Industry leader perspective:Stefano Pessino — Walgreens | KPMG | GLOBAL

Industry perspective: Stefano Pessina — Walgreens Boot Alliance

Industry perspective: Stefano Pessina — WBA

Walgreens Boots Alliance chief talks opportunities in health, beauty and wellness.

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Stefano Pessina walgreen boots

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How will your company deliver growth?

Walgreens Boots Alliance are a pharmacy, health and wellbeing business, and we want to bring pharmacy, health and wellbeing to as many people as possible. Growth will come from new products, partnerships, acquisitions and new markets. We will develop in all four areas and improve our offering to customers. Of course, it’s easier to grow in the countries where you already operate and can quickly win additional market share as the results will come sooner. Entering new markets is an exercise for the future – you see the benefit in two to four years. Emerging markets are very promising for growth, but also more risky.

How is digital technology affecting you?

We have to change the way we do business to attract customers, giving them additional opportunities to contact us, shop with us and retrieve information. We also have competition from e-commerce companies, although we are less exposed than others as we mainly sell drugs and products related to healthcare and beauty. Our customers like to come in and touch our products and talk to a pharmacist or a beauty advisor. E-commerce is a source of revenue for us, although it’s less profitable than traditional channels.

Do you believe bricks and mortar stores will disappear completely?

No – at least not in the next 50 years. And particularly not in our business, where so much of what we sell is medicine, and we provide important healthcare advice.

There’s lot of talk about the need for companies to be customer-centric.

We have always made a big effort to convert the companies we manage to being customer centric. The fact that more people are going in this direction is confirming what I have always believed. It must be part of your DNA.

Will there be more disruption in beauty?

In the future, the scent of a perfume could be delivered to your mobile phone. Beauty is easier in store – it’s also a way to treat yourself, a way to relax. People want to look, touch and talk to the beauty advisor: they’re often buying the experience more than the product.

Are customers still going in to your stores as often as they were?

There is probably a little less footfall due to e-commerce, but for us it’s marginal. If anything we should rationalize the products we offer to the public, with a little less choice but better quality products and service. Then we would generate more revenue and a better margin for each transaction.

What are the key challenges facing Walgreens Boots Alliance?

We are in a relatively stable market, so some of the challenges are internal. If we are trying to move the company, particularly in the US, towards a more service-centric model, we have to change mindsets and you can’t do that overnight. In a market like healthcare you need some clear thinking to help control the explosion of costs around the world. When you are under pressure you need to work hard to rationalize – this can be a big opportunity, particularly if you are able to do this quicker than your competitors.

Do feel that you have derived value from recent acquisitions?

Definitely. Mergers and acquisitions give you the opportunity to create a lot of value. Our aim is to have a low double-digit growth in earnings every year, and we do it by improving the quality of our business. We do that in terms of our industrial operations, not through financial engineering, so we can create true value from the acquisitions and mergers we make.

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