NEW YORK ___Beauty was highlighted as a major push during the Walgreens Boots Alliance annual shareholder’s meeting held here on Jan. 27 at the Park Hyatt.
WBA’s executive vice chairman and chief executive officer Stefano Pessina told shareholders the proposed acquisition of Rite Aid (which is pending approval from regulators and Rite Aid shareholders) will continue to strengthen the company’s U.S. footprint. Pessina expects the transaction to be completed by the second half of the calendar year.
His remarks also indicated that beauty expansion is on the front burner as the company seeks to duplicate Boot’s stellar reputation in the U.K. WBA, he said, is “building a wider and better beauty and personal care offering based on our own exclusive product range.” Company officials expanded on the blueprint for beauty in the next year during the question and answer period. “There are really two programs active at the moment in the U.S.,” said Ken Murphy, executive vice president of WBA and president of Global Brands. One, as reported last December in WWD, is a pilot test called Beauty Evolution being monitored in 13 Houston area stores. “We have transformed the entire beauty department of the store to really change the experience of the consumer in Walgreens. That’s under the Boots banner in the store. It is a learning experience,” he said adding it has been well received by acknowledging it is expensive to operate. The concept features entirely illuminated fixtures across all beauty categories, trained staff performing makeovers and uncarded beauty products—even for the national brands. The latter is a major revolution in the traditionally peg board mass market beauty merchandising style.
The department is set off with the familiar Boots elliptical signage, which hangs from the ceiling over cosmetics. Sleek white fixtures are punctuated in several areas with bright splashes provided by colored LED lights. A recent visit to one of the Houston stores revealed well-trained beauty consultants performing skin care consultations, color foundation matching and in-store makeovers. There were also testers of most of the beauty products along with ample sampling. The fragrance department is open sell with special tester units affixed to the display.
The second beauty initiative will roll out this summer under a program called Beauty 2000. Pessina said the drugstore chain is “building a wider and better beauty and personal care” offering. “There’s a yin and a yang to wellbeing and one side of it is health, and one side of it’s beauty,” said executive vice president and president of global brands Ken Murphy.
Walgreens plans to add beauty lines Soap & Glory and No7 to about 1,600 U.S. doors in August, as part of the Beauty 2000 program.. No7 is carried in about 400 U.S. stores, according to the company.
The rollout is in line with Walgreens’ intention to transform into a go-to beauty-shopping destination in the U.S. “It’s a place where we want to develop real authority,” Murphy said. Additional products are expected to hit shelves between February and August 2017, according to Murphy. He declined to elaborate on which brands will be added.
Walgreens has already taken a step away from traditional drugstore beauty retailing with a program called Beauty Evolution. As part of that effort, the retailer opened 13 beauty shops-in-shop in the Houston market last fall, complete with beauty consultants and service staff, according to Murphy. Those stores already carry the Soap & Glory line.
“What it was designed to do was really see how far we could push the beauty environment in a Walgreens store,” Murphy said. “It really stops a lot of customers in their tracks.” Walgreens is unlikely to roll out the program widely, and Murphy described the cost as “prohibitively expensive.”
Following that initiative, Beauty 2000 comes as the business attempts to change how consumers view Walgreens. “The ambition is similarly lofty in the sense that we want to really change the beauty environment in the mind of the customer and make her reappraise Walgreens,” Murphy said. Aside from drawing in more premium brands, Walgreens anticipates growing its fragrance credentials, Murphy noted. “I know we’re asking the consumer and the supplier to shift their mind-set quite a long way,” Murphy said. “It is farther down the priority list than cosmetics and skin [care].”
Walgreens lags behind Wal-Mart in terms of beauty market share in the U.S. The company is in the process of buying Rite Aid Corp. in a $9.4 billion deal that would add scale. That transaction has not closed and requires regulatory approval. In December 2014, Walgreens and Boots Alliance merged. The combined company bought Liz Earle from Avon in July.
Before the Walgreens Boots merger, Boots bought Soap & Glory and repositioned the brand — a job that included cutting distribution through Sephora and expanding at Ulta, Murphy said.