Walgreens Boots Alliance: A Beauty Business within a Global Retailer
Paul Bosher, Global Head of Consumer Planning & Insights at Walgreens Boots Alliance, explains how his team serves as the voice of the consumer, holding the business to account, and helping the company grow its brand business portfolio.
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Just as all Brits know Boots, all Americans know Walgreens. Both are beloved retail pharmacy, health, and beauty brands in their respective countries. (As a British expat living in the US, I can now say I know both very well!)
Nearly three years ago, the two retail brands merged to form a new global business, Walgreens Boots Alliance (WBA). Boots and Walgreens retail stores are in dozens of countries, with more than 13,000 locations worldwide, and each maintain a healthy e-commerce presence. Not only is WBA massive, it’s also massively successful, with annual revenue of more than $117 billion.
One the most important sources of revenue for the company are its own beauty brands and private label products, including brands like No7, Soap & Glory, Liz Earle, Botanics, Nice!, and Studio 35. WBA isn’t alone in relying on its own brands as a source of growth. Across the entire retail industry, store brand product sales are growing – in the past year alone to 0.7% – compared to nationally branded product sales, which decreased by 0.3%, according to Nielsen.
Despite proclamations that private label is retail’s secret weapon, the particular success of any one of WBA’s own products isn’t guaranteed. It demands deep customer understanding. WBA operates in a rapidly changing global consumer landscape. It must contend with competitors, disruptors, and remain ahead of the macro trends that sway consumer behavior and sentiment.
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Paul Bosher, Global Head of Consumer Planning & Insights at Walgreens Boots Alliance, and a team of nearly 40, are charged with understanding global customers to help develop, launch, market, and grow the company’s own brand business portfolio. “My job is putting the consumer in the room, being the voice of the consumer, holding the business to account, and saying, ‘Are we building brand equity here, or are we just doing growth?’”
What are some examples of successful brand initiatives your team is working on?
Being a retail business is an advantage WBA has over national FMCG brands. “Because we’re both a retailer and a brand owner, and we’re leveraging the best of both, we’re able to really take advantage of those synergies and, three years in, we’re moving really fast,” Bosher says.
Most recently, Walgreens Boots Alliance launched CYO, an affordable cosmetics line (most products are $8 or less) geared towards Gen Z for its hip, edgy, urban vibe. CYO is the first cosmetics brand the company has launched in more than 20 years. “Before the brand launched, we were able to test it live in stores,” explains Bosher of the consumer research for CYO, which was conducted mostly in the US. “We made mockups of the products, we had them installed in stores, and we saw consumers interact with them.”
Boots and Walgreens operate as independent retail stores, but crossover with WBA’s private-label products is starting to occur. For example, the aforementioned No7 has been a staple in the UK for more than 80 years. In just under a year since it launched in Walgreens stores, No7 has risen to stateside success; Bosher says it’s now the #1 serum in the US.
Both Walgreens and Boots rely heavily on bricks-and-mortar sales. In the age of Amazon, is that sustainable? How is Walgreens Boots Alliance encouraging consumers to visit its physical retail stores?
Bosher says the company’s online businesses are doing incredibly well, but he also admits that Amazon is “a threat to every business.” So, WBA is innovating its bricks-and-mortar retail stores to be more complementary to consumers’ lives. “It’s about experience. It’s about wanting to come into the store, to enjoy the experience or get in and out really quickly depending on what the customer’s needs and motivations are,” he says.
At thousands of Walgreens stores, the company has introduced “Beauty Differentiation” at the front of the store. The strategy is to give customers, mostly women, a “beauty-centric” experience as soon as they enter a Walgreens – something they can’t get on Amazon, or anywhere else. “Beauty Differentiation” stores are lit differently, offer an array of beauty and personal care merchandise (including the company’s own brands), and they even feature live beauty consultants.
George Fairweather, EVP and global CFO of Walgreens Boots Alliance, has called the “Beauty Differentiation” strategy one of the reasons the business – and its own brand sales – is growing. “We have now recruited beauty [consultants] across more than 1,800 stores, which is helping to drive No7 sales and gross profit,” he told analysts earlier this year.
What about big data? Is it the answer to achieving greater customer understanding?
A statistician by trade, Bosher uses data to inform his view of customers and where to take the brands business next. And, with more than 100 million active loyalty card holders across WBA (about 22.5 million in the UK and 80 million in the US), data is in abundant supply. It can tell Bosher everything from what customers bought, to where and when they bought it, and with what other products.
While data can help make better business decisions, Bosher says it can also lead to incrementalism. For a retail business like WBA, incremental innovations can sometimes make a big difference, especially as margins narrow. However, it’s not always the best long-term growth strategy. More powerful than data alone is asking, ‘Why?’ As he explains, “Small improvements are important, but you’re never going to transform a business or build a new brand or be disruptive unless you understand the consumer motivation behind the data.”
What are some of the techniques you use to gain a broad view of your customers?
“We use data, but we also talk to people,” Bosher stresses. “We talk to them in as many different ways as we can.” For example, his team can whittle down customer loyalty data into insightful conversations with small subsets of loyalty card members, which can reveal underlying reasons and motivations behind the trends observed in the data.
But sometimes they can’t. Consumers are complex and imperfect and can’t always readily explain why it is they do what they do. “We often rely on the consumer telling us why they did something, and that’s not always the case,” Bosher acknowledges. For that reason, he turns to System 1 and System 2 decision making analysis – essentially, learning from how people make fast, snap decisions versus slower, more deliberate ones – or behavioral economics to get to the “whys” behind what the data is saying and what consumers themselves aren’t readily revealing.
What is your team’s mission? What are you focused on most for the business?
“All good businesses should have a vision, and that vision should cascade down,” Bosher says. For his team, it’s to be the best insights team in the world. They aim to be strategic partners to internal stakeholders throughout the global WBA business. They’re obsessed with customer centricity, with being a rational and passionate voice of the customer that’s ready, willing, and able to challenge every employee to think differently.
Ultimately, Bosher’s priority is to create “significant commercial advantage.” He thinks this should be every employee’s mission, something instilled in him from a 13-year career in sales at Johnson & Johnson. “Whatever function you’re in, you are responsible for the culture, you’re responsible for the brands you own, and you’re responsible for the bottom line. If we’re not making a commercial difference, we shouldn’t be doing it.”
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