Walgreens is undergoing the most extensive and dramatic transformation that any U.S. retailer has ever attempted. And initial indications are that Walgreens will indeed be transformed — and, more significant, that this 108-year-old drug chain will emerge in the strongest position in its history.

Walgreens, drug chain, Greg Wasson, Bryan Pugh, Hal Rosenbluth, Kim Feil, Sona Chawla, David Pinto

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Inside This Issue - Opinion

New blood transforms Walgreens

June 8th, 2009
by David Pinto, Editor

Walgreens is undergoing the most extensive and dramatic transformation that any U.S. retailer has ever attempted. And initial indications are that Walgreens will indeed be transformed — and, more significant, that this 108-year-old drug chain will emerge in the strongest position in its history.

Not only will Walgreens become a more powerful drug chain, it will emerge from this metamorphosis as a more compelling, more exciting, more innovative retailer, one that others will watch, emulate and envy.

These are strong words. But Walgreens’ actions over the past six months clearly warrant them. Specifically, during the first five months of 2009 the drug chain has launched several innovative initiatives designed both to distance itself from its competitors and restore some measure of the luster that has traditionally surrounded one of America’s oldest drug chains.

But the real story here is not the programs the retailer has launched but the people Walgreens has brought in to renovate the drug chain. To put it simply, no retailer in this country, or indeed anywhere in the world, has so altered the content and character of its senior management as quickly or as dramatically as Walgreens has done over the past several months.

Much has already been made of the fact that the retailer has named a new chief executive officer, Greg Wasson, and that its selection is proving to be a wise choice. Largely overlooked is the fact that the company, against all retailing tradition and history, has brought to its Deerfield, Ill., headquarters a group of senior staffers who, though collectively possessing very little retail experience, come to Walgreens with a wealth of business knowledge.

Should these executives succeed, their performance will do nothing less than transform the retailer’s model, one built on the premise that senior-level staffers be selected from within the company.

Compounding the challenge for both the company and its new personnel is the fact that many of the staffers that Walgreens has brought to the company differ dramatically in temperament and management style from the demeanor Walgreens has typically expected — indeed, insisted upon — from its senior managers in the past.

More specifically, where Walgreens managers have traditionally been self-effacing, the new people exude self-confidence. Where past leaders have been diffident, the new ones are outgoing. Where Walgreens was previously known for the reserved nature of its leaders, the current group exhibits a refreshing degree of candor and confidence.

Among the new leaders, four stand out for the skills they so obviously possess, the impact they have already exerted on their company and its employees, and the apparent enjoyment their new careers are already providing. They are:

• Bryan Pugh. Walgreens’ new senior merchant has, in fewer than six months, become the central subject of conversation both within Walgreens and in the chain drug supplier community — with good reason. He is as un-Walgreens a staffer as the drug chain has yet encountered. His background includes extensive experience with Wal-Mart and Tesco, arguably the two dominant global retailers.

Where Walgreens has traditionally built its success on a “crawl, walk, run” philosophy, Pugh is more at home with the old Wal-Mart axiom of preferring to ask forgiveness than permission. He has bought with him a new energy, some new ways of doing business, several innovations and a few surprises, some of the stunning variety.

He is supremely self-confident and self-assured, and has succeeded in gaining the confidence of many of the people around him. Most important, the critical consumer-centric retailing initiative he is quickly unveiling throughout the Walgreens store empire appears, initially at least, to be working.

• Hal Rosenbluth. Walgreens’ new head of health care services is arguably the least likely staffer laboring in retailing today, though laboring is hardly the correct word. Rosenbluth is clearly enjoying doing something he thought he’d never be comfortable doing: working for somebody else.

Once upon a time, he built one of the country’s most successful travel agencies, before selling it to American Express. More recently, he launched a chain of immediate-care medical clinics, before selling it to Walgreens. He came to the drug chain in the aftermath of that sale, and he now oversees Walgreens’ Take Care in-store clinics as well as the retailer’s innovative employer-based health initiative, one that has positioned the retailer to provide a range of clinic-based health care services, which include access to physicians, to some of America’s largest companies.

As an aside, when Rosenbluth, a native Philadelphian, is not working and traveling for Walgreens, he often heads for the cattle ranch in North Dakota he recently purchased, where he ropes and brands cows.

• Kim Feil. The retailer’s new chief marketing officer, the company’s first, comes closer to the prototypical Walgreens executive. Though she has no retail experience, she has worked for several major consumer goods companies as well as market research giant Information Resources Inc. At Walgreens, her assignment is to change the retailer’s relationship with its customers — or to state it more accurately, to establish a relationship between Walgreens and its customers.

To do so, she has immersed herself in the interaction between the retailer and the customer. In close collaboration with Pugh, she is working to put the customer at the heart of everything Walgreens sells and every promotional and marketing program the retailer utilizes to sell it. As an initial result, almost overnight Walgreens, a retailer whose success was built on treating all customers the same, has identified the differing aspirations of the different consumers who shop its stores.

Now comes Feil’s bigger challenge: satisfying them.

• Sona Chawla. She is perhaps the most interesting of these four newcomers. A native of India, which is itself something of a departure from Walgreens’ past hiring proclivities, Chawla comes to the drug chain after a period in the banking business (Wells Fargo) and a stint in the computer industry (Dell). Earlier, she graduated from Wellesley, after which she worked as a consultant for a short period.

It was at Wells Fargo that Chawla gained both a knowledge of and experience with online retailing, in this case banking. Her success there, against all the traditional arguments that online banking would drive people away from the brick-and-mortar banks, brought her to Dell, where her accomplishments caught the eye of a Walgreens recruiter.

Now Chawla tackles her biggest assignment yet: integrating online drug store retailing and health care with brick-and-mortar drug store retailing and health care — to the advantage of both.

If these new Walgreens staffers sound compelling, it is because they are. If their work in transforming a traditional drug chain sounds intriguing, it is because it is intriguing. So intriguing, in fact, that Chain Drug Review will devote its July 20 issue to the many new faces and initiatives of this most legendary of chain drug retailers.