Annual Report to Team Members
January • February 2012
walgreenworld
Page 16
Q&A: Express Scripts, Web Pickup, Roth 401(k)s and more Answers inside!
Page 14
2011 poster
timeline
4
5 STRATEGIES Plain and simple
10
Well Experience photo tour
Executive letter from CEO Greg Wasson
Greg Wasson President & CEO
Progress brings opportunities
I
t’s just the start of the calendar year, but we’re already well into fiscal 2012, as we continue on our transformational journey to own the strategic territory of “well.” We’ve had so many significant achievements and accomplishments over the past year – finishing the last Customer Centric Retailing (CCR) conversions, integrating Duane Reade, introducing our revitalized private brand, launching our Well Experience stores, starting integration of our drugstore.com acquisition, kicking off our 2011 flu shot program, ramping up our 90-day-at-retail program and expanding our health systems relationships in hospitals, medical centers and communities. (You can see even more milestones in a pull-out timeline on page 14.) Sounds like a lot – and it is – but in some ways it feels like only the beginning. Progress almost always brings with it more opportunities. Our 5 key strategies are guiding our transformation and helping ensure we stay on track. Without a doubt, our work to transform from a retail drugstore to a retail health and daily living destination is taking us into exciting new territory. We are a real change agent in the retail drugstore industry – with the expansion of our Well Experience stores in the Indianapolis market, our groundbreaking new Duane Reade flagship store
at 40 Wall Street and much more. We’re bringing healthy and happy together – and are absolutely creating value. Just ask our 6 million daily store visitors and growing number of online shoppers. As we’ve already seen with a number of our activities, innovation, process improvement and progress clearly seem to open doors to new possibilities all across our organization. And that’s why my main message to you today is to always keep your mind open to innovative ideas and potential growth. Keep thinking of ways we can better serve our customers and fulfill our commitment to our communities. And on top of everything, let's continue our culture of helping each other feel well cared for. We’re a company based on solid values and a culture that encourages hard work, speed to market, performance excellence and innovation. Together, we’re taking this company into its 111th year of success. I wish you all a very successful year at Walgreens – wherever you work, whatever you do. Wishing you “well,”
Greg Wasson
President & CEO
Contents
VOLUME 79 | NUMBER 1
14
16
4
10
Features
2 The Scoop
Walgreen World is published six times
a year for team members and retirees of the Walgreens family of companies.
4
5 Strategies: Simplified
Quick - what are our five strategies, and what do they mean? We'll make it easy to answer with confidence.
Editor Moriah Simpson
10
Well Experience photo tour
You’ve heard about the new stores we’re piloting in the Midwest. Because we can't fly every team member to Indianapolis, we'll take you on a guided photo tour through one Well Experience store.
Managing Editor (interim) Maisie Sparks
14
Remember when …
Calendar 2011 was a year to remember. Use this pull-out timeline of major 2011 accomplishments and events to decorate your office or breakroom – and to see how far we’ve come in a year.
16
A flurry of questions*
Writers Elaine Achuck, Tyson Bosier, Steven Cohen, Dana Holmes and Iris Iglarsh Editorial Assistant & Translator Julia Ayala Design Hennessy Design Group, Inc.
There's no shortage of questions about why we do what we do. In our annual Q&A section, we answer 41 questions we received from you.
28 Powering our strategies New technologies like mobile POS devices and electronic mylars will keep us at the cutting edge of retailers and help us deliver on our five strategies.
Write to Walgreen World Mail Stop #1845, 108 Wilmot Road, Deerfield, IL 60015, or e-mail walgreen.world@walgreens.com.
Visit us at walgreens.com diversity.walgreens.com
On our cover From top left are Guy Halley, pharmacy manager; Tyrone Mitchell, DC team member; Frances Caamano, pharmacist; Tiffany Banks, pharmacy technician; Marlene Negron, photo specialist; and Lamont Frazier, service clerk. * Selected questions from "A flurry of questions" are available in Spanish on StoreNet or WalNet by searching for “publications.”
employee.walgreens.com facebook.com/walgreens foursquare.com/walgreens twitter.com/walgreens twitter.com/walgreensnews youtube.com/walgreens
* Preguntas seleccionadas de "A flurry of questions" están disponibles en Español en “StoreNet” o “WalNet” buscando por “publications.” jan | feb 2012 Walgreen World 1
The
scoop
First choice of the first lady
First lady Michelle Obama (center and right) joined CEO Greg Wasson (left) and Chicago mayor Rahm Emanuel at our store at 11 E. 75th St. on Chicago’s South Side on Oct. 25 to see first-hand our efforts to fight the childhood obesity epidemic. She praised our commitment to provide better food options and accessible healthcare to underserved communities. The event was part of a mayoral summit hosted by Emanuel and the first lady’s Let’s Move! initiative. As part of Let’s Move!, Mrs. Obama has focused on the issue of access to healthy, affordable food as a key pillar of her fight to end childhood obesity within a generation.
Shoo the flu
A
printed “thank you” in Walgreen World isn’t nearly enough to express all the appreciation for pharmacists, pharmacy technicians, nurse practitioners and other clinicians who give flu shots or provide support to our flu shot program. Even with all you’ve been asked to do on top of normal script filling and patient care – especially Express Scripts and Medicare Part D – you’re still making this a successful flu shot season.
To help spread the word about the importance of flu shots to residents of the Big Apple, New York City mayor Michael Bloomberg received his flu shot from Duane Reade pharmacist Nathan Barber at 3225 3rd Ave. in Bronx, N.Y.
2 Walgreen World JAN | FEB 2012
Since August 2011, more than 54 percent of our team members have received flu shots, which shows how well our healthcare professionals are educating co-workers on the importance of flu prevention. We’re also seeing strong flu shot sales on the consumer side. Kudos to all our team members for providing and encouraging customers to get flu shots. And congratulations to our top markets in the Flu Bowl competition. Look for winners on the “Arm Yourself” blog on WalNet and StoreNet.
L
Voice
ast year’s first annual My Walgreens My Voice survey was a success, with 60 percent participation companywide. We hope to increase that number in 2012 so we can keep track of how we’re doing to help team members feel well cared for. The survey will open in April, and we’ll be sending communications about it in the months and weeks leading up to the survey. In the meantime, managers should keep working on the action plans they developed with their team to improve engagement at each work location. And to all team members, be sure to participate in the survey in April!
FUN FACT
More than 40 percent of stores in the Walgreens family of companies are located in our top five states – Florida, Texas, California, Illinois and New York.
spy
Arm yourself is winning awards as it wins over patients.
'Arm yourself' takes home the prize
O
ur “Arm yourself for the ones you love” campaign is truly the best in the world. It was named Retail Advertising Campaign of the Year at an international gathering of retailers in Germany. Judges said our campaign combined outreach, speed and value that connected with customers and produced results. Congratulations to our marketing team.
Sandy Leslie, service clerk at 56805 Van Dyke Ave. in Shelby Township, Mich., sent us this photo, saying, "Our prices and honey are SO good, even the bees shop at store 11395!"
Taking care of Fighting Irish employees
T
his fall, Take Care Health broke ground on a wellness center for employees of the University of Notre Dame in South Bend, Ind. The center, which is scheduled to open this summer, will be staffed by a physician, nurse practitioner, pharmacist and additional medical professionals. Physical therapy will also be offered.
The center will be open to all full-time university employees and dependents, but not to students. This is Take Care Health’s first time opening a health center at a university and – they hope – the first of many more such facilities at colleges and universities.
Fill up your healthcare reimbursement account
I
f you’re a member of the Well Choice or Well Choice Select health plans, your 2012 benefits begin this month. In order to get healthcare reimbursement account (HRA) money to help offset deductibles, you need to complete the Walgreens Well Informed program. If you’re not a Well Choice or Well Choice Select member, you can still participate in Well Informed for free, but spouses and partners will have to pay for the service.
You can receive your health testing from a participating pharmacist, Take Care Clinic, or primary care physician, then enter information such as cholesterol levels and blood pressure into an online health assessment. All participating team members who complete the program are eligible for gift card drawings throughout the year. For more information, please visit www.walgreenshealthaction.com.
jan | feb 2012 Walgreen World 3
Remember when … 2011 at Walgreens Here's a look back at some of the highlights and news from the year.
Jan
13
Partnered with Oprah for free blood pressure testing in all stores Jun
Acquired drugstore.com
3
Jan
27
Launched Colby Red
JUN
Apr
21
6
Introduced Walk with Walgreens to consumers
mar
1
Pharmacists compounded Tamiflu oral suspension for children in response to shortage
January
february
JUN
22
march
mar
9
FEB
april
Sold pharmacy benefit manager to Catalyst
mar
1
16
Launched Way to Well Commitment – $100 million over the next four years
Feb. 17-March 4: Team members took the first annual “My Walgreens My Voice” team member survey
14 Walgreen World JAN | FEB 2012
Announced we’re moving forward without Express Scripts
mar
25
may
may
2
Matched team members’ donations to Japanese earthquake/ tsunami relief
Turned off lights at 1,415 stores for Earth Hour
9
10
june
Announced that pharmacists are providing daily cholesterol, glucose and A1C testing at 1,400 stores
may
may
Partnered with Greater Than AIDS to increase knowledge and understanding about HIV/AIDS and confront the stigma surrounding the disease. Provided HIV testing in 27 stores on June 22
Won several Webby awards for Walgreens.com
Won best national campaign from the CDC’s National Influenza Vaccine Summit
jul
5
Opened new flagship Duane Reade store at 40 Wall Street
jul
8
jul
20
Committed to converting or opening 1,000 food oasis stores in the next five years
Oct
5
Health and Human Services Secretary Kathleen Sebelius discussed prevention and received her flu shot at our store
Surpassed 1 million Facebook fans
Yo u r C ity. Yo u r d r u g stor e .
Oct
13
jul
13
Completed Duane Reade systems integration with the last store converted to Walgreen systems
Announced largest increase to dividend in company history oct
25 jul
14
july
July 25-28: Community Management Seminar in Las Vegas
Unveiled Walgreens 2.0 technology for the future
august
sep
15
Rolled out Web Pickup in Chicago-area stores
september
aug
18
First lady Michelle Obama visited Chicago Food Oasis store
October
October: Finished Customer Centric Retailing (CCR) store conversions
Launched Nice! private brand sep
november
december
November: Completed 43 Well Experience store conversions in Indianapolis
Installed 100th solar power system
28 smart. quality. everyday.
nOV
11
Offered a merchandise discount to veterans and active-duty military for Veterans Day
jan | feb 2012 Walgreen World 15
technology
Powering our strategies Upgrades to software and hardware will enable a new experience for customers and team members. By Moriah Simpson
Y
ou asked for it … faster computers, better registers, smarter alternatives to the drudgery of hanging ad tags. You want tools that’ll make you feel like you work for the cutting-edge, innovative retailer we are. Well, we heard you. In Las Vegas, we shared some of our technology goals and gave store managers a glimpse of the gadgets we’re working on. And, boy, did they generate excitement. Even standing ovations. “We’re investing heavily to support the stores with the best technology that’s available, such as mobile POS devices, ‘next generation’ touch-screen registers and electronic mylars,” says Tim Theriault, chief information officer. “Everything we do in technology is focused on providing team members with leading-edge tools that will save time, improve the customer experience and increase sales.” Next-generation registers have been developed and thoroughly tested in pilot. They’re now in approximately 1,000 stores, with more on the way. The others are more long-term investments because we need to provide the technological horsepower needed to run these mobile and innovative applications before they’ll operate in every store.
“Everything we do in technology is focused on providing team members with leading-edge tools that will save time, improve the customer experience and increase sales.” Tim Theriault Chief information officer
28 Walgreen World JAN | FEB 2012
Tablet computers, with their easy access to health and wellness information, allow team members to look up details about products, services or health conditions for customers and patients.
Powering up At the end of last year, we started installing faster and more powerful servers and networks in our stores. By the end of 2012, all our stores will have new servers that provide enhanced security, more data storage and faster networking capabilities. Along with the servers, we’re also beefing up the infrastructure to make the gadgets run. We’re installing faster telecommunications lines, new phone systems, a “next generation” data center and wireless access (Wi-Fi) at all our corporate, distribution center and store locations. If you look at our five strategies (see page 4), technology plays a big part in achieving all five of them. As we transform our stores and pharmacies, new tools will help us differentiate ourselves from competitors. The technology will give team members what they’re asking for to keep them engaged and provide an outstanding customer experience. And, they’ll be crucial to opening new channels and reducing costs by improving the way we work. “We’ve always been a technology pioneer,” says Theriault. “Intercom Plus is just one great example. We were the first drugstore in the world to build a system that links patient records across our store network. Now, our
technology rollout plan features lots of new and exciting solutions to give team members the tools they need at their fingertips to perform all their job duties.”
Here are some solutions to look forward to: Touch-screen registers
With their large touch-screens, these new registers give lots more information to team members. For example, message prompts guide service clerks from screen to screen, eliminating the need for flip books and special functions or reason codes. And new team members tell us they find the system intuitive and easy to use. “Everything is meant to be so much simpler on the new register,” says Kathleen Horne, community leader at 21 Rand Road in Des Plaines, Ill. “Even the receipts are easier to read and understand.” Receipts print out at the end of the transaction, not while the bar code is being scanned. That allows all like items to be grouped together and coupons to be listed below the corresponding items. This new format makes it easier for customers to identify their purchases and their savings.
Mobile POS devices speed up check-outs and price checks because they bring the register to the customer.
Electronic mylars show regular and sale prices with the click of a button, saving time and keeping shelf tags in sync with the point-of-sale (POS) system.
Tablet computers
Electronic mylars
Our health guides and pharmacy managers at Well Experience locations are taking advantage of the power, portability and convenience of these devices to provide customers and patients with real-time health and wellness information. When fully operational, they also will be able to access non-Walgreens databases to better coordinate patient healthcare.
One of the most time-intensive responsibilities at our stores is printing, hanging and changing price and ad tags. In response to many ideas from the stores, we’re piloting a software program that will handle these tasks electronically. This drew the biggest reaction in Vegas, but it’s still in the earliest stages of testing and may not roll out for years. “We know team members want to hear about rollouts, not pilots,” says Theriault. “At the same time, we owe it to them to be sure we’re introducing a product that’s been tested and proved, and to keep costs in line. We’re letting team members know what we’re working on so they can get as excited as we are about the ways we’re using technology to make their lives easier.”
Mobile POS
We’re testing a mobile point-of-sale (POS) device that can scan bar codes, check on-hand quantities, verify costs, look up item locations, review sales and ring up customers who are using credit or debit cards. A little larger than a smartphone, the mobile POS can be taken anywhere in the store to assist customers with price checks or help them check out. “A customer who was on crutches thanked me for bringing the ‘register’ to him,” says Caryn Cox, store manager at 1701 N. Buffalo Grove Road in Buffalo Grove, Ill., who’s piloting the mobile POS. “I saw him trying to get to the checkout line so I went over to him and swiped his credit card. He placed his purchase in his back pack and was on his way. With that simple act, we were able to enhance his shopping experience and his impression of our company.”
Innovation recognition Our plans to improve productivity and the customer experience through technology have been recognized by ComputerWorld, InformationWeek and Retail Information Systems. The seamless integration of our systems to serve our customers as well as our own business needs has placed us among the nation’s most innovative users of information technology.
jan | feb 2012 Walgreen World 29
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2011
by the Numbers
Fiscal 2011, which ended Aug. 31, 2011, was a big year for Walgreens. In fact, despite a challenging economy, it was our best year financially since 1994. True, it will take hard work to sustain these results this year. But for now, here are some of our significant financial milestones we achieved during the last fiscal year:
• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •
Through our Profit Sharing Plan, we paid nearly
$322 million into team members' accounts through the company match.
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30% from 2010, to $2.7 billion.
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Our net earnings – our bottom line results – were up nearly
This was our 37th consecutive year of record sales, and we set three company records: Nearly
72.2 billion
$
in sales, a 7.1 percent increase over fiscal 2010; $20.5 billion in gross profit, an 8 percent increase; and $2.94 of earnings per diluted share, a nearly 39 percent increase.
••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• In July, the Board of Directors increased the quarterly dividend by
28.6% the largest percentage increase in our 110-year history. We’ve paid a dividend in 316 straight quarters (79 years) and have raised it for 36 consecutive years.
••••••••••••••••••••••••••
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8,200
locations, including our stores, worksite health centers, infusion
and respiratory service facilities, specialty pharmacy and mail service facilities.
We completed our Rewiring for Growth initiative, exceeding the goal of
one
billion dollars in annual cost savings.
We administered
6.4
million flu shots last season and continue to be the No. 1 provider of flu shots outside of the federal government.
••••••••••••••••••••••••••••••••••••••••••••••
we now have more than
•••••••••••••••••••••••••••••••••••••••••••••
With 164 net store openings (254 new locations, 36 acquisitions and 126 closings),
We filled
819 million prescriptions, meaning we fill one out of every five retail prescriptions in America.
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