Three Takeaways from Walgreens’ Innovation Strategy
During a keynote at the recent Oracle OpenWorld conference in San Francisco, Tim Theriault, senior VP/CIO of Walgreens, discussed his company’s ongoing efforts at IT innovation. Walgreens has been involved in a number of notable recent innovative technology implementations, but column looks at the underlying strategy that helps ensure the success of those rollouts.
Here are three takeaways other retailers can glean from Walgreens’ innovation strategy:
Focus on the store
One of the first things Theriault mentioned was Walgreens’ focus on transforming the “well experience” at its stores. Although Walgreens’ Balance Rewards loyalty program, launched to huge success two years ago, includes a vitally important mobile app, one of the most significant returns it provides Walgreens is otherwise unobtainable insight into localized customer preferences for store merchandise.
“You need to have lobsters in Boston, and of course pictures of Elvis in Las Vegas,” Theriault said jokingly.
But more seriously, Walgreens understands that making sure consumers can get the products they want at local stores, including products that might not be part of the national merchandise mix, is a critical component of omnichannel retail success. Rewards points will only keep customers coming back to the store, which remains the primary profit center of retail, if they can buy something they want there.
Don’t forget the back end
Despite its heavy store focus, Walgreens still remembers that technology innovation also needs to benefit back-end operations, such as supply chain.
“The supply chain is a massive issue,” said Theriault. “We have two different supply chains – front of store and the supply chain around drugs and medicine, which is really complex.”
Walgreens understands that the main function of both supply chains is to make sure that items are in stock. This is particularly relevant when Walgreens is running a front-of-store promotion. While innovative CRM and data analytics systems are needed to determine what products customers want to buy on a highly localized level, innovative supply chain and logistics systems are needed to make sure the products arrive on time and in the right quantity.
So Walgreens extends its innovation efforts to boring old core back end systems, which of course are necessary to support any of the cool, flashy stuff consumers see on the front end.
Do more with less
Like most retailers, Walgreens has reduced its IT budget. Yet also like most retailers, it still expects its IT department to keep ratcheting up the innovation even as funding goes down.
“Innovation is up but the budget isn’t up,” said Theriault. “Today’s technology allows you to innovate with a lot of enthusiasm and make it a better value proposition for our customer.”
While increasing capabilities of technology and service-based architectures are helping retailers to derive more value from a leaner infrastructure, Theriault also mentioned another key factor in Walgreens being able to keep innovating regardless of funding.
“We need to be thoughtful where we place our bets and investment,” he stated.
It’s also worth noting that the thoughtfulness of Walgreens’ IT approach extends to security.
“Security is fundamentally important,” said Theriault. “Nothing is more important than to protect our customers and their information.”