Why Walgreens is 'ambitious' about its own brands

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Why Walgreens is 'ambitious' about its own brands

By Lawrence Aylward - 10/03/2019
The Walgreens store in New York's Times Square.

In three very simple but powerful words, Helayna Minsk describes the state of Walgreens’ private brands program.

“We are inventing,” says Minsk, the group vice president of retail brands for the Deerfield, Ill.-based drugstore chain, which operates about 9,500 stores in all 50 states.

Minsk didn’t say “we are following the name brands” or “we are creating cheaper products than the name brands.” Realizing that the store brands industry is flourishing and ripe for innovation, Minsk wants Walgreens to be a player in the future.

Her words — “We are inventing” — affirm what the top grocery retailers of private brands have become in consumer packaged goods (CPG). They are leaders in the modern private brands movement. Minsk wants Walgreens, which has been in business for 118 years, to be one of those retailers.

“We are ambitious,” Minsk says. “As a company, we are ambitious, and with our own brands we are ambitious.”

Walgreens, which began offering its own brands in the early 1900s, currently offers several thousand SKUs of private branded products across several categories, with the biggest category being health and wellness with around 2,200 SKUs ranging from over the counter medicines to home health care products. One of Walgreens’ most popular lines is Nice!, which debuted in 2011 and was rebranded in 2017 with more products and new packaging. Nice! has nearly 500 products in three core tiers: everyday, premium and organic. Many of the products are free from hydrogenated oils, trans fats and artificial ingredients. 

The retailer also offers many SKUs under its Walgreens Beauty & Personal Care line, and pet food and related products under its PetShoppe Premium line. Complete Home, a brand launched in April, includes bath tissue, paper towels and household cleaners.

Minsk joined Walgreens about three years ago. Since then, she says she and her team of 40 people have been “culling the portfolio” and upgrading it where the opportunity is present, from product quality to packaging.

When Minsk arrived, she brought with her new thinking to the private brands team.

“My coming here was to deliberately bring some classic brand management to the team,” she says.

Minsk knows brands. She spent more than seven years with Johnson & Johnson, including as vice president of marketing and vice president of business development for the company’s consumer health-care products. Minsk spent the last two years of her career with Johnson & Johnson in Shanghai, China, where she oversaw all commercial, marketing and operational results for the company’s $600 million CPG business there. Minsk also spent four years as marketing director for Unilever’s laundry product division.

“I’m used to marketing world-class brands,” says Minsk, who worked on brands such as Neutrogena, Clean & Clear, Dabao and Listerine at Johnson & Johnson. “So I can’t imagine coming to a company and working on products that would be something less.”

Walgreens’ private brands were in 120 categories when Minsk arrived, but she wanted to scale back that number a tad and get out of categories where she believes consumers aren’t looking for private brands. She cites toothpaste as an example. Her branded expertise told her that Walgreens didn’t need a product in a category dominated by brands, some with low prices.

“We thought we could provide more value by getting out of that market and providing that shelf space to the national brands,” she says.

Walgreens is increasing its store brands offerings in other categories such as snacks and focusing more on better-for-you products.

“Certain categories are no brainers for us to lean into,” Minsk says. “And getting out of some categories frees us up to do that. There are plenty of categories where customers are more open to an own brand. [Those are the categories] where we want to bring new benefits. We’re always in discussion with our merchants on where we can add value.”

Minsk didn’t elaborate on specific products in the pipeline for competitive reasons.

“We have a certain amount of space for each category,” she adds. “It’s about putting together that balance of national brands and own brands.”

Minsk and her staff believe in testing products several times to make sure they meet the retailer’s strict code for quality and safety. Much of that testing, from buffalo wings to socks, is done in the retailer’s expansive testing laboratory at its Deerfield headquarters.

Products are tested against their national brand counterparts. If it’s a food product, it’s tested to confirm that it tastes as good if not better than the national brand. If it’s a non-food product, it’s tested to confirm that it performs as well if not better than the national brand.

Walgreens also requires its suppliers to test products and then has a third party test them again.

A potential new private brand product begins with a brief — a simple document that details the product, its audience and their needs, and the quality that needs to be delivered. There’s no shortcutting when it comes to value, Minsk stresses.

“If [consumers buy] something cheaper but feel like they are getting something less for less, that’s not a good value,” she says.

Walgreens works strictly with suppliers and isn’t currently interested in self-manufacturing any of its own brands. The goal is to work with suppliers to deliver the right products at the right price and, more importantly, to offer value.

“If we can’t find a vendor that can give us a quality product, we’re not just going to put that product on the shelf,” Minsk says.

Minsk also realizes that Walgreens’ store brands are competing with other retailers’ store brands so it’s crucial to differentiate.

“We want to be the first to market,” she says.

Walgreens’ private brands could also benefit from the partnership it has formed with The Kroger. Co. The two retailers will begin piloting a program in October in Tennessee where they are featuring each other’s products. Several Kroger stores in Knoxville, Tenn., will carry Walgreens’ own-brand products across several categories, including beauty, personal care, over-the-counter medications and wellness.

Walgreens encourages all of its more than 240,000 employees to use its own brands. The retailer also offers its employees a discount on products, including four days a year when employees can purchase the retailer’s own brands for 40% off.

“We really encourage them to use our own brands, not only for company pride but also because they are the people on the front lines who see our customers on a day-to-day basis and have to field their questions or be asked for referrals,” Minsk says.

While the competition has intensified across all mass retail, it’s a great time to be in store brands, Minsk agrees. “The number of private brands are expanding and consumers are leaning into own brands,” she adds. “It’s a golden age of innovation, and we have a lot of innovators on our staff.”