Will new cash-back cards deliver healthy returns for Walgreens?

Discussion
Photo: Walgreens
Aug 18, 2021

Walgreens announced on Monday the launch of its new myWalgreens Credit Card program, which features two “industry-first retail health and wellness credit cards.”

The two cards — a myWalgreens Mastercard and a private label myWalgreens option — provide cash-back rewards at the drugstore’s 9,000 stores, on its website and via its mobile app and can be used wherever Mastercard is accepted. Cash-back rewards are not the sole story, however, as the card has been designed to provide specific benefits for cardholders making purchases and engaging in activities that benefit their health.

“Most credit cards reward customers for what they buy, but not how they live,” Maria Smith, vice president of payments & financial services at Walgreens, said in a statement accompanying the card’s launch. “The myWalgreens Credit Card aims to change that through building upon the strength of our myWalgreens loyalty platform and app experience, while cardholders can earn up to 10 percent Walgreens Cash rewards for making healthy choices.”

Ms. Smith told RetailWire that the card program represents “the latest expansion of Walgreens financial services offerings, which also include the myWalgreens mobile wallet, Walgreens remittance services, ATM and third-party banking services.” The cards will seamlessly integrate with Walgreens’ programs including “curbside pickup, integrated pickup, same-day delivery and same-day prescription delivery.

The new myWalgreens cards do not charge an annual fee and allow cardholders to earn 10 percent back on eligible purchases of the drugstore chain’s private label products and five percent on other eligible front-of-store and pharmacy purchases.

The rewards do not stop at Walgreens — cardholders earn three percent when they buy eligible grocery, health and wellness products elsewhere, including visits to healthcare providers. The card offers one percent rewards on all other eligible purchases.

Customers opening accounts will receive $25 in Walgreens Cash rewards after making a purchase with the card within the first 45 days.

The cashback benefits that cardholders receive offer greater rewards than those from the retailer’s myWalgreens loyalty program. The retailer announced last November a reinvention of its previous program with members earning five percent for store brands and one percent for all other purchases made storewide. Program members would also receive personalized “Only for you” deals as a perk, as well.

DISCUSSION QUESTIONS: Are the financial benefits or the consumer data derived from credit card usage linked to loyalty programs of greater value to retailers? Will the myWalgreens card’s health and wellness angle prove a strong draw for the chain’s customers?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"To be competitive in health, Walgreens must examine their entire operation and ensure their overall focus is clear."
"To be honest, I’d rather see Walgreens re-invest in pharmacy personnel. The service has gone way downhill in the past 2+ years..."
"A win-win, if you ask me. The financial benefits to Walgreens are simply icing on the cake."

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13 Comments on "Will new cash-back cards deliver healthy returns for Walgreens?"


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Paula Rosenblum
BrainTrust

To be honest, I’d rather see Walgreens re-invest in pharmacy personnel. The service has gone way downhill in the past 2+ years (predating the pandemic, but exacerbated by it). When I call to ask the pharmacy a question, I am routinely left on hold for a half hour or more (they answer the phone, so corporate wouldn’t likely notice, and then just press the hold button over and over again). The drive-thru pharmacy almost always has a long line and I find those who remain somewhat less cooperative than in the past. There is no substitute for real customer service and I’m just not seeing it.

Richard Hernandez
BrainTrust

This. I agree 100 percent — and it is the same in-store (I experienced this yesterday). Trying to find someone to ask where something is, is a difficult thing. While I understand the need to be in the game with other cards, investment in customer service would be money well spent.

Neil Saunders
BrainTrust

Again, not a bad initiative and one that will be helpful to a degree. But what about the core business? Retail? Pharmacy services? How about investing in those areas – which are lagging behind – rather than toying around with schemes which are peripheral to the main business?

Melissa Minkow
BrainTrust

Walgreens already has a strong app and loyalty program, so they’ll have to make it extra clear that these cards provide even further value for the consumer in order for them to adopt.

Dave Bruno
BrainTrust

For consumers, this feels like more of a good thing. We get more rewards, seamless integration to our existing relationship with the brand (as well as all the brand’s services), greater Walgreens rewards, and rewards for purchases beyond the four walls of Walgreens. And no annual fee. And Walgreens’ marketers and merchants get all that rich data. A win-win, if you ask me. The financial benefits to Walgreens are simply icing on the cake.

Dave Wendland
BrainTrust

Admittedly, the health and wellness angle is an intriguing one. However encouraging healthy behaviors, stocking the right merchandise, and offering services that encourage and support personal selfcare initiatives is paramount. To be competitive in health, Walgreens must examine their entire operation and ensure their overall focus is clear.

Chuck Ehredt
BrainTrust

This is not an investment by Walgreens. They will make a lot of money from the co-branded card operator (bank) and get a lot of useful insight about customer spend outside Walgreens. What is open for debate is how many people will take them up on the new cards (aren´t people who actually pay their bills already inundated with payment methods), and will they be able to put all the new data to profitable use?

You can´t build loyalty with a loyalty program, points, or other gimmicks. Loyalty is primarily based on the customer’s overall perceived value from the brand, and their cumulative experience interacting across all touchpoints with the brand. If those are broken, new cards will have a minor impact on the business.

George Anderson
Staff

Walgreens’ best bet is for its regular customers to adopt this card. As others have pointed out, there is a lot of options for households to use cash-back or other credit cards with incentives. These, at least the couple we use for our purchases, are with those retailers where we were already doing a lot of shopping before signing up for a card. The downside to rewards for cardholders, however, is that high interest rates are charged for payments not made in full.

Andrew Casey
Guest

Besides the obvious financial gain retailers get from a card, this is simply a proxy for programs such as Amazon Prime which are designed to make the issuing retailer the default for participating shoppers. Customer service comments are certainly relevant but just as Prime encourages people to start their product search at Amazon, this will encourage participants to start at Walgreens. And it doesn’t cost $120 a year.

Raj B. Shroff
BrainTrust

I believe both the financial benefits and consumer data will be of value to Walgreens.

Getting 10 percent back on eligible Walgreens private label products seems compelling and 5 percent back on front of store. I can’t think of anyone else giving 10 percent back, the standards seem to be 1, 2 and 5 percent. So if people switch to Walgreens private label, they stand to get a good amount of money back. And even if they don’t, the perceived value of getting 10 percent back from a marketing standpoint could be potent. Add the health and wellness marketing halo and it can’t hurt.

As for the health and wellness angle, I think it could be a draw for sign-ups. People feel good about themselves when they enroll in something aligned with health and wellness, even if their long-term purchase behaviors prove otherwise.

Ananda Chakravarty
BrainTrust

This move is a follow up to the recent piloting of the Walgreens Plus program that’s being phased out. The program offered up to 20% discounts and required a fixed membership fee. The new program will capture solid financial results, even if designed to breakeven. The data may be less substantial as most of this data would be available to the retailer through other programs and their credit card processing.

The health and wellness angle, if stressed properly, can be a huge draw. For the pharmacy, rolling the program out across 70MM+ members will certainly yield some immediate financial results and more important, the wellness impact.

storewanderer
Guest
2 months 3 days ago

The marketing message is too confusing. Points back. Different number of points back depending on item/category. Difficult to redeem points — can only redeem in $1, $2, $3, $4, $5, $10, or $20 (only one of those per transaction).

They would have been more successful copying Target with an instant 5% discount if you pay with this card. Sure, they’d have looked like a copycat, but so what — it would have provided a simple, immediate benefit to the customer and would have been simple for the employees to sell to the customer.

A lot of changes are needed at Walgreens and so far, if this is the best the new CEO can come up with, this is really disappointing. Also in the past couple weeks I’ve been to multiple Walgreens Stores where the “system is down” and they are only accepting cash, can’t do loyalty/coupons, can’t process pick-up orders (even if the order is ready for you and bagged) … their basic operation is broken and meanwhile they are focusing on this?

storewanderer
Guest
2 months 3 days ago

This card reminds me of Sears and credit cards tied to its Shop Your Way program. And that is not a positive connection.

wpDiscuz
Braintrust
"To be competitive in health, Walgreens must examine their entire operation and ensure their overall focus is clear."
"To be honest, I’d rather see Walgreens re-invest in pharmacy personnel. The service has gone way downhill in the past 2+ years..."
"A win-win, if you ask me. The financial benefits to Walgreens are simply icing on the cake."

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