Our omnichannel strategy brings retail to our direct channels and, in addition, we are big believers that we can bring e-commerce to our stores. Our expanded category online selection through and and our Web pick-up initiatives are great examples.

We also believe that, when choosing retailers, consumers will be looking for retailers that are highly innovative, for in-store experiences but also in product assortment.  Our Well Experience remodel and rebranding program is targeted to make each retail location even more relevant to the local market that it serves and advances all facets of our health, beauty and convenience product and services strategies.

How serious a threat is “showrooming” and how has Walgreens approached the issue? Can bricks-and-mortar stores compete with online retailers when it comes to price? What advantages do the stores have?

Showroomimg continues to be a concern for retailers. Our location strategy allows us to be the most convenient retail in communities, and we certainly need to leverage that as part of our overall strategy to combat the concerns associated with showrooming. Our ability to utilize our direct properties will also allow us to keep share of wallet within our retail portfolio.

What’s Walgreens’ biggest challenge this year? What’s the company’s strategy for solving it?

In 2013, we are very focused on profitable, sustainable growth in our core health beauty and convenience businesses. The competitive climate is unknown and continues to evolve. Many retailers like J.C. Penney are reinventing themselves, while others, like the convenience channel, are trying to find their role in the future of retail.  The uncertainty of the competitive market will be somewhat disruptive in 2013.

Does the typical Walgreens shopper make purchasing decisions based on social issues/values? What values/social issues are most important to your customers, and how does Walgreens show support for those causes?

As a health care company, we clearly are focused on issues that relate or affect health care. We continue to focus on health issues like HIV and AIDS platforms and have created hundreds of HIV Centers of Excellence across the country in key markets to provide additional  service and product focus in our stores.  In addition, we are a huge supporter of the GMHC in New York as part of the initiative.

We are also heavily involved in creating accessibility for fresh foods in under-served markets, referred to as food deserts. Our Food Oasis program brings expanded fresh foods to markets that supermarkets or green grocers have exited. Our localization model ensures that our store meets the needs of the consumer and is just one example of the program in action. In addition, we tend to find that under-served food markets tend to be markets that have under-served health care services. Our ability to address that through our Take Care clinics and expanded health care products and services allows us to help communities in additional ways.

Last fall, Walgreens launched its Balance Rewards program. How is it different from other retailers’ loyalty programs? What’s been the response from customers?

One of the exciting opportunities with loyalty is the fact that our loyalty program, which launched this last September is truly state of the art. It has been able to take total advantage of the technology explosion in the past few years. Combined with our new POS system, we are well prepared for future technology advancements.

With more than 50 million active customers in less than four months, our loyalty program is well on its way to be the largest in North America.  With our merger with Alliance Boots, we believe we will have the largest worldwide program, when you combine Balance Rewards and the hugely successful Advantage program.

Our program is simple to sign up for and use in-store. Points are earned on pharmacy and front-end products and services and are redeemable in our stores.

Points redemption value increases at the higher rate of redemption, providing even greater value for our best and loyal shoppers. Our vendor support has been extremely favorable, and our employee network has embraced the program and done an outstanding job making Balance Rewards the fastest-growing rewards program in the U.S. The insights we have gained are heavily influencing product listing decisions, promotional and pricing strategies and store design, to name a few. The effort to launch this best-in-class program was second to none based on great loyalty vision and strategy, supported by flawless execution support divisions led by our IT team.