Walgreens says new small-format store personalizes care, could help ‘pharmacy deserts’

Walgreens has launched a new type of store that reduces its square footage and focuses on the pharmacy.

Expect to see fewer items in the store front, a narrow selection of over-the-counter medications, and an emphasis on pharmacist-customer relationships.

It has opened more than 30 small-format pharmacies as part of a pilot, and may open more, depending on store performance. Within the company, the project was named “Cooper,” a reference to the Mini Cooper, a cult little BMW car.

Walgreens Boots Alliance is testing new approaches as its competition grows. Sales in fiscal 2019 increased 4.1% to $ 136.9 billion, but adjusted earnings per share fell 0.5%.

In addition to feeling the heat from CVS Health and other pharmacies, Walmart and Amazon are expanding their approach to healthcare. Walmart has opened four clinics that offer a wide range of services at a low price, including primary care and dental care, in addition to the pharmacies it has in many of its large stores. Amazon bought PillPack two years ago, laying the foundation for the company to expand to a pharmacy.

Walgreens is balancing its investment with cost-cutting efforts that have included layoffs and hundreds of store closings. Walgreens shares, which have a market value of $ 36.7 billion, are down 29% since the start of the year. The company’s pharmacies initially saw sales increase during the pandemic as people stocked up on essentials and recipes, but that decreased with requests to stay home.

Walgreens has turned some of its more than 9,200 stores in the United States into “neighborhood health destinations,” a term it uses to describe locations with health care services along with a pharmacy. In some stores, rent space from the diagnostic company LabCorp, the optical company For Eyes, and the weight loss company Jenny Craig. It has 14 locations that offer primary care through agreements with third-party companies, such as Village MD. More than 230 of Walgreens stores have clinics run and run by a nurse practitioner from a health system.

Walgreens group vice president of pharmacy operations Rina Shah said the company wanted to move away from a “one size fits all” approach and tailor store offerings to a nearby community and customers.

He said the small-format pharmacy was partly inspired by Walgreens stores near health care systems that are smaller and serve customers who collect medications after they are discharged from the hospital.

In early 2019, he began testing small-format pharmacies. You now have stores in a variety of small towns and big cities across the country, including Mobile, Alabama; Greenville, South Carolina; Schenectady, New York; Bethesda, Maryland; Indianapolis, Indiana; Jacksonville, Texas and Knoxville, Tennessee.

Small-format pharmacies are about a quarter the size of a typical Walgreens store, averaging approximately 13,500 square feet. Stores have a more open concept and receive daily deliveries, so they have less stock in the back.

Inside the stores, customers will not find the typical wide selection. Instead, they’ll notice a sharper focus on health and wellness products like vitamins, over-the-counter medications, thermometers and band-aids, Shah said.

She said the product mix has changed, depending on what customers want. For example, in a store, she expanded the section for cough and cold medicines.

Stores have a limited variety of drinks in a small refrigerator and snacks, including healthy options like vegetable chips, peanuts, pretzels, and popcorn.

Pharmacists play a central role in the new type of store, and Walgreens hopes that personalized care will ultimately lead to better health outcomes, Shah said.

He said the company sees smaller stores as a place where more people can have one-on-one conversations with pharmacists, particularly those taking multiple medications or with complex and chronic conditions.

“These stores really do intend to provide a high contact experience, and even a convenient experience, to our patients in a different capacity than a potentially busy 24-hour location where people enter and exit,” he said.

So far, he said Walgreens has received positive feedback from patients and doctors about the “hands-on approach.” She said the first signs were noticed that this style has increased patient adherence, or the number of people who follow medical advice and take their prescriptions correctly.

In addition to filling prescriptions, pharmacies also offer vaccines such as the flu shot, he said.

Like many other Walgreens stores, most small-format pharmacies have a place where customers can drop by and pick up items instead of parking and entering. That option has gained popularity during the coronavirus pandemic, Shah said.

Most Walgreens stores in the United States have drive-thrus.

Shah said the company is testing small-format pharmacies in various locations, including urban, suburban, and rural areas. Even when people order prescriptions online or deliver them to their doorstep, Shah said physical locations continue to play a role.

“The value of the pharmacy is not so much the prescription he takes,” he said. “It’s about understanding how to take the medication, what side effects you should control, and ultimately how to manage your disease in the future.”

The company considers a variety of factors when deciding where to open stores, such as whether more pharmacies and greater access to healthcare are needed, Shah said.

“Every customer and every market is a little bit different, so we’re just looking to understand exactly where this would fit,” he said. Those include “pharmacy deserts,” where customers don’t have a nearby place to pick up prescriptions.

“That is an environment in which a small-format pharmacy can fit really well,” he said.