Walgreens Store Manager Goes on Local Buying Spree

Discussion
May 15, 2009
Avatar

By George
Anderson

Locavores in the Crescent City,
CA area are able to get some satisfaction buying from a big, old national
chain.

According
to Jon Parmentier,
a store manager at a local Walgreens, corporate management has given him
some dollars and the green light to pick up locally produced goods.

“There’s
been a lot of talk about buying local,” Mr. Parmentier told The
Triplicate
. “Here at Walgreens, I’ve gone on a binge and bought
a lot of local stuff.”

Among
the local items sold at the Crescent City Walgreens are postcards by Barbara
Bono; Allen Justice Photography 5×7 notecards;
Elk Prairie goat’s milk soap; Organic Essence lip balm; Jed Smith Redwood
Burl Company wood carvings; Two Sisters and Such jelly; Sacred Grounds
Coffee and books from local authors.

The
local goods have all been placed at the front of the store to make them
easy to find and a different item is featured each week.  Business
for the locally produced items have been good, according to Mr. Parmentier. “I’m
finding that much of it is appealing to both locals … but also to tourists
coming through,” he said.

Discussion Questions:
Would you recommend local sourcing for large chain retailers? Are store
managers best suited to be the buyer of those goods?

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19 Comments on "Walgreens Store Manager Goes on Local Buying Spree"


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Bob Phibbs
Guest
11 years 11 months ago

Smart if customers are demanding it, notice it and it makes money.

Warren Thayer
Guest
11 years 11 months ago

So much can vary here. Yeah, sometimes it’s a good idea. You have to factor in margin and turn, obviously (or you better!), but also whether these items displace items that are of potentially more importance to your shoppers. If they differentiate and turn out to be traffic builders, great. If you’re doing it to be Mr. Nice Guy or politically correct, it’s a bad idea. Sounds like what this Walgreen’s store has are some cool, differentiating traffic builders, which is great. Some “local” food buys are increasingly being found to have a higher carbon footprint, etc., than crops grown in Mexico or South America. Like I say, so much can vary here.

Steve Montgomery
Guest
11 years 11 months ago
In our experience we have found that empowering store level managers to select items for resale not to be a good decision. We have seen this go wrong so many times we coined the phase “empowerment before education equals chaos.” That being said, even if the company attempts to provide the education required, it is unlikely that they can afford the resources to educate store managers to the degree necessary. Walgreens may have mitigated the downside by two factors–limiting the funds involved and a requirement that the items be locally produced. Buying local for a large chain can be a good idea. It helps form bonds with the community that otherwise might not exist. However, if a company wants to buy local we have found regional/local supervision is a far better level of management to handle the task. Ideally, the responsible party does solicit input for the local manager and they, in turn, from their staff. We also encourage clients to carefully control the process with guidelines on the types of items, retail value, amount… Read more »
Joan Treistman
Guest
11 years 11 months ago

I think this is a smart way for Walgreens to become part of the community and engage its local customers. If they support the businesses in their community, the business people, aka consumers, will support Walgreens.

I don’t expect the sales of the additional products to be a significant revenue stream. However, the draw for local and tourist shoppers will create opportunity for Walgreens’ other products and services (pharmacy, photos) to benefit. And that will definitely add to the bottom line.

Having the local manager responsible for this initiative makes sense. This is the person who knows the store’s consumer profile and has the relationships outside the store. It’s efficient from a time and cost perspective. It also adds a sense of ownership that will result in greater motivation and enthusiasm which the entire staff will enjoy.

I would not recommend a centralized approach because it will defeat the added value Walgreens can realize. It’s a great example of “think global” and “act local.”

Ben Sprecher
Guest
Ben Sprecher
11 years 11 months ago

For chains with strong talent at the store level (e.g., Whole Foods), empowering store managers to make buying decisions has been a critical factor in differentiating from alternative channels. But, devoting floor space to local products means less room to sell existing national brands.

It will be critical for Walgreens to measure the outcome of this experiment according to their existing success metrics. For example: revenue per square foot, trip frequency, size of basket, share of wallet, or contribution margin. The greatest potential opportunity might in attracting consumers willing and able to spend more.

Moreover, it doesn’t only matter how good an *idea* this is. Chain drug struggles with store-level execution, even for centrally planned national brand programs. Throwing a wild card into the mix will only increase those challenges.

Anne Howe
Guest
11 years 11 months ago

From a consumer POV, it’s great. But what if they source local products that make someone ill. Perfect example is lotion or soap not properly labeled with various herbs that can cause big allergy issues (this happened to me).

While I am a huge supporter of locally-made products, I do think there must be some regional supervision and “vetting” of products for safety issues, to help avoid a potentially big risk for this well-respected national retailer.

Carol Spieckerman
Guest
11 years 11 months ago

I don’t see local buys as profit and volume-drivers; however, they do help build connections with shoppers. If Walgreens continues the program, they can look forward to volumes of inquiries from local suppliers wanting to sell their handmade goods then follow-up inquiries about when those products will roll out chain-wide. Perhaps you’ve seen all of the rags-to-riches misinformation about how local buys turn into chain-wide success stories! To me, that alone makes local buying an administrative challenge and potential distraction.

David Biernbaum
Guest
11 years 11 months ago

Local sourcing within a large retail chain is a very smart practice if the local store manager is well trained to make good decisions.

Doron Levy
Guest
Doron Levy
11 years 11 months ago

Buying local is good but I would lean towards more of supplying community wants and needs. If you are in a Hispanic area and you happen to find a Hispanic wholesaler then for sure. You probably can’t get cultural goods from your own DC. It pays to make those community connections and bring in unique merch that your competitor would never think to get. If it sells, it’s shelved.

Kevin Graff
Guest
11 years 11 months ago

Possibly good, possibly bad. The comments above do a great job of reflecting both sides. Having said that, in an era of so much ‘sameness’ between competing chains, if done well, this could be a good differentiator. Yes, there’s lots that could go wrong, but this type of ‘community involvement’ has a lot of potential upside as well. Bring on the right training and parameters to control these type of purchases and this could be a good, albeit small, win for Walgreens.

David Livingston
Guest
11 years 11 months ago

This is a good way to keep the manager being a manager and not a robot. It’s also a good way to free up time for corporate employees which would normally have to deal with these local decisions.

Jonathan Marek
Guest
11 years 11 months ago

No one could possibly know in advance how this idea will work. It is perfect for a test. Most likely, what Walgreens will find is that the idea works in some stores and not in others. Maybe it works in rural environments but not urban, or only where there are long-tenured managers to make good decisions, or only in touristy areas. By testing the idea in different types of stores, Walgreens can find the sweet spot.

Mel Kleiman
Guest
11 years 11 months ago

Good idea, bad implementation…if you look at this as a risk versus reward scenario. The risks are much greater then the reward.

1. Most managers think like managers and not buyers or owners.
2. Lack of control over quality of product.
3. Lack of financial control.
4. Adding another task to someone who is already over worked.
5. Lack of consistency of product and utilization of floor space.

Solution: Develop a regional buying team and let store managers make suggestions and let the professional buyers buy.

Gene Detroyer
Guest
11 years 11 months ago
I am really quite astounded that Walgreens bought into this concept. Back in 2006, Walgreens loaded all of their stores with the introduction of the Today Contraceptive Sponge. Every store got the same number of units. A dramatic misallocation of stock surfaced in Arizona (and I am sure other places.) Apparently, the same district manager had responsibility for stores in the largely retirement community of Scottsdale and the university community of Tempe. The Tempe stores were out-of-stock on a daily basis. The Scottsdale stores sold almost none. Yet, the district manager was not permitted to move product from Scottsdale stores to Tempe stores. It sounds like Walgreens may be moving to the other extreme. This is a dangerous precedent. Purchasing locally is good. It enhances the product assortment and may mean greater returns with the addition of a very small number of unique items. But to do this without control can lead to disaster. Consider, to be accepted into the Walgreens distribution system, a manufacturer must have anywhere between $5 million and $15 million product… Read more »
Ralph Jacobson
Guest
11 years 11 months ago

Mel said it best. Period. The company is playing with fire. And I’m an ex-supermarket store manager.

Craig Sundstrom
Guest
11 years 11 months ago

This strikes me as today’s example of “lipstick on a pig,” at least to the extent that a major chain (national brands, low prices) is trying to be a “local” store as well (unique brands and–presumably–higher prices)…a seemingly incompatible mix. Also, Crescent City seems like a curious locale to launch the idea, as it’s hardly a hub of industry (that they found even this many local vendors surprises me…but c’mon, where’s the Salmon Jerky?) Then again, maybe the limited supply of suppliers will keep the manager from getting into too much mischief.

Dave Wendland
Guest
11 years 11 months ago

I agree with many of the comments already shared. This is a slippery slope and may certainly present some significant challenge. On the positive side, if Walgreens is truly focused on ‘local-market’ influence and being an integral part of the community’s tapestry, then bravo. Caution is a good watchword and execution/monitoring will be difficult at best, but I do applaud the innovative thinking and entrepreneurial spirit.

Jonathan Sapp
Guest
Jonathan Sapp
11 years 11 months ago

For many years, Longs Drugs allowed their store managers to buy local products, which were displayed in a special area. Depending on the manager, these ranged from art to locally produced food products. It gave a “local face” to the company, resulting in customer loyalty based on feeling they were spending money with a “local retailer,” rather than a faceless corporate one.

janet spada
Guest
janet spada
11 years 11 months ago

I worked for Walgreens for a while about 10 years ago and the store managers purchased local-interest products. For example, they purchased local sports team items during playoffs. Great idea, in my opinion. Who knows the customer better than the manager of the store where he/she shops?

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