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DEERFIELD, Ill. — One of the missing pieces for Walgreen Co. in its transformation into a “health and daily living” retailer has been a customer loyalty program. But that won’t be for much longer.
Company executives recently provided some details about the shopper loyalty program that the drug store chain is testing.
Speaking at the 2011 Walgreens Vendor Summit in Lincolnshire, Ill., division vice president of loyalty Adam Holyk said Walgreens is close to finalizing the program after an 18-month pilot in 130 stores in three markets: Richmond, Va.; Portland, Ore.; and Kansas City.
More than 1.3 million customers were involved in the pilot program in which Walgreens tested a point-based system that gave shoppers $1 off a future purchase for every 400 points they collected.
Expectations are that Walgreens will launch the program in its 2013 fiscal year, according to Holyk. The company just closed the 2011 fiscal year in late September.
When the loyalty program is rolled out, it will be the largest of its kind in all of retailing, Holyk said.
“It will be big, and it will change how we and our vendors do business,” Holyk said.
A points-based system, he explained, drives positive changes in consumer behavior better than a program focused on price reductions.
“People who collect points are more loyal, and points help attract new customers and keep them,” said Holyk.
He noted that the loyalty program will have an impact on every part of Walgreens’ business.
“We believe we can drive customer acquisitions with this program, and in the pharmacy space we feel that a loyalty program can drive adherence [to medications],” Holyk pointed out.
Of the nation’s largest mass-market retailers, Walgreens is one of a few chains without a customer loyalty program. Discount store giant Walmart, the country’s biggest retailer, also doesn’t have a shopper loyalty program.
Walgreens’ two chief competitors in the chain drug store arena, CVS Caremark Corp. and Rite Aid Corp., already operate successful customer rewards programs.
CVS/pharmacy’s 10-year-old ExtraCare program is the country’s largest retail rewards program, with more than 67 million active cardholders. And Rite Aid’s wellness+ program, which was launched chainwide in April 2010, now has more than 44 million members and is billed as the drug store industry’s first customer loyalty program to provide health and wellness benefits along with shopping discounts and special prices.
