Inside This Issue - News
Walgreens’ Wagner is top operations exec
January 6th, 2014
by David Pinto
DEERFIELD, Ill. – Overlooked amid the dramatic merger, acquisition and assimilation activity that defined and characterized Walgreen Co. in 2013 was a stunning if less obvious set of initiatives that put Walgreens on the cutting edge of innovative retailing concepts and initiatives.
The continued openings of the retailer’s innovative Flagship store concept, the unveiling of a small-store format designed to fit a college campus, and, most recently, an energy-friendly store that accurately claims a net-zero energy output — these new-store initiatives have distinguished Walgreens every bit as impressively as its headline-making alliances with the Alliance Boots retail-wholesale enterprise and the AmerisourceBergen wholesale house.
Along the way, the retailer found the time to integrate several of the Boots own-label brands, most notably its innovative No7 beauty care line, into Walgreens’ various store sizes and formats.
The executive behind these successful initiatives is Mark Wagner, Walgreens’ senior operations executive, one of the handful of top managers who collectively run America’s largest drug chain. Recognizing his contributions to Walgreens and, by implication, to chain drug retailing in America, the editors of Chain Drug Review have rewarded Wagner by designating him as Operations Executive of the Year in 2013.
Wagner, 52, has been with Walgreens since 1977. During his 36-year career with the company, he has held, and faithfully executed, a seemingly endless variety of assignments in myriad locations. Yet he readily acknowledges that he is “more excited by the opportunities” today than at any time since he’s been with Walgreens. With good reason.
OF THE YEAR
As one example, there are the campus stores. Last year Walgreens opened its first college location, in Madison, Wis., on the campus of the University of Wisconsin. A second quickly followed, in Minneapolis, on the University of Minnesota campus. A third will debut shortly, on the University of Michigan campus in Ann Arbor.
As Wagner describes these stores, they are significantly smaller (4,000 to 4,500 square feet) than a typical Walgreens drug store, and they emphasize food, consumables, beauty care and elements of Walgreens’ “Well Experience” stores. The “fresh” offering developed in the retailer’s flagship stores is in evidence here as well, as is the “grab-and-go” food assortment. Notable for its absence is the anchor of most Walgreens drug stores, the pharmacy.
“These are stores that are marketed to the college students and faculty, who are their almost-exclusive customers,” says Wagner. “While we’ve always had stores on college campuses, these are different in that they are directed entirely to the residents of those campuses, both student and faculty.”
Though Wagner chooses not to project the number of campus stores in the works, he leaves no doubt that the initial results are encouraging. “Now,” he says, “we need to learn more from these initial efforts.”
Then there’s the ongoing flagship project which began in 2011 at Duane Reade with the opening of the 21,000-square-foot 40 Wall St. drug store. Thirteen flagship stores now dot the Walgreens landscape, all in major metropolitan markets.
“These are Big City stores,” says Wagner, adding that “each has to stand on its own to be successful. Thus far, each of them has performed at least as well as we believed it would.”
However, he adds that the impact of the flagship stores goes far beyond the ability of each to generate sales and earnings. “Internally, these stores have provided a lot of excitement,” he says. “The idea of a drug chain being able to successfully introduce so dramatic and exciting a concept has been a huge source of pride throughout our organization.”
"I'm more excited by the opportunities I see here than at any other time since I've been with the company. I'm particularly excited by the prospect that we can change the world of health care."
Externally, Wagner notes, “they’ve established and extended our credibility. More specifically, they’ve provided a halo effect. For example, when tourists visit a flagship store, they remember Walgreens when they return home — and perhaps shop Walgreens more consistently. Then, too, the stores surrounding a flagship location generally get an uptick in sales and customer visits after the flagship opens.”
Wagner has been instrumental in bringing Boots’ own-brand labels into the Walgreens merchandising assortment, a more daunting task than seems immediately apparent. Particularly daunting has been the integration of the legendary No7 beauty brand, a sprawling assortment of premium products that is not suited to every Walgreens drug store.
To simplify the task of integration, Wagner and his team have identified three store groupings, those that can accommodate the entire No7 assortment, those suited to a significant portion of the line, and those that can accommodate only a partial assortment.
Wagner points to the Phoenix market as an example of Walgreens’ success in aligning the No7 brand with the appropriate stores.
“All Walgreens stores in Phoenix sell some No7 products,” he says. “Some stores are ‘all-in,’ our designation for those stores that can accommodate the entire No7 color cosmetics and skin care assortment. Another group of ‘somewhat in’ stores gets a No7 assortment that includes both color cosmetics and skin care, but not the complete mix of the all-in stores. A third grouping, designated ‘partially in,’ offers only the No7 color cosmetics assortment. This approach is working well for us, simply because we’ve effectively aligned the assortment to the store’s primary shopper.”
One final achievement for Mark Wagner last year was the opening, in November, of a Walgreens drug store in the Chicago suburb of Evanston that is state-of-the-art in its accommodation to environmental and sustainability considerations.
The new unit, which replaces an existing store on the same Chicago Avenue site, features an array of energy-saving features found, according to Wagner, at no other retail store in the United States. Among them:
• The store is projected to produce more energy in the course of a year than it consumes. More specifically, it utilizes two wind turbines and 849 solar panels to produce 220,000 kilowatts of energy per year, while it consumes just 200,000 kilowatts.
• The store utilizes LED lighting, which saves 30% on lighting costs but puts out the same light levels as conventional stores. As well, the lighting system enables the store to reduce energy usage by almost 60%.
This “net zero” store offers other features as well, among them a monitor mounted on wall tracks inside the store that tells customers how effectively the store is proceeding in its efforts to reach net zero energy levels.
Wagner is particularly proud of the Evanston store, calling it “one of the easiest builds we’ve ever been part of, primarily because of the cooperation of the community in moving this concept forward.” And now? “We want to test our assumptions and determine what works well” in the Evanston store. “From there, we will expand the experiment, or parts of it — the solar panels, for example — to other locations.”
Throughout this year of accomplishment, one that has permanently changed the face of Walgreens, Wagner has been reenergized, perhaps to a degree unequalled in his 36 years at Walgreens.
“I’m more excited by the opportunities I see here than at any other time since I’ve been with the company,” he says. “I’m particularly excited by the prospect that we can change the world of health care.”
Looking ahead a year, Wagner envisions more accomplishments. “The integration of Walgreens and Alliance Boots will be nearer completion,” he says. “Equally important, the various constituencies we influence will come closer to understanding the full impact of this merger. That prospect is what drives everything we do these days.”
Except, perhaps, what has driven Mark Wagner to new levels of accomplishment in 2013.