Walgreens Chases Customers It Lost During Covid Focus

Tracy Brown, president of Walgreens retail and chief customer officer, said in an interview the customer loss was primarily about people who only came into stores for vaccinations in the past few years. She said the company wants to convert them into permanent customers.

The nation’s second-biggest drugstore chain said revenue declined 5.3% in the quarter ended Aug. 31 as it filled fewer prescriptions and administered fewer Covid-19 shots. A shortage of pharmacy staff affected sales by forcing some stores to operate with reduced hours. Executives said the company plans to rectify that labor shortage by earmarking $265 million to stabilize pharmacy staffing. They also plan to boost sales by leaning into digital marketing.

In addition to converting the customers who came for vaccinations only, Walgreens’s marketing team has been tasked with analyzing data to figure out which customers have abandoned the company in the past couple of years and how best to recover them, executives said.

Customer data will come in part from the company’s myWalgreens rewards program and app, which currently counts 102 million members, according to Chief Executive

Roz Brewer.

The program lets executives analyze where customers are shopping and what they are buying, and use that information to reach out to them with more personalized marketing, Ms. Brewer said on the earnings call.

“The marketing dollars that come behind this are not the traditional marketing dollars from years past,” she said. “This is primarily a digital plan.”

Walgreens plans to assess data to group customers into various communities, depending on what their needs are and where they shop, according to Ms. Brown, the customer chief.

For instance, certain communities may be classed as “efficiency enthusiasts”—customers who are often digitally connected and want to get their shopping done as fast as possible—who are best targeted by ads for offerings like the ability to pick up online orders at their local stores. But a community of “support seekers,” who may need more pharmacy support, would be targeted with marketing around a store’s pharmacy services, Ms. Brown said.

The targeting strategy is part of the company’s plan to pivot its marketing toward everyday living, which Ms. Brown described as embracing a wide range of Walgreens customers’ needs and preferences, as opposed to a focus on Covid-19 services.

Recouping customers can be a difficult task in pharmacy, said John Ransom, managing director of healthcare equity research at financial-services firm Raymond James. “People leave and they don’t generally come back, even if you wave a coupon or something at them,” he said, adding that the growth in drugstore loyalty programs over the past decade doesn’t appear to have materially improved companies’ ability to bring in new customers.

Walgreens in May named former Calvin Klein executive Linh Peters as its chief marketing officer, in part because of her experience leading marketing and loyalty programs at

Starbucks,

Best Buy,

Target and Ulta.

Walgreens, which beat analysts’ expectations for its fourth quarter, is also continuing to remodel itself as a healthcare provider, having fully acquired home-health benefits manager CareCentrix and taken a controlling stake in primary-care network VillageMD. The company raised its outlook for its U.S. healthcare business after reporting unit revenue of $622 million for the quarter, equivalent to 2% of sales.

This month it began preparing a network of prescription-filling robots to give pharmacists more time to provide medical services and customer care.

Write to Katie Deighton at [email protected]