Supplier diversity has been an increasing point of emphasis for the company over the last several years. It has committed to increasing sourcing from suppliers that are at least 51 percent owned, operated, and managed by individuals who are disadvantaged, disabled, military veterans, LGBTQ+, minorities, and/or women. That focus is reflected in a projected 40 percent increase in WBA’s spending growth with diverse suppliers over three years covering fiscal years 2020-22.
- In its 2021 fiscal year, WBA set a spending target of $500 million with diverse Tier 1 direct suppliers in the U.S., an increase of $53 million compared with fiscal year 2020. WBA surpassed the diverse spend goal by $21.5 million
- In fiscal year 2022, WBA has set a target to increase supplier diversity spending to $625 million
“Having a diverse group of suppliers is important to Walgreens because it's becoming increasingly important to our customers and our employees. Our shareholders also expect us to be responsible corporate citizens who build equitable business across diverse companies and foster economic vitality in the communities where we do business," she says.
Walgreens constantly seeks suppliers to fulfill unmet category needs by using the power of data to understand opportunities across every retail product category in their stores. Leveraging information from 95 million myWalgreens users provides valuable insights on product and supplier gaps that diverse businesses can oftentimes fill. Walgreens category managers are actively looking to work with these businesses to become suppliers and will reach out to those with brands they view as promising.
So how do diverse businesses get connected? The first mandatory step for any minority-owned business is to be certified as such with the United States government. This certification authenticates that a business is owned, managed and controlled by a qualifying diverse group, and permits a business to work with any company in the U.S., whether it’s Walgreens or another retailer.
Once a business is officially registered as minority-owned, they can apply to be a Walgreens supplier through the RangeMe product discovery and sourcing platform. Walgreens also offers diverse businesses multiple other opportunities to make a connection and potentially become suppliers.
- Top Shelf supplier diversity initiative is an eight-week program sponsored by Walgreens and the Women’s Business Development Center (WBDC), helping minority-owned businesses learn how to partner with large retailers and build supply capacity. 65 diverse-owned businesses have graduated from the program to become Walgreens suppliers since 2019.
- Supplier Diversity Summit: Walgreens hosts an annual showcase for diverse businesses to share their retail offerings, with this year’s virtual event taking place April 5-8. The event provides diverse vendors who are certified as a minority-owned business the opportunity to connect with the Walgreens merchandising team and receive feedback, with the ultimate goal of being stocked on Walgreens shelves.
- Diversity Advantage Program (DAP): Walgreens partners with IRI to support DAP, designed to help diverse-owned consumer packaged goods (CPG) companies elevate their abilities to leverage data and produce insights promoting better collaboration with Walgreens.
Mielle Organics, a Black-owned beauty care business established in 2014, became a Walgreens supplier in 2018 and since then has experienced rapid sales growth.
“Getting our products into Walgreens was both a dream of mine and a strategic goal for the company,” says Monique Rodriguez, Mielle owner and CEO. “We knew Walgreens represented an important opportunity to expand access for the Mielle brand, but we had a plan to do it only when the time was right. It wasn’t until our customers started voicing their wishes to see Mielle products on Walgreens shelves that we made a move.
“Walgreens attracts a broad cross-section of consumers, so when we had our first meeting, we had to pitch the new type of customers our products were going to bring into their stores,” Rodriguez continues. “We were prepared for that because Mielle is uniquely positioned to meet many different consumer needs and preferences.”
As an entrepreneur with firsthand experience getting in the door at Walgreens and growing share of shelf, Rodriguez is happy to provide advice to help other diverse business owners aspiring to do the same. “I get questions from other minority-owned businesses all the time like, what is the first step to get into a store like Walgreens? What is the process? How do the contracts look, and how do you negotiate?” says Rodriguez. Here are her five areas of focus she says any diverse business should address to better position themselves to get into Walgreens and be successful:
- Focus on building a great brand: “First, develop a brand and products that create a strong connection with your audience and offer solutions to your customers’ problems,” says Rodriguez. Brindley agrees, noting Walgreens practices that same philosophy. “The most important thing is that you bring a brand or a product lineup that is unique and differentiated to offer our customers. If you are clear on that differentiation, then actually going through the review process is easy.”
- Create a community to create demand: Build a community of devoted brand advocates, then deliver a great experience so suppliers are able to maximize value and sales.
- Don’t be afraid to start small: “I always say ‘modify your strategy to fit your reality,’” says Rodriguez. “So, if your reality is you have limited resources that make it harder to scale, then start small and build and grow your way up from there. It’s tempting to want to be in 9,000 stores right away, but it’s a lot harder to fund 9,000 stores than 100. Remember, your partnership with the retailer is everything, so if you can’t deliver on your obligations that partnership will be damaged.”
- Make sure you’re financially sound: “Understand your company’s financial implications in taking on retail partners, and make sure your company is in a financially sound place before entering a relationship,” she says.
- Use a retail broker: "It's really important to find a good sales broker that understands the Walgreens business, who can help negotiate contracts and make sure that you have the right shelf placement."
As the country’s population continues to grow more diverse and its demand for relevant products expands along with it, diversity in Walgreens’ supplier network will be an increasingly important initiative. “The opportunities for diverse businesses are out there to be taken,” says Brindley. “By partnering together, we strengthen each other and our communities.”