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Stefano Pessina – Walgreens Boots Alliance

Stefano Pessina – WBA

WBA chief Stefano Pessina reveals how digital technology will help transform the business


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Walgreens Boots Alliance Chief

What is top of your agenda this year?

First, we are undergoing a process to digitalize the company. In some parts of the business we are quite good in this area and in others we are not very digitalized because we have to rewrite all of our old software. We are also reformatting our stores and have just launched a test in 17 stores in Florida to focus even more on healthcare in the retail side of our business. We want to prepare the company to give a better service to our customers giving
them a more focused choice.

How do you expect your relationship with the customers to evolve?

The digitalization of our company will substantially change the relationship with our customers. We have to get closer to them and understand, and if possible, anticipate their needs. We can do this by using their data to improve our service. We are also always working to be competitive on price, especially in the front of store.

How important are physical stores?

People are social, they like to talk to other people, they don’t want to stay at home waiting for something to be delivered. Even though online sales are growing at a rate of 30 to 40 percent a year, it could take a lot of time for them to be prevalent. You will always have a combination of online and offline. Bookshops are still opening because people like to hold a book in their hands – to change human nature will take generations.

What do you have in mind for rethinking your supply chain?

We have already done up to 90 percent of what we can do, but we are looking to make the supply chain more efficient, and where we can, integrate our wholesale and retail businesses. 85 percent of Americans live within five miles of a Walgreens, and in the UK, 90 percent of people live within 10 minutes of a Boots, so we are using our stores’ proximity to customers to improve service. We have an agreement with FedEx to deliver and pick up parcels in practically all our stores. We are using this network to cover the last mile from our stores to households.

How easy is it for you to actually disrupt yourself and drive innovation?

We have to do it. If we improve the technological level of our company we make savings, which we can use to finance disruption. I am quite confident about the future. We are very pragmatic, we are not dreamers. But we are also fortunate because the bulk of our business is in pharmacy. And it will not be touched in the medium term, so we have time to do it.

What was behind the move to acquire a 40 percent stake in GuoDa in China?

For many years we have had joint ventures in distribution in China. New regulations have changed the relationship between pharmacies, hospitals and distributors so we decided to reduce our presence as a distributor and increase our presence as a pharmacy. GuoDa is the biggest selling pharmacy chain in China. We have taken a 40 percent stake to help them expand. They want to open 7,000 to 10,000 stores in five years.

Is there a lot of natural growth left to come in healthcare and beauty?

Healthcare, probably yes. I see high single digit percentage growth. In the beauty sector, it will only be 1 to 3 percent, not more than that. But even for healthcare, I don’t see the rapid growth that we were used to having in the past.

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