Minimizing store operating costs through operating hour optimization for Walgreens' FP&A team

Post its merger with Alliance Boots, Walgreens was looking to cut ~ $ 1bn in operating costs, $100 mn of which was meant to come from store operating hour optimization alone. This project involved strategic, data-driven recommendations to optimize operating hours while minimizing the impact on Rx and front-end sales and customer engagement

Context

The FP&A team at Walgreens was looking to cut $1billion in operating costs post its merger with Alliance Boots, with a goal of cutting $100million through store operating hour optimization alone.

Previous trigger

The business ran a pilot rollback, converting 60 24-hour pharmacies into non-24 hour ones. The approach for identifying these stores were unknown and the business incurred an unexpected 8% drop in prescription sales.

Opportunity

A data-driven approach for minimizing operating hours while minimizing the impact on prescription sales and customer retention

Approach

Using the data that was available for the 60 rollback stores to:

Understand the drivers of patient churn post rollback
Predict store-level risk for rollback for the entire chain of pharmacies
Recommend stores with lowest risk for operating hour rollbacks

Implementation

The operating costs of 40 low-risk stores were rolled back based on the first round of our recommendations

Impact

The net lift was computed using a test and control framework to isolate and measure the impact of operating hour rollbacks on front-end and Rx sales, customer satisfaction and operational metrics