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Walgreen’s Launches Loyalty Card in September

Drugstore chain Walgreen, one of the nation’s largest retailers, will launch of the company’s first ever loyalty card called Balance Rewards this September.

According to a recent posting on MarketWatch, Walgreen hopes this new loyaltycard will improve sales and help the retailer personalize offerings to meet customers needs. Rivals are expected to use their loyalty cards to retain customers they won during Walgreen’s spat with Express Scripts. Some observers worry about how Walgreen’s loyalty program will affect the promotional environment for drugstore chains.

Graham Atkinson, chief customer experience officer, said the program should improve sales and help the retailer personalize offerings to meet customer needs, especially for those most loyal to its stores. “With 7,900 stores and almost six million people walking through our stores every day, we do expect this to be one of, if not the largest retail loyalty programs in the country, if not the world,” Mr. Atkinson said.

Walgreen’s program will utilize a point-based system, similar to the program used by Duane Reade, a New York-based chain Walgreen acquired in 2010. The company will award points for front-end items, as well as immunizations and prescriptions unless restricted by state law. For example, if a customer were to accrue 5,000 points, they would be eligible to redeem $5. But if the customer waited to reach 40,000 points, $50 could be redeemed.

Walgreen said it learned some lessons from the loyalty card Duane Reade offers at its 256 stores. That program, which has more than two million active members, will fold into Walgreen’s new initiative.

Both CVS and Rite Aid intend to use their loyalty cards to retain customers the chains won after millions of clients were driven away from Walgreen, which had left pharmacy-benefits manager Express Scripts Holding Co.’s ESRX network at the beginning of the year due to a contract rate dispute. Some industry observers have expressed concern about how Walgreen’s debut of a loyalty program will affect the promotional environment for drugstore chains this fall, as CVS and Rite Aid likely will attempt to keep new and existing customers engaged with targeted deals. But executives from the companies say a highly competitive environment isn’t new to an industry that is already battling for market share with big-box retailers like Wal-Mart Stores Inc. and grocery-store chains.

Walgreen and Express Scripts resolved their differences last month, signing a multiyear agreement that will allow patients to again get their prescriptions filled at Walgreen stores as of Sept. 15. Coincidentally, those customers can begin returning to Walgreen’s pharmacies a day before the official store launch of Balance Rewards.

Executives and observers say the battle for customer loyalty will mostly center around customers who pick up monthly prescriptions–as they often spend more in the store as regular visits can lead to sales of toiletries, food and household items.

Among the trio, CVS’s loyalty program is the clear leader. The company’s ExtraCare loyalty program is more than 15 years old and has 70 million active cardholders–defined as those who have used the card at least once the past six months.