At The Intersection Of Several Types Of Retailers
From a strategic perspective, Walgreens has a unique position in the marketplace, sitting at the intersection of Wal-Mart, small discounters, Target, and grocery store chains. The medium size and neighborhood-centric locations of typical Walgreens make them akin to small discounters. Walgreens’ scale allows it to offer low prices à la Wal-Mart. The uniqueness of some of Walgreens’ merchandise is similar in ways to Target’s offerings. And Walgreens’ offering of some staple groceries put it in line with grocery stores. The “trick” for Walgreens is to leverage some of these aspects of its offerings into targeting buyer groups which value a significant combination of many or all of them. If they can locate large pockets of these profiled consumers within given geographic locations, they will be hugely successful in this recession and in any economic climate, no matter how terrible.

How To Use Its Position To Gain Buyers
In sitting at this strategic intersection, Walgreens can gain buyers by:
1. Keeping Low Prices For Many Merchandised Items
2. Maintain and Develop Relevant Signature Brands (Non-Staples)
3. Stock Need-To-Have Grocery Items (Staples & Certain Non-Staples)

Prescription Savings Card Is A Winner
A bright spot for Walgreens is its prescription savings card which is increasing in usage and members. This offers people savings on the purchase of prescription drugs, which can be a substantial expense especially for people on a fixed income. Walgreens has a recession-proof winner here and should put more resources behind increased marketing to targeted groups. Here, they can utilize the advantage of their scale to move returns beyond other investment of resources.

Match Position With Informed Strategy And Right Tactics
Walgreens’ positioning and strategy must be “in-synch” especially during this economic downturn. They need to build solid links to key buyer groups through understanding their demographics and lifestyle preferences. This needs to be turned into pinpointing geographical locations where groups with desired demographics and lifestyles are located. Bets need to be placed in these areas – whether with a new store or upgrading an existing store. Simple line extensions of “stripped-out” non- or less value-added features will yield ultra-value private label product lines – which can counter-intuitively be branded boldly by wrapping these items into a special designated section or store-within-a-store. This is a marketer’s dream: being able to brand generic low cost items! At the intersection where Walgreens sits, what would you do?

Impact of Goodwill with Customers
Goodwill is measurable and highly elastic, which allows a company or person to earn a premium ethically. The additional sales that are generated by customers feeling good about your product or service has an elastic factor in the sense that it will cause them to buy from you at a higher proportion than if they felt indifferent. This effect can be directly measured in increased “pocket share” for current individual customers, and the amount of new customers obtained through referrals. These numbers are real and important to your business.

Ethics Fade, Societies Fall
It is interesting to see throughout history how the fall of ethics in a society preceded the collapse of that society, empire, or nation. Look at the Roman Empire, Greece, the French Revolution, and other collapses and it’s likely they started or were emblematic in their non-ethical businesses activities and that spread to their core institutions. Positive activism – not only just by the elite but with everyday people – is right and dutiful. We must all remember that people doing right by each other in business and activities translates into morality in our society – and that’s the whole point, isn’t it?

Change To Localization Orientation Is Key
The new CEO, Frank Blake, tackled this problem, and changed Home Depot’s purchasing system which favored national uniformity at the expense of local preferences to a less centralized system. His new system balanced local demand with national efficiency. Localization of purchasing for retailers is critical for two reasons. First, it can lead directly the development of blue oceans in products and services. Secondly, from a shorter-term, more quarterly perspective, it enables a retailer’s stores to own marketspace geographically. Wal-Mart’s meteoric rise is based in creating local monopolies in “small town” America. The real explosion for retailers occurs when geography is linked to demographics and usage habits.

Wal-Mart Example: Link Geography To Demographics And Usage
Wal-Mart is beginning to understand this linkage – they created a group of 350 people around the country to better respond to local preferences. Wal-Mart also hired experts to produce more detailed demographic information about each store’s customer base. By linking demographics and customer usage to a locale or region, a retailer becomes more responsive and speedier in spotting buying trends and habits which affect an individual store’s profitability and margins. These twin metrics are even more important now during our current challenging economy as consumer sentiment and buying habits are shifting more toward value. Even Target’s usual value proposition and communication to its customers of “Expect More, Pay Less” is being skewed by them to the “Pay Less” side – truly a sign of the current tough times.

Home Depot Blue Ocean Strategy Localization Wal-Mart Robert Nardelli Frank Blake Turbo Tagger