Walgreens Health & Wellness Sourcing: Open Eyes, Ears, Doors 1/20/2017
Walgreens' Robert Tompkins, general merchandise manager and group vice president for health & wellness, and his staff were recognized this past December with ECRM’s Merchant Team of the Year award for excellence in sourcing, merchandising, and supplier collaboration.
ECRM discussed these three areas with Tompkins, as well as his team members Heather Hughes, divisional merchandising manager OTC, and Mike Wolf, divisional merchandising manager advanced care, to highlight the strategies and successes that earned them the award. In this first of a three-part Q&A, we focus on sourcing.
ECRM: Please give us a brief overview of your roles within the team.
Tompkins: I’m the general merchandise manager and group vice president for health and wellness. We have three divisions: OTC drug, wellness, and advanced care. Advanced care is focused on seniors and chronic disease. We manage the front end of retail products portion of the Walgreens portfolio but work very closely with both our pharmacy partners.
Hughes: I’m the senior director and divisional merchandise manager for our OTC portion of the business, which basically reflects those core treatment over-the-counter products. So, think cough, cold and allergy, GI, foot care, pain, sleep and pediatrics.
Wolf: I’m senior director and divisional merchandise manager of advanced care. So, I work in the senior business which is really convalescence, incontinence, adult nutrition, reader glasses, and then more advanced care businesses which we kind of encapsulate things like diabetes, diagnostics and compliance. And some of those disease states have a lot of overlap with our pharmacy peers, so there’s a lot of collaboration there.
ECRM: Tell us the overall strategy around your sourcing -- your main areas of focus when you’re sourcing new products.
Tompkins: Our goal is to be first and best with innovation, and innovation can come from many sources. I would say our general philosophy is that we want to have open doors, open eyes and open ears. A great product can come from our large or mid-sized CPG partners, but then we also try to make sure that we allocate a good percentage of our time to small, niche or even totally new-to-market suppliers. I think our merchant team does a great job of this.
ECRM: Can you give us a couple of examples?
Hughes: IBgard is a good example of where our category manager identified the trend of irritable bowel syndrome (IBS) growing pretty strongly within the U.S. population. When the product was presented to him, he saw an opportunity to work with that vendor and make sure the communications out there for the customer to know that they can find this product at Walgreens. It’s really only been on our shelf for 18 months and we’re seeing consumers respond the first year in. On the own brand side, we’re always are looking for opportunities where the national brand hasn’t found a solution, but the customer has definitely told us that they need one. An example of that would be our Walgreens Chest Rub Vapo Stick. We put a cold vapor rub in a stick format because mom didn’t really want to have to touch that strong formulation as they put it on her child, so we gave it to her in a stick format as an alternative solution to having to rub it on directly with her hands.
Wolf: On the advanced care side, there are certain niche areas that CPG won’t enter, and the best example there in own brand is the Walgreens Talking Pill Reminder that we work in partnership with our pharmacy team on for people with visual impairment. It adheres to the top of medication bottles and the caregiver or pharmacist can record instructions into the device on how and when to take the pills. It’s a $9.99 retail, so it’s very low entry price point for the consumer. It was something for which we saw a consumer need that was not being addressed in the marketplace and so we actually developed that innovation with our own brand counterparts.
On the branded side, in the diabetes space found a brand called Almased at an ECRM EPPS meeting. We saw the uniqueness of a diabetic-friendly supplement that was not yet in the marketplace. So we launched that with them and were first to market by a pretty sizable lead, a good six or eight months.
ECRM: Walgreens does a lot on the digital front -- are you tapping into the digital to mine what some of those consumer needs are?
Wolf: Yes. We work really closely with our digital partners on the e-comm side in several ways. Often e-comm is the right place to get a feel for consumer demand on innovation, especially with niche products, and so there is a history of us making our e-comm brethren aware of what might be niche offerings that we don’t see necessarily as being a chainwide play yet. But they take them on, help launch their products, and then if those items get scaled in appropriate volume and consumer demand, we’ll start to bring them into our stores. There are many examples of this in convalescence and other categories. I think the other place that can come into play is with product reviews and product rankings. Customers provide us with a lot of feedback on products online and that’s how we are working in the other direction with our e-comm partners – to provide feedback and insights on consumer delight or more issues with products back to the core brick and mortar merchants.
Also, I think our partnership with Web MD is a unique digital asset. It’s a strong marketing and digital collaboration where we bring that product knowledge into our customers’ hands through the Web MD access.