Bernauer, David W. 1944–

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David W. Bernauer
1944–

Chairman and CEO, Walgreen Company

Nationality: American.

Born: 1944.

Education: North Dakota State University, BS, 1967.

Family: Married Mary (maiden name unknown); children: three.

Career: Walgreen Company, 1967–1979, pharmacist and then also store manager; 1979–1987, district manager; 1987–1990, regional vice president; 1990–1992, vice president and treasurer; 1992–1994, vice president of purchasing and merchandising; 1994–1997, vice president and chief information officer; 1997–1999, senior vice president and CIO; 1999–2002, president and COO; 2002–2003, CEO; 2003–, chairman and CEO.

Awards: Distinguished Alumni Award, North Dakota State University, 1999; Honorary Doctorate of Pharmacy, North Dakota State University, 2000.

Address: Walgreen Company, 200 Wilmot Road, Deerfield, Illinois 60015; http://www.walgreens.com.

■ David W. Bernauer spent his entire career at Walgreen Company, advancing over the span of 36 years from his first position as a pharmacist in a Walgreens drugstore to chairman and CEO. Before becoming CEO, Bernauer played a primary role in many of the chain's activities in store expansion, merchandising, finance, and technology. Colleagues and industry analysts described Bernauer as a low-key, soft-spoken leader with a consistent and determined approach to management.

DECIDES ON PHARMACY RETAILING CAREER

Growing up in Wadena, Minnesota, Bernauer worked in a J. C. Penney retail store managed by his father. He found that he liked retailing and noticed that some of the most successful retailers in town owned pharmacies. Bernauer decided he wanted to own his own pharmacy one day and thought that the best way to achieve his goal would be to study the subject.

Bernauer began his career at Walgreens as a pharmacy intern in 1966, the year before he graduated from North Dakota State University. The following year he joined the company as a pharmacist with the plan of learning as much as he could about the retail business before starting out on his own. In a quote from an article for his alma mater's pharmacy newsletter, Bernauer recalled, "After a few years it was pretty clear that I could have more fun and just as much freedom running a store for Walgreen as I could owning my own store" (2000).

GROOMED FOR MANAGEMENT

Over the next decade Bernauer held several store-manager positions before being appointed a district manager in Phoenix in 1979 and then in San Francisco in 1984. Walgreen's upper management identified Bernauer as someone with significant potential and followed the company's long tradition of grooming management successors from within the company. In 1987 Bernauer was named regional vice manager of Walgreen's western operations.

Over the next few years Bernauer was appointed to a series of positions that included regional vice president, vice president, and treasurer and then vice president of purchasing and merchandising. In 1995 Bernauer let it be known that he was interested in becoming the company's chief information officer when the then CIO announced his impending retirement. But the company's president and COO, L. Daniel Jorndt, thought Bernauer needed more experience in merchandising and was looking at several outside candidates. In the end he appointed Bernauer. In an interview for Drug Store News, Jorndt noted, "I realized that none of them were in Dave's league. This guy is so talented" (October 16, 2000).

Bernauer continued his slow but steady rise in the company as he succeeded in a variety of areas, including store operations, purchasing, and finances. In 1999 he was named president and COO. Jorndt, who had become CEO, noted that he could not think of anyone more qualified within the company to assume the position of president and COO and extend the company's remarkable growth.

One of Bernauer's most noted accomplishments before he became president and COO was his overseeing of the development of Walgreen's Intercom Plus, an advanced pharmacy computer and workflow system based on Internet technology. The system was seen as a way to streamline operations so that Walgreens pharmacists could have more time to spend with customers. In order to handle store-to-store prescription transfers and automatic drug reorders from Walgreen's more than three thousand satellite-connected stores, the system implemented an integrated infrastructure that could process several million transactions a day.

Although Bernauer was convinced that computer technology and the Internet could improve Walgreen's business, he did not see the company becoming an Internet retailer. Rather, he thought that the Internet would be a medium through which to give better service to Walgreens customers and thus develop a stronger relationship with them. As he noted in Drug Store News, the Internet would help business "because it enables us to provide customers with information, with better service, and to expand what a pharmacy means to them" (October 16, 2000).

PROMOTES EXPANSION AND NEW TECHNOLOGY

In 2000 one of Bernauer's goals for Walgreen was to use his broad experience in operations to build the company to six thousand stores by 2010. He said that building Walgreens stores on roads that people traveled during their daily commutes would help families with two working parents deal with the time crunches they faced.

Bernauer also touted a new technological process called Basic Department Management, which gave Walgreen the ability to customize merchandise quantities according to data accrued through its computer system. According to Bernauer, instead of relying on individual store managers to decide on what to stock and how to control promotional space, the BDM system would itself customize each store at the stockkeeping level. With BDM, Walgreen could identify the items that sold well in each store location and then offer more of those items. In addition, the company could eliminate items that sold poorly in particular regions, as those items served only as distractions on the shelves. Bernauer believed the implementation of this process would have a positive impact on both sales and inventory control.

In 2002 Bernauer was named CEO of Walgreen, replacing the retiring Jorndt. Industry commentators observed that Bernauer had been thoroughly groomed for the job. The stock analyst Tom Goetzinger noted in Supermarket News, "He knows the business inside and out, and that's an important trait for a CEO, especially in retailing" (July 21, 2003).

MANAGEMENT STYLE: LOW-KEY

Industry analysts noted that Bernauer's appointment as CEO did not represent a change in the management philosophy at Walgreen, such as one that occurs when an outsider is brought in to take over the reins. However, Bernauer was seen as a much "mellower" and more soft-spoken manager than his predecessor. Bernauer's colleagues noted that he had an encyclopedic knowledge of the company, was extremely enthusiastic, and paid close attention to details.

Industry analysts also said that Bernauer accomplished what many people in retail management could not—that is, a smooth and seamless advancement through the ranks to become a company's leader. As noted by the retail consultant Neil Stern in Supermarket News, Bernauer stayed firmly within the corporate culture at Walgreen and distinguished himself by, in essence, not distinguishing himself. Stern noted, "You're not going to see Bernauer write a book about management principles or go on the podium speaking at industry events; that's not his style" (July 21, 2003).

BECOMES CHAIRMAN

In 2003 Bernauer was named Walgreen's chairman of the board in addition to his post as CEO. Over the previous four years he had helped oversee Walgreen's market share increase from 15.4 to 21.2 percent. Nevertheless, Walgreen did face questions, especially when its third-quarter operating performances in 2003 were not as high as expected. Bernauer maintained that the company's long-term strategy of expansion would not be sacrificed to meet quarterly expectations. The following quarter, Bernauer and Walgreen announced record sales and earnings, primarily because of an increase in prescription drug sales. Overall, sales for the quarter ending August 31, 2003, rose 14 percent to $8.2 billion, and sales for the year rose 13.3 percent to $32.5 billion. Bernauer noted that the company was budgeting more than $1 billion in capital investments for the 2004 fiscal year to include expenditures for new stores and a new distribution facility in Southern California. He also said that the company was going to focus on reaching seven thousand stores by 2010, upping the previous goal by one thousand. In addition to his duties at Walgreen, Bernauer is on the board of directors of the National Association of Chain Drug Stores, the board of trustees of Chicago's Field Museum, and the board of directors of Students in Free Enterprise.

See also entry on Walgreen Co. in International Directory of Company Histories.