Automation projects near completion

CHICAGO -- Walgreen Co. is nearing completion of some major technology installations that were years in development and cost scores of millions of dollars, according to top executives at the company's annual meeting here.

When all systems are fully operational over the next two or three years, they will advance the chain's information-gathering and inventory management capabilities dramatically.

"We're investing nearly $130 million--roughly $80,000 per store--in retail technology over a three-year period to stay ahead of the pack," said chairman and ceo Charles R. Walgreen III.

800 stores are scanning

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Half the chain's 1,588 stores now have scanning, and chainwide installation is planned by the end of the year. "We're about 90 percent done with our scanning programming," he told shareholders. "The advantages it will give us include easy credit card transactions and check approvals, shorter lines and faster service; better in-stock conditions; happier cashiers and customers...and (the ability) to react fast to hot new items. Scanning helps us think national and act local."

About 600 stores with scanners have already eliminated price-stickering, Jorndt added.

Walgreens is also beginning to test its Strategic Inventory Management System (SIMS), a massive automation project which has encompassed the efforts of nearly 100 programmers and merchandisers for some three years. Jorndt said 1991 will be "a major rollout year" for SIMS, adding, "we expect the entire `closed-loop' system to be largely in place by 1993, with benefits expanding through the '90s."

Tighter controls

SIMS promises some big benefits, Jorndt said. "Our first SIMS marketing system gives buyers much tighter control and better on-line, `real-time' knowledge of merchandise movement. They'll be able to electronically track orders from vendor to distribution center to store."

In addition, he said, the system will "substantially lower inventory investment by increasing turns and optimizing control" while allowing for more competitive pricing as costs go down. "Some distribution systems have been in place more than a year, and the first store systems are now in Milwaukee pilot stores," Jorndt said.

Walgreens is also investing in a new, computerized order entry and tracking system for its photofinishing department. The system, now in early rollout, is built into the department register. It scans photo orders, prints labels and receipts, and allows for identification of regular customers.

In the pharmacies, meanwhile, computerized automatic inventory replenishment systems will be chainwide by the end of the year, Jorndt reported. On another front, the chain now has direct links with administrators representing 60 percent of its third-party business, he said.

Cosmetics overhaul

Besides its automation efforts, Walgreens is also breaking ground with new formats and new ways of doing business. It has embarked on an extensive overhaul of its cosmetics section, which Jorndt admitted was way out of date. It has broken Spanish-language commercials in southern Florida. A drive-through pharmacy window is now in test in one Chicago store on Belmont Avenue.

Walgreens' test of RxPress, its small-scale retail pharmacies, is being turned up a notch. Five of the units are now open in the Chicago area, and six more are slated to open in Evansville, Indiana this year.

"That's an entirely new market for Walgreens, and we'll be tracking these stores closely," said Walgreen. "We obviously like their potential."

The chain is enjoying 50 percent gains in its fledging nursing home script business, and is "taking a harder look at our mail-order business," the chairman said.