Amazon not only sold $2.5 billion worth of goods, it introduced Prime members to new services. How should rivals compete in 2017?
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But ingrained doesn't mean inflexible. Senior management has recognized the role a strong Internet presence plays in engaging customers in stores and through mobile devices as well as through e-commerce sites and online marketing, Chawla says. "There is a lot of support at the top," says Chawla, who declined to comment on organizational structure but according to company records reports to CEO Greg D. Wasson. "Multichannel is in our DNA. Everybody on our senior management team really recognizes the value of the Internet and what it can do for all of our businesses. It's a great ongoing topic on our board agendas."
Walgreens also has the capital resources to invest in its multichannel strategy. For the fiscal year ended Aug. 31, 2010, its net earnings rose 4% year over year to $2.09 billion, as revenue climbed 6% to $67.42 billion.
Since joining Walgreens two years ago, Chawla has worked to combine the convenience of Walgreens stores with the Internet and mobile access into the kind of multichannel offering that can provide compelling services to customers however they prefer to shop.
Breaking new ground
The benefits have been quick to materialize, she says. In its own in-house study, Walgreens found that its customers who shop across more than one retail channel spend three times as much as those who shop only one channel. Other studies by research firms have found similar results for multichannel retailing in general.
But, facing formidable competition from the likes of Wal-Mart, Walgreens knows it must innovate. One example of that is its new live chat with pharmacy staff service– a program that captures the spirit of company founder Charles R. Walgreen Sr., who launched the first Walgreens store as a young pharmacist known for offering personal service.
After testing the live chat service last year, the positive response from customers convinced Walgreens to roll it out 24/7. "We saw high customer satisfaction numbers," Chawla says, without providing details.
One result, she notes, is that customers engaging in live chat with pharmacists tend to refill prescriptions at a high rate. That draws many of them into Walgreens stores to pick up their orders, and, Walgreens hopes, to purchase other items.
Moving pharmacists from the closed-off pharmacy section of a store to spend time in call centers conversing with many customers is an efficient use of a pharmacy's highest-paid professionals, Kilcourse says.
"Pharmacies can do a lot more and get better profit margins by incorporating live chat and online orders," he says.
They can also create buzz on Facebook. Taking live chat into new media, Walgreens has run a 90-minute live chat session with a New York-based Walgreens pharmacist, Dr. Stacia Woodcock, on the retailer's Facebook page–one of the tactics that has helped to build its following of 600,000 Facebook fans.
Big on video
Walgreens has also developed health videos featuring many of its 26,000 pharmacists discussing topics such as flu shots. And when one of its pharmacists administered a flu shot on The Dr. Oz Show, a popular health TV program, Walgreens showed a clip of that part of the show on its Facebook page.
In an effort to bridge Facebook and its stores, Walgreens features programs such as SaturDate with Beauty, which invites Facebook visitors to visit their local Walgreens to learn about beauty products and treatments. Walgreens promotes the program through e-mail and search marketing campaigns. "This is one of those things that can build excitement by leveraging all of our different channels," Chawla says.
She adds that Walgreens is taking several other steps to educate its customers about health and wellness while also making it easier to interact with the retailer through its multiple channels. Its e-commerce site at Walgreens.com, redesigned last year on an e-commerce platform from Art Technology Group Inc., was built to accommodate the growing number of consumers who access the site's extensive educational information, including 1,500 videos. In August, the redesigned site handled 17 million visits, up 20% from a year earlier, Chawla says.
Walgreens also runs many of its educational videos on HealthCornerTV.com, which includes direct links to Walgreens.com where viewers can purchase related products as well as access the videos. The retailer's HealthCornerTV videos have also appeared on the Lifetime TV channel. And Walgreens has introduced a video-stocked information site in a joint venture with Parents Ask, a division of Deca, a company that produces video content for advertisers, at ParentsAsk.com/Walgreens.
Last month, Walgreens launched with Bazaarvoice a customer reviews program that incorporates review content from consumer sites operated by some of Walgreens' suppliers. It also tags review content to improve how Walgreens' web pages are indexed by search engines.
On a mobile mission
Walgreens also is moving aggressively in mobile commerce. The company demonstrated its commitment to mobile in May 2009 when it assigned Tim McCauley, a senior Walgreens e-commerce executive, to become director of mobile commerce, making him one of the first retail executives with m-commerce in his title.
McCauley, who is part the Walgreens senior e-commerce management team, has helped make Walgreens an m-commerce leader. His team launched an app in September for Android phones, for example, that lets shoppers scan prescription labels, then view information on their mobile screens to confirm the prescription information and click to refill it. Similar apps for other mobile phones are in the works.
Walgreens already has apps for iPhone and BlackBerry phones that let users refill prescriptions. And iPhone users can check the availability of inventory in Walgreens stores.
Walgreens is also looking into additional functionality, including using GPS technology to inform consumers of promotions at stores they happen to be nearby. "This is how we think mobile will play," Chawla says.
The retailer's mobile commerce site, which it developed with mobile technology firm Usablenet Inc., provides many of the same features of its e-commerce site, including refilling or ordering new prescriptions, loading digital photos for printing at a Walgreens store, and checking the content of any store's weekly advertising circular.
"We're very excited about the usage we're getting with mobile; it has exceeded our expectations," Chawla says, declining to offer specifics on number of users or sales. "It really is like having a drug store in the palm of your hand."