Walgreens Hires Outside Help to Fix Its In-Store Problems

Publicis's Arc Is Charged With Creating In-store Uniformity for Chain

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CHICAGO (AdAge.com) -- Walgreens, which has suffered from a disconnect between its national ad messaging and the in-store experience, has for the first time hired an agency to handle in-store and promotional work.

The nation's largest drug-store chain has named Publicis Groupe's Arc Worldwide its promotional marketing agency of record, following a review. The agency is charged with improving the in-store experience for the retailer's customers, which has been a key focus for Chief Marketing Officer Kim Feil since she took over in September.

Photo: AP

Arc needs to apply some in-store uniformity to a store chain that has historically offered very little consistency in that regard, a result of its traditional deference to local store managers. Those local managers tended to arrange stores in ways that put high-margin items front and center, but often obscured goods that were featured in ads, creating a discrepancy between the national marketing messages and the in-store experience.

"Traditionally, Target has been one extreme [with very little local autonomy in store layouts and displays], and Walgreens has been the other extreme," said Neil Stern, a senior partner at retail consultancy McMillan Doolittle. "They are trying to become a little more like Target."

As a result, Walgreens has never previously used an agency for its in-store work. But those efforts have enjoyed a generous budget, as the company spent $227 million on measured media last year, according to TNS Media Intelligence, meaning perhaps a third of its $341 million marketing budget went to below-the-line initiatives such as in-store work.

"The brief was to bring the brand to life and to activate it in a way that brings customers back into the store, and then hopefully back again," said Arc CEO Bill Rosen. He said Arc's early work will have a particular focus on the upcoming flu and holiday seasons.

Added Ms. Feil, in a statement: "The hiring of Arc Worldwide as our dedicated promotional marketing agency of record signifies our strategic move to create a more differentiated and integrated Walgreens shopper experience."

Through June, the chain saw its same-store sales rise 2%; its total sales climbed 7%.

Arc will collaborate with Walgreens' creative agency of record, Downtown Partners, Chicago.

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