Walgreens Taps Personalized Marketing to Reach Deal-Seeking Consumers

As economic pressures weigh on shoppers’ minds, Walgreens is leveraging its targeting capabilities to keep them engaged.

On a call with analysts Thursday (March 28) discussing second-quarter fiscal 2024 financial results for Walgreens Boots Alliance (WBA), the multinational pharmacy giant spoke to how U.S. consumers’ changing purchasing behaviors demand that the retailer works harder for their spending.

“Within retail, our U.S. customer’s confronting considerable pressure from multiyear inflationary trends and depleted household savings, with U.S. household debt at record levels and delinquency rates on the rise,” CEO Tim Wentworth said. “Our shopper is making deliberate choices to seek value resulting in channel-shifting behavior. We’re responding to these market dynamics by making investments in key value items and focusing our capabilities to engage with customers in an intelligent, targeted way.”

Many shoppers are pulling back. The February/March PYMNTS Intelligence report, “New Reality Check: The Paycheck-to-Paycheck Report: Why One-Third of High Earners Live Paycheck to Paycheck,” which draws from a census-balanced survey of more than 4,200 U.S. consumers, finds that 60% of shoppers have cut down on nonessential purchasing due to retail product price increases. Plus, half have turned to cheaper merchants, and 45% of low-income consumers have shifted to purchasing lower-quality products, as have 41% of middle-income and 28% of high-income shoppers.

Amid this trend toward trading down, private label products have become more popular. Wentworth shared that the retailer is “leaning into the massive and timely opportunity to increase own brand penetration,” not only meeting shopper demand for lower prices but also seizing on the “margin advantage” that these products provide.

“We launched 37 new products in Q2, and what this means for us is, as the consumer’s behavior continue to focus on looking at value and … being willing to lean into own-brand, this is working out quite nicely for us,” WBA Executive Vice President, President, Retail and Chief Customer Officer Tracey Brown told analysts.

Against this cost-conscious backdrop, “intelligent, targeted” communications, such as those highlighted by Wentworth, may go a long way. The report “Personalized Offers Are Powerful — But Too Often Off-Base,” a PYMNTS Intelligence study created in collaboration with AWS, finds that 71% of consumers received personalized offers and are interested in them, and another 12% did not receive personalized offers, but are interested in them.

Overall, WBA’s sales for the quarter were up roughly 6% year over year.

Additionally, the pharmacy giant is also adjusting its omnichannel strategy to meet the needs of today’s Click-and-Mortar shoppers.

“Operationally, we’re intensely focused on the customer experience and meeting customers where, when and how they want to shop,” Wentworth said. “That means enhancing the experience not only in-store, but ordering online for pickup in-store and also same-day delivery.”

This focus comes as a growing share of consumers seeks omnichannel engagement. PYMNTS Intelligence’s study “2024 Global Digital Shopping Index: The Rise of the Click-and-Mortar Shopper and What It Means for Merchants,” commissioned by Visa Acceptance Solutions and drawing from a survey of nearly 14,000 consumers across seven countries, revealed that 39% of consumers are now Click-and-Mortar shoppers, engaging across digital and physical channels. Specifically, 25% are digitally assisted in-store shoppers, using technology to improve their brick-and-mortar experience, and 14% are pickup shoppers, preferring to buy online and collect their items at the store.