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Walgreens Boots Alliance announced sales growth of 11.3% to $131.5bn for the year ending 31st August 2018. Performance was boosted by its acquisition of Rite Aid. Performance across markets and divisions was mixed. 

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Walgreens has entered a partnership with online beauty retailer Birchbox to pilot an experience-led fixture in a selection of its stores.

Improving the beauty offer in-store and online

Walgreens has partnered with beauty brand Birchbox to boost in-store experience for its beauty shoppers. Walgreens will also acquire a minority equity interest in the beauty brand.

The initial pilot will include 11 Walgreens locations throughout the US, rolling out in December and early 2019.

The space will be branded as Birchbox, and designed to look and feel inviting, homely and comfortable, appealing to the everyday beauty shopper. The range will include over 40 new beauty brands as a result of the Birchbox tie-up.

The beauty brand allows shoppers to build their own box for a set price. This includes a total of five products, both full and sample sized. This offers shoppers opportunity for personalisation and to trial several products in an innovative and engaging way.

Source: Business Wire

Birchbox-trained Walgreens Beauty Consultants will be on hand to navigate shoppers through the purchase experience.

Partnering to offer a point of difference in a competitive market

The addition of Birchbox, originally an online-only subscription service, enhances the retailers existing multi-channel offering and will help Walgreens in its drive to boost its digital capabilities.

The partnership will create a seamless experience, with shoppers able to sign up for a Birchbox online subscription in-store.

The partnership complements the retailer’s Beauty Differentiation programme, which began in 2016 and is designed to improve Walgreens’ beauty offer in terms of service and product portfolio.

Richard Ashworth, President of Operations, Walgreens commented on the move “This collaboration will help enable Walgreens to continue to strengthen our beauty offering and build our prestige portfolio.”

The announcement follows the news that Kroger and Walgreens have partnered to launch a pilot store, which aims to differentiate its customer experience, offer convenient ways to shop and enhance its grocery offer.

 

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Kroger and Walgreens are partnering on a new store pilot where customers will be able to shop for products and services from both retailers.

Walgreens stores to operate as pickup points for Kroger ecommerce orders

The companies have selected 13 Walgreens locations in Northern Kentucky where customers will be able to collect their Kroger online grocery orders and purchase Kroger’s private brand ranges. The pilot will run for several months, with the companies collating customer feedback before making any decision on expanding the program.

Source: IGD Research

Aligned with Kroger’s strategic priorities

This pilot aligns with Kroger’s strategic priority to redefine the customer experience and provide its shoppers with more convenient options. The business continues to expand its grocery ecommerce operation, through both store pickup and delivery in partnership with Instacart. Earlier this year, it formed a strategic partnership with Ocado which will see it develop up to 20 customer fulfillment centres to support the further expansion of its grocery ecommerce initiative.

Delivering convenience in new ways

For Kroger, Walgreens’ network of almost 10,000 stores makes it an attractive partner to collaborate with. The drugstore retailer has secured highly convenient sites in many major US cities, potentially providing Kroger with access to new shoppers in urban locations. These are areas where Kroger is currently under-penetrated. The stores could be key in helping it grow its ecommerce business as the store locations will be close to where consumers work and live. This move comes following a shift out of convenience retailing, having sold its convenience network to UK-based, Euro Garages earlier this year.

Enhancing the Walgreens grocery offer

Partnering with Kroger provides Walgreens with an opportunity to further differentiate the customer experience. Although it has a well-established private brands program, especially in beauty categories where it has optimised the Boots portfolio, it does not have the same depth of offer in grocery categories. Kroger’s Simple Truth, natural and organic range, and premium-tier, Private Selection, brand will be key additions to the offer. Walgreens will also be assessing the impact on store traffic of having Kroger customers coming in to pick up their orders. 

Enables Walgreens to focus efforts on health, wellness and pharmacy

If the pilot is successful, it could see Kroger take a more strategic role in supporting the development of the fresh and grocery offer at Walgreens. This would enable the drugstore operator to focus on its areas of expertise in health, wellness and pharmacy. While the retailer has developed a sophisticated food offer, including its ‘up market’ fresh food concept, there has been less development in this area over recent years compared to the healthcare side of the business. Future developments could also see Walgreens take a role in the provision of healthcare and pharmacy services at Kroger. Three years ago, Target divested its pharmacy business to CVS Health, noting the growing sophistication and complexity of pharmacy-related services. 

Global shift towards strategic alliances

This new partnership further highlights a key trend we have seen over the last year of retailers globally reimaging how they operate. Where historically it was a case of owning and operating stores in as many countries possible, there is now a strategy of building alliances. The strategic partnerships are enabling retailers to expand into new areas and reach different customers, faster and with lower capital requirements.

Retail Analysis subscribers: access our latest report on Global Retail Alliances here

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International health and beauty retailer Walgreens Boots Alliance taps half a billion consumer pool in China with Alibaba’s Tmall.

Beauty sector in China showing impressive growth rates

China’s beauty market is seeing rapid growth in recent years. As they become more sophisticated and brand-aware, Chinese shoppers are increasingly looking for quality international beauty and cosmetics products.

Cross-border e-commerce on Tmall

Alibaba’s Tmall Global platform is China’s largest B2C marketplace for both Chinese and international brands. It allows brands and retailers without operations in China to build virtual storefronts and ship products to the country. Alibaba asserts that the growth rate of gross merchandise volume (GMV) was over 70% for Tmall’s top 20 global strategic partners in 2017.

First step to reach great potential

Boots will launch its online flagship store exclusively on Tmall, introducing a range of Boots own popular brands to more than half a billion consumers in China. Popular products, such as No7, Soap & Glory and Boots Cucumber, will become available on the platform.

Today’s announcement is the first step on a path we believe offers both of us incredible potential for the future,” said Ken Murphy, executive vice president at Walgreens Boots Alliance.

Multiple routes to growth in China

 The business has described its latest venture with Tmall as complementary to its existing retailing and wholesaling activity in China. WBA has been operating in China for over a decade, recently increasing its investment in the market through a new strategic partnership with Guoda Drugstores Co. Ltd in December 2017. WBA’s $416m investment secured a 40% stake in the Chinese retail pharmacy business which operates more than 3,500 outlets in 70 different cities.

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