Client
Walgreens
On the Web
www.walgreens.com Project
Merchandising Transformation
Shorcut to
Business Challenge
How
Accenture Helped
High Performance Delivered Executive Summary
Walgreens and Accenture collaborated to increase local customer loyalty by
using customer insight to create stores according to local buying patterns. By
implementing new capabilities such as the Basic Department Management system,
each store can create a blueprint for merchandise allocation that will maximize
sales, profitability, and customer satisfaction and retention.
Understanding Customers Leads to Store
Innovation  
Business Challenge
What bricks and mortar stores don't carry is as important to convenience as
what they do carry. The challenge is to closely match the needs of consumers in
their local market to the store offerings thus creating a more loyal customer
base and more efficient, profitable operation.
Walgreens, the
largest drugstore in the US with more than 3,000 stores, met this challenge
head on. It recognized the opportunity to create targeted assortments based on
the buying patterns of its customers as a way to distance itself from the
competition, drive sales and profits and foster loyalty among its customers.
Previously, its merchandise strategy dictated that stores adhere to
prototype (one size fits all) category assortment and space requirements
preventing Walgreens from creating assortments for the local customer.
How Accenture Helped Accenture was brought in to develop the tools, capabilities
and infrastructure to help Walgreens increase its sales and profitability by
creating assortments and space allocations based on local needs. We designed
and implemented a new integrated software system which tailors merchandise
assortment and shelf placement to its 3,000+ individual store neighborhoods.
The new system—Basic Department Management (BDM)—analyzes customer
demographics and adds product information, geographic factors, seasonal changes, and store and shelf sizes so that every store can receive a personal
merchandising blueprint. As a result of this effort, Walgreens now has: - An effective Web-based information distribution infrastructure
to allow efficient headquarters-to-store communication for merchandise
planning.
- Identified departments/categories where customers buy products differently.
- The ability to build assortments for each category to meet these important customer needs.
- The ability to allocate store-level space based on local
customer demand for each department.
High Performance Delivered This blueprint not only influences where today's items are
placed (changes can be communicated and executed in days or even hours) but
also helps Walgreens locate tomorrow's trends or niche customer needs. It gives
managers the tools to adjust basic departments—like pain relief, foot needs, or
skin care—to the ordinarily homogenous demographic groups in their store's
one-to-two mile radius.
For example, an urban Walgreens will likely end up with smaller size or
count products, such as single-use pain relief tablets, pedestrian-oriented
items such as cushioned insoles, while suburban Walgreens will stock up on
larger count products or merchandise.
To customers the changes will be subtle—they'll only know it's easier and
faster to find exactly what they need at Walgreens.
Not only does this initiative improve performance by driving
sales, profitability and differentiation but it also frees up additional
capital by eliminating inventory that does not sell in all stores providing the
capital necessary to fuel Walgreens' aggressive growth strategy.
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