General Merchandise

Boosting Traffic & Transactions

New agency expected to help Walgreen design more effective promotions
DEERFIELD, Ill. -- Walgreen Co. said that it is "reinventing the customer experience" in its stores. Promotions will be designed to not only boost transactions, but also to increase overall traffic to the stores to entice consumers with the experiences that will keep them coming back. To help it implement this new customer strategy, the Deerfield, Ill.-based drug store chain has awarded Arc Worldwide, the marketing services arm of Leo Burnett USA, its U.S. retail marketing business effective immediately. Arc Worldwide will handle promotional work as Walgreens' first-ever promotional [image-nocss] marketing agency of record, including shopper marketing.

The retailer has been attempting to reposition itself as a convenience destination as well as a health and wellness destination. It has been streamlining merchandise selection and shifting promotional focus toward essential consumer needs. It has also been expanding its private-brand products to provide value to customers and higher profit margins to stores.

In late 2008, Walgreen launched "Rewiring for Growth," a major initiative designed to fundamentally reduce costs and improve productivity. The program will align the company's costs, culture and capabilities to its strategy and the realities of the current economic environment. It targets approximately $1 billion in annual cost savings by fiscal 2011 through strategic sourcing of indirect spend, plans to reduce corporate overhead and work throughout the stores, and savings from the initiative to transform community pharmacy. In conjunction with the overall "Rewiring for Growth" effort, Walgreen anticipates incurring total one-time costs of approximately $300 million to $400 million over fiscal 2009 and 2010.

And the retailer recently said that it wants to bring liquor back to its stores. It exited the liquor business in the early 1990s at most of its stores except for a few markets in the Southeast and Southwest. The company is applying for local government licenses needed to reintroduce beer and wine to its national chain of more than 7,000 stores.

"The hiring of Arc Worldwide as our dedicated promotional marketing agency of record signifies our strategic move to create a more differentiated and integrated Walgreens shopper experience," said Kim Feil, chief marketing officer for Walgreen. "Arc's expertise in truly connecting with consumers, moving and inspiring them both in-store and out is going to help Walgreens play a unique role in shopper's lives by giving what they need and what they want, when they want it."

As part of the engagement, Arc Worldwide will be helping Walgreens gear up for both the flu and holiday seasons, as those are expected to be heavy traffic times for the retailer. Arc will also tap Relaythe sponsorship, consulting and experiential marketing company of Publicis Groupefor field marketing and event sponsorship projects.

Walgreens is the nation's largest drugstore chain with fiscal 2008 sales of $59 billion. The company operates 6,679 drugstores in 49 states, the District of Columbia and Puerto Rico. It provides convenient access to consumer goods and services and cost-effective pharmacy, health and wellness services in America through its retail drugstores, Walgreens Health Services division and Walgreens Health and Wellness division. Walgreens Health and Wellness division includes Take Care Health Systems, the largest and most comprehensive manager of worksite health and wellness centers and in-store convenient care clinics, with more than 700 locations throughout the country.

Click hereto view previous CSP Daily News coverage of Walgreens.

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