Jul. 30, 2013 7:00 PM ET | About: Walgreens Boots Alliance, Inc. (WBA) http://seekingalpha.com/article/1586342-walgreens-mobile-strategy-scores-with-retail-customers
Walgreen‘s Mobile Strategy Scores With Retail Customers Walgreen Company (WAG), a drug store chain in the U.S., is developing a mobile device strategy that seeks to engage customers at a deeper level than their competitors, offering services that bind Walgreens stores more tightly with the customer‘s health and wellness. While early results indicate the strategy is paying off among its retail customers, other trends suggest maintaining the customer‘s engagement and integrating Walgreen‘s mobile data with electronic health records are complex, moving targets that will require a continuing investment of resources or shift in strategy. Please note: In this article the company name Walgreen is used when referring to corporate activities and the store/brand name Walgreens refers to branded or retail services. At last week‘s mHealth + Telehealth World Conference in Boston, Abhi Dhar, Walgreen‘s chief technology officer for electronic commerce, described the company‘s experience with mobile devices, such as smartphones and tablets, as part of the company‘s digital and overall marketing strategies. As Seeking Alpha contributor Larry Smith commented earlier this month, Walgreen is „changing the stores from the traditional drug store layout to a wellness center destination.“ The company‘s mobile strategy extends that idea to smartphones and related devices used for personal wellness.
Investor snapshot
Walgreen Company operates some 8,100 drug stores in the U.S., with 700 walk-in health clinics at selected stores and contracted work sites. In addition to pharmacies filling prescriptions, Walgreen stores sell over-thecounter drugs, cosmetics, general merchandise, household items, and food, and provide photo-processing services. In 2012, the company had net sales of $71.6 billion, with net earnings of $2.1 billion, and a workforce of 240,000 employees. The past year has been an event-filled period for the company, which is reflected in Walgreen‘s share price that fluctuated in that time from $31.88 to $51.62, and opened at $50.79 on 29 July. In June 2012, Walgreens bought a 45 percent stake in Alliance Boots, an European retail pharmacy chain, for $6.7 billion in cash and stock, providing the com-
pany with a significant presence in Europe. Walgreen has the option of acquiring the remainder of the Alliance Boots by 2015.
even refills from Web browsers, with mobile usage peaking at 6:00 to 8:00 am and at 9:00 pm.
In July 2012, Walgreen settled a year-long dispute over payments with Express Scripts, a pharmacy benefit manager. At the time of the dispute resolution, questions were raised about the ability of Walgreen to win back Express Scripts customers. Walgreen reported that its June 2013 pharmacy sales rose 2.9 percent compared to June 2013, with Express Scripts prescriptions returning to Walgreens stores, although the volume of Express Scripts sales was not disclosed.
While Walgreen designs the mobile app to extend its reach outside the store, the app also is tightly bound to the store shopping experience with layouts of individual stores, shopping lists, advertised specials, and coupons. As a result, said Dhar, more than 40 percent of Walgreens customers use the app while inside the store.
Taking mobile engagement to a new level
Walgreen‘s presence on the web covers five online brands: walgreens.com, drugstore. com, beauty.com for cosmetics and beauty items, skinstore.com for skin-care cosmetics, and visiondirect.com for optical needs. The walgreens.com site also has a mobile version, for viewing on smaller screens. Dhar reported the five online properties attract some 12 million visits per week. Of that number, 3.2 million visits per week to walgreens.com are from a mobile device. Walgreen‘s mobile apps -- designed for Apple iOS, Android, and Windows operating systems, and offered in smartphone and tablet versions -- are based on Walgreens store services, such as prescription refills, photo-processing, store specials, and coupons. However, competitors such as CVS also have mobile apps providing many of the same store-based services. Dhar said Walgreen wanted its mobile presence to take advantage of the ubiquitous nature of mobile devices and engage customers at more times and at more levels. Prescription refills, Dhar said, is the most popular mobile service, with more than half of Walgreen‘s online refills now ordered from a mobile device, at a rate of more than one refill a second. Walgreens mobile customers can scan the bar code on Walgreens pill bottles -- see image at top -- with their smartphone cameras to enter prescription numbers (CVS also offers this service). According to company data reported by Dhar, customers ordered refills through the mobile app more frequently early in the morning and later at night than
Walgreen also tries to extend its reach by integrating its mobile services with other mobile apps and devices. The company, for example, partnered with Facebook (NASDAQ:FB) and Foursquare, a location-based social network, to donate a free flu shot to needy residents every time a customer checked-in with those networks for a flu shot at a Walgreens store-front clinic. Dhar said some 200,000 check-ins at 10 million stores were registered with this program.
More steps mean more points
In addition, the mobile app can import data from activity tracking devices, such as FitBit and Withings, with customers awarded additional Walgreens loyalty points for being more active. The imported activity records are translated into loyalty points and displayed as a bar code on the customer‘s mobile device, which can be scanned and redeemed at the store. In a related extension of its app, Walgreen developed an application program interface or API, a standard interconnection routine, for its mobile app. Walgreen has some experience with this technique, having already designed an API for its photo processing services. The newer API allows for prescription refills and transfers with Walgreens stores, and is integrated into Healthspek, a personal health record developed for the iPad. These features seem to be working for Walgreen, and there‘s some evidence that the health of customers may be benefiting as well. Dhar reported from Walgreen internal studies that customers using Web-based services and visit Walgreens stores spend 3.5 times as much as customers who only visit the store. And customers using Web and mobile services, plus visit Walgreens stores, spend 6 Seite 1