No doubt that Walgreens Boots Alliance—which owns the U.S.-based Walgreens and the UK-based Boots pharmacies—has seen recent challenges. Stefano Pessina, Walgreens’ executive vice chairman, CEO and largest individual shareholder, said Q2 was “the most difficult quarter we have had since the formation of Walgreens Boots Alliance.” He identified “market challenges and macro trends” as the reasons that the company fell short of Wall Street expectations—which caused the company’s stock to drop 15.3 percent in April.
That combination of market challenges and macro trends that Pessina cited is particularly troublesome for Walgreens, which faces consolidation among insurers and tougher drug reimbursement rates. A weak cold, cough, and flu season added to the challenges, the Wall Street Journal reported in a paywalled article about the company’s woes.
Some speculate that Walgreens Boots Alliance may merge its way out of trouble, with Amerisource Bergen and LabCorp both frequently mentioned as targets. Each make logical sense; Walgreens Boots Alliance already owns just over a quarter of Amerisource, while Labcorp is installing patient service centers in hundreds of Walgreens stores.
Pundits can pontificate on what might make sense—and why—but Walgreens Boots Alliance has said exactly how it intends to propel Walgreens into the future: through partnerships, not purchases. The company signaled last year that partnerships would “bring us scale beyond anything we could do ourselves,” Pessina said.
Here are five strategic partnerships poised to help Walgreens Boots Alliance transform healthcare delivery and revolutionize its retail operations.
Walgreens x Microsoft
In January, Walgreens Boots Alliance and Microsoft announced a multiyear strategic partnership focused on building healthcare solutions, improving health outcomes, and lowering the cost of care. The two companies also said they might explore joint innovation centers in select locations. “Digital health corners,” where healthcare-related hardware and devices were available, were piloted in other locations.
The goals are lofty, with a focus on personalized medicine, connected consumer-driven medicine and collaborations with payors, providers and pharmaceutical manufacturers. Walgreens Boots Alliance is a key link in the chain between patient, provider, insurer and pharmaceutical—and the data that those relationships generate. Leveraging that ensures Walgreens has a leading role in the transformation of healthcare.
Walgreens x Narvar
With more than 8,000 Walgreens locations already offering FedEx services, an expansion made sense. Logistics company Narvar is using those FedEx-enabled locations as a pickup option for those who buy online/pickup in store from any number of Narvar Concierge customers. (The Narvar Concierge alliance also includes select Nordstrom stores.) Shoppers also can use the Narvar Concierge to return unwanted items.
For consumers, it offers an easy pick-up place (thwarting porch pirates) and an easy return location—especially when Walgreens’ FedEx partnership makes any return shipping so convenient.
When the relationship was announced in April, a Walgreens spokesman notes that it would build on the service it offers customers. “As our customers redefine value and convenience, change the way they shop, and adopt new technologies, this is another way to leverage new and different platforms, and partnerships, to bring more services and solutions closer to our customers,” he says.
In other words, as RIS News notes, “For Walgreens, the offering builds upon its efforts to further transform its retail business to provide more of the products and services customers are looking for today.” It takes advantage of the large number of Walgreens’ locations—some 8,000 will offer the service—and gets customers through the door. Taken together, it strengthens Walgreens position as a retailer to visit.
Walgreens x Village MD
Walgreens’ relationship with Village MD will put primary care physician offices in a handful of locations. Unlike existing walk-in clinics—in which customers see a nurse practitioner or physician’s assistant for minor ailments—the Village MD clinics will be full-service, ranging from annual physicals to any other issue one would normally see a doctor about. Walgreens will shrink its retail space in favor of the physician offices.
The physician offices are another facet of Walgreens’ expansion of healthcare delivery. Some locations have LabCorp facilities, which can perform blood draws. Others have an Aspen Dental location or senior care facility in partnership with Humana. Adding these additional services would help expand Walgreens from a pharmacy retailer into a one-stop center able to serve a majority of healthcare needs.
Walgreens x Birchbox
While most of Walgreens’ new initiatives are decidedly focused on health and wellness, beauty isn’t overlooked. Enter the alliance with Birchbox, which performed an extreme makeover on select Walgreens beauty areas. The revamped spaces range from 400 to 1,000 square feet and look like mini Birchbox stores. Birchbox has curated skincare, makeup and haircare products that have proven popular with its subscription boxes.
As part of the deal, Walgreens Boots Alliance made an undisclosed investment in Birchbox. Skincare and beauty are both booming retail sectors and upping the cache through the Birchbox partnership could help put those select Walgreens on par with department store cosmetic counters.
Walgreens x Sprint
The Sprint Express option put a mini-Sprint store into a handful of Walgreens locations. There, customers could buy pre- and post-paid plans and products, select devices, sign up for service and pay bills. During the holiday season, Sprint used Walgreens stores as a pickup location for its buy online/pickup in store option.
The partnership makes sense for both parties, since Walgreens outpaces its rival CVS in terms of tech products sold.
These store-in-stores— as an option to combat porch pirates with online delivery—provides Walgreen with foot traffic. How easy is it to pick up laundry detergent, a bag of chips or aspirin while paying the phone bill?
The Power and Potential of Partnerships
Most of Walgreens’ new partnerships are somewhat limited in number of stores impacted. Whether that’s about personalizing the store experience based on location or just experimenting to find strategies that will work more broadly remains to be seen. But one thing is clear: Walgreens Boots Alliance has put the healthcare industry in general on notice. It sees the future of healthcare delivery and is staking out its place in a better-aligned system of care. And it’s going to use its expertise in pharmacy retail to better understand shoppers’ needs as it becomes a full-fledged partner in their overall health and wellness.
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