Walgreens Opening 9 New Micro-Fulfillment Centers As Personalization Pays Off

Lisa Johnston
Editor-in-Chief, CGT
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Walgreens Boots Alliance (WBA) is increasing investments in micro-fulfillment centers as the retailer furthers its tech-enabled healthcare growth plans.

The company currently operates two micro-fulfillment centers in Phoenix and Dallas that support about 550 Walgreens pharmacies. These two facilities are lifted by the majority stake WBA took in automation provider iA earlier this year and will grow to support about 1,000 pharmacies. The company has also selected nine more markets for micro-fulfillment centers it plans to open by the end of 2022.

WBA, named the No. 5 retailer by RIS News earlier this year, is evolving its U.S. retail model across consumer value, services and convenience, said James Kehoe, EVP and global chief financial officer, in an earnings call, noting that its customer engagement platform is “progressing nicely and building momentum.”

The company reported year-over-year sales growth of 12.1% in the quarter, to $34 billion, up 10.4% on a constant currency basis. U.S. retail sales increased 1.4% and comp retail sales grew 1.7%.

As part of its retail evolution, the company is refining its personalized offerings as access to consumer insight increases. Membership of its loyalty program, relaunched last year as MyWalgreens, was up 34% over the prior quarter to 75 million members, while mass personalization increased retail sales by around 100 basis points in the fiscal third quarter.

Walgreens, which also plans to launch a series of debit and credit card products in the fall, has leaned into its loyalty data to connect with consumers during the pandemic, serving them with information surrounding COVID-19 testing and the vaccine. It’s also created personalized content and solutions through digital chat with its pharmacists.  

“The work we've undertaken throughout the pandemic to improve our omnichannel experience and offer convenience options is resonating with consumers,” Kehoe said.

In providing an update on its Walgreens Advertising Group retail media network, which launched late last year, Kehoe shared that it’s expanding its offerings and also now working with third-party brand providers across digital and video.

The retailer has also completed the rollout of SAP S/4HANA, which is expected to unlock operational efficiencies and working capital improvements, as well as improve product availability and delivery speed.

WBA has completed 6 million curbside drive-thru and last-mile delivery orders to date.

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