Case Study: AI Transformation at Walgreens

Background

Walgreens, part of the Walgreens Boots Alliance, is one of the largest retail pharmacy chains in the US, with nearly 9,000 stores nationwide. For years, Walgreens has relied on traditional demand planning and marketing strategies to meet customer needs. But with the decline of print advertising and the advent of advanced technologies, the company recognized the need for a more proactive and personalized approach to serve its ever-changing customer base.

Key Takeaways

  • Walgreens successfully transitioned from traditional print marketing to AI-driven demand planning and personalized customer outreach.
  • Implementation of AI enabled Walgreens to predict specific demands, ensuring better inventory allocation and heightened customer satisfaction.
  • Collaboration and partnerships, particularly with Microsoft and Adobe, have been instrumental in driving Walgreens’ digital transformation and enhancing customer experiences.

Deep Dive: AI Transformation at Walgreens

Approach

Walgreens acknowledged the constraints of its traditional demand planning methods and took a decisive step forward by joining hands with partners like antuit.ai. By leveraging AI technology and predictive data science, they aimed to enhance their demand forecasting. Concurrently, the company embarked on a cloud-first digital journey, with a significant emphasis on Microsoft’s Azure cloud. This strategy allowed them to assimilate cutting-edge technologies, ensuring they could provide superior service to their customers.

Implementation

In the foundational stage, Walgreens revamped its communication strategy to more effectively engage with its expansive loyalty card membership, boasting over 100 million members. As part of their digital evolution, the company centralized its varied data resources into a Microsoft Azure data lake, transitioning away from outdated databases towards sophisticated cloud databases and analytics tools. Complementing this transformation, Walgreens developed approximately 100 in-house AI solutions. Leveraging platforms like Databricks, Python tools, and open-source NLP capabilities, they honed in on refining inventory and pricing strategies while meticulously crafting comprehensive customer profiles.

Results

Leveraging AI tools, Walgreens acquired a precision-driven capability to foresee customer demand, right down to specific brands, sizes, and flavors. By tapping into detailed local data, they’ve adeptly factored in the impact of regional events, weather variations, and other pertinent influences on consumer needs. This digital metamorphosis proved invaluable during the COVID-19 crisis, facilitating Walgreens in administering an impressive 56 million vaccines and 22.9 million tests across the US.

Challenges and Barriers

Moving away from established methods, Walgreens faced initial reservations, particularly around the adoption of an opaque “black box” AI model for internal processes. Given Walgreens’ vast network spanning 9,000 locations, the challenge was accentuated by the need for AI to handle a staggering 300 million time series forecast, a task of immense complexity for any system.

Future Outlook

Walgreens is pivoting towards creating detailed customer profiles and delivering mass personalization. By augmenting its online dispensing system, the company aims to empower consumers with greater autonomy over their online prescriptions. This strategy encompasses providing customers with tailored recommendations and facilitating interactions through chatbots.

Conclusion

Walgreens’ AI transformation showcases how a large retailer can not only adapt to technological changes but also drive them. Leveraging AI has not just been about boosting sales or optimizing inventory. It has been about better serving millions of customers, understanding their unique needs, and enhancing their overall experience. The successful implementation of AI at Walgreens serves as a testament to the immense potential of AI in retail and sets a benchmark for other retailers to follow.

Sources:
A Closer Look at Walgreens’ AI-Powered Demand Planning Transformation
Walgreens Boots Alliance gets personal with AI
Walgreens empowers pharmacists with an intelligent prescription data platform on Microsoft Cloud


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