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CCR is just the beginning, says Walgreens CEO

BY CSA STAFF

Chicago — Walgreens’ massive Customer Centric Retailing initiative is transforming the way the company’s stores are merchandised and designed as it rolls into an ever-larger proportion of its more than 7,600 stores across the United States. But it’s only the opening drive in a campaign to “reinvent the customer experience in our stores,” president and CEO Greg Wasson told shareholders Wednesday.

That effort to significantly upgrade customers’ shopping experience “began with CCR,” said Wasson, who dubbed it “a much-needed, low-cost refresh of the majority of our stores.” But the full impact of the transformation — which involves a tighter, faster-turning front-end product mix, improved departmental adjacencies, better signing and other changes — will go far beyond the initial improvements in store appeal, he noted.

“To date, we’ve converted or opened [more than] 2,100 stores to the CCR format, and a little [more than] 28% of the chain,” Wasson said. In those stores, he said, “we’re hitting on all four cylinders of our four-way win, which was to increase total sales, reduce our inventories, increase our store efficiencies … and, most importantly, to improve the customer experience. This time next year, we will have converted or opened approximately 5,500 [CCR] stores, which is about 73% of the chain,” Wasson added.

With that conversion well under way, “once we’ve moved beyond CCR, we have a lot of exciting opportunities we’ve been piloting and studying that we can now begin to move forward with,” Wasson said. For instance, he added, “We believe we have tremendous opportunity in the front end of our drug stores. We’re expanding our private-brand offering to meet the needs of the new consumer. We’re piloting a loyalty program in three markets across the country, and we also acquired a loyalty program from Duane Reade to help us … study and capture their learnings as we go forward.”

In addition, Wasson said, “We’re looking to offer a Duane Reade-like beauty department in many stores across our company — we’re testing those in several markets — and we’re expanding our fresh food offering.” That expansion began last summer when Walgreens rolled out several more stores with much larger selections of produce, fresh-prepared foods, dairy products and other groceries in parts of inner-city Chicago that have been called “food deserts” because they lack access to full supermarkets or other healthy-food options.

Chicago now hosts 10 Walgreens fresh-food stores, including at least one unit that reportedly has dedicated 40% of its retail area to food. “By leveraging the drug store locations we have across this country in food deserts, we can become the food oasis in those communities,” Wasson asserted. “We think there’s tremendous opportunity to do good business while we’re there.”

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Target sets sights on Canada

BY CSA STAFF

MINNEAPOLIS -Just days after announcing 2011 U.S. expansion plans, Target announced an acquisition in Canada that will enable it to open between 100 and 150 stores during the next four years. The company announced that it hasagreed to pay C$1.825 billion to purchase from Zellers Inc., a subsidiary of the Hudson’s Bay Company, the leasehold interests in up to 220 sites currently operated by Zellers Inc. This transaction will allow Target to open its first Target stores in Canada beginning in 2013.

"This transaction provides an outstanding opportunity for us to extend our Target brand, Target stores and superior shopping experience beyond the United States for the first time in our company’s history," said Gregg Steinhafel, chairman, president and chief executive officer of Target Corporation. "We are very excited to bring our broad assortment of unique, high-quality merchandise at exceptional values and our convenient shopping environment to Canadian guests coast-to-coast. We believe our investment in these leases will strengthen the surrounding communities as well as create strategic and financial value for Target stakeholders."

Target said it expects to open 100 to 150 Target stores throughout Canada in 2013 and 2014. The financial returns on these stores are expected to be in line with returns on new Target stores in the United States, resulting in dilution to earnings prior to store openings followed by accretion to earnings in the first full year of store operations, according to the company.

According to Target, its presence in Canada should create thousands of jobs, including several in the initial construction phase and associate positions once the stores are open. The company noted that atypical Target store in the United States employs approximately 150 to 200 team members.

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NRF and First Data release small business data security survey

BY CSA STAFF

New York City — An overwhelming majority (86%) of small-business respondents (86%) say that keeping their customer card information secure and feel payment-card data security is important to their business. But 60% are unaware of the costs they could incur in the event of a breach. Those are among the results of a research study of data security and fraud-prevention strategies practiced at small- to mid-sized retailers. The study is from the National Retail Federation and First Data Corp.

While two-thirds (66%) of respondents to the survey claimed awareness of the Payment Card Industry Data Security Standard (PCI DSS), only 49% of respondents had completed a self-assessment at the time of the survey. Among those who had heard of PCI DSS; however, 42% did not know that merchants are obligated to conduct the self-assessment annually and 41% had not heard of the recent change in regulations.

The survey also showed there appears to be some confusion among retailers regarding the liability costs in the event of a data security breach. More than 60% of these smaller merchants did not realize that credit-card companies are authorized to fine their business a per-card fee for every card that has to be canceled if it is determined that they are the source of a data breach. According to the 2009 U.S. Cost of a Data Breach Study by the Ponemon Institute, the average cost for merchants coping with a data breach in 2009 rose to $6.7 million with the cost per customer record breached estimated at $204.

Restricting physical access to cardholder data and using anti-virus software were the two most frequently reported protection methods (76%). Other practices toward the top of the list were restricting access to cardholder data by business need to know (67%); developing and maintaining secure systems and applications (64%); and maintaining a policy that addresses information security (63%). Of those who electronically store cardholder data, 68% also take steps to protect that data and 53% use encryption technology.

More than 4% of respondents reported having been a victim of any one type of fraud listed in the survey. Although the percentage appears low, it equates to a potential one million small businesses being impacted. The latest Federal data estimates there are approximately 24.6 million small businesses currently operating in the United States.

Physical theft or tampering with terminals and computer viruses, including malware, were the top two fraud and security incidents experienced by respondents at 37% and 22%, respectively. Employee misuse or theft of card data accounted for another 17% of incidents.

"Our survey results illustrate that smaller retailers take protection of their customers’ sensitive payment card data very seriously and continue to add more layers of security to their business operations," said Mark Herrington, senior VP global product management and innovation, First Data. "The finding we found most intriguing was the confusion around the potential liabilities in the event of a data breach. We’re confident that continued education in the payments industry will raise awareness of the importance of annual self-assessments and the right mix of data security and fraud prevention tools."

The majority of survey respondents represented less than $500,000 in payment-card sales annually through both card-not-present (CNP) and in-person transactions.

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