Walgreens Plans Q3 Launch for New Customer Loyalty Program

By Adam Blair
Walgreens plans to introduce a customer loyalty program in September, and the nation's largest drugstore chain will also complete the chainwide rollout of its next-generation point-of-sale system by the end of 2012. The retailer's technology investments, which also include a 500,000-square-foot e-commerce distribution center that began shipping orders in February, are a significant contributor to a projected $1.4 billion in capital expenditures for Walgreens' fiscal 2012.

"For the [second] quarter, we invested $304 million in capital projects, bringing our year-to-date capital expenditures to $723 million," explained Walgreens CFO Wade Miquelon during a recent conference call discussing financial results for Q2, which ended February 29. The expected $1.4 billion in CapEx for the entire fiscal year reflects "our commitment to continue to invest meaningfully in game-changing technology such as a new POS system and e-commerce distribution center, as well as to continue to invest in our existing store base."

The POS system "is designed to be intuitive and easy to use and is powered by the latest technology in wireless capability," said Walgreens CEO Gregory Wasson. He also noted that the new DC, located in Edwardsville, IL, "is expected to improve customer order delivery time by 50%." Wasson provided no additional details about the retailer's loyalty program beyond the planned mid-September launch date.

Walgreens had $18.7 billion in net sales during Q2, a 0.8% increase over the same period the previous year and a record high for the company. Front-end comp store sales increased 2.1% during the same period.

The retailer is "expanding the scope and reach of Walgreens" through a multi-channel approach, said Wasson. In addition to ongoing progress in its integration of the drugstore.com e-commerce site, the retailer expanded its buy online/pick up in store service from Chicago and San Jose, CA to Indianapolis.

"In mobile, we added new functionality for customers to help them stay on top of their medications and transfer prescriptions in a few easy steps," he added.

On the social media front, Walgreens launched the Answers application on its Facebook page in March. Created in association with Sharecare, an expert question-and-answer online platform addressing health topics, Answers is "a first of its kind interactive portal that gives our two million [Facebook] friends access to valuable health information and resources including prescription drugs, disease symptoms, at-home remedies and over-the-counter recommendations," said Wasson.

"With the success of our online health initiatives, such as the ability to chat live with a Walgreens pharmacist 24/7, this is yet another example of our commitment to innovation in the digital space that gives people greater access to Walgreens pharmacists and other clinical experts," said Walgreens president of e-commerce Sona Chawla. "Our relationship with Sharecare further extends our Answers promise beyond Walgreens retail locations, providing important health care information to customer online, through mobile applications and social media