Helena Foulkes to analysts: CVS/pharmacy rethinking health, beauty

NEW YORK — CVS Health is rethinking health and beauty in its stores and further leveraging digital to enhance customer interaction, Helena Foulkes, EVP and president of CVS/pharmacy, told analysts during the company’s Annual Analyst Day on Tuesday in New York City.

“In looking at the front store, our goal is to position ourselves as health and beauty destination to drive profitable growth. We’ve already had success and we have a strong plan to go farther,” Foulkes told analysts.

Health and beauty has grown rapidly for the company with overall sales up more than 30% over the past five years.

"We will bring the look and feel of our beauty offerings up-market to create an accessible specialty look and feel and permanently dedicate some of our most valuable space to elevated beauty offerings.”

Indeed, CVS/pharmacy has been on a tear in beauty in that time. The company holds a 40% share of total drug store beauty sales, up from 38% in 2009. It has attracted 17 million ExtraCare Beauty Club members. And its naturals business is up 50% year-over-year.

The journey, however, is far from over, as the company looks to further reinvent the front store.

“Looking ahead, there are significant health and beauty opportunities we can tap into in the drug channel. Our market is poised between two worlds: The convenience sphere, which is the quick foods and general merchandise we sell, and the destinations sphere, which is all the health and beauty products that people associate with a drug store,” said Foulkes.

Foulkes said the company has outlined five strategic themes to drive growth —

• Better health made easy
• Elevate beauty
• Customer-driven personalization
• MyCVS store
• Digital innovation

As part of the strategy, the company is looking to deliver a better in-store experience and showcase its healthcare expertise. For example, it plans to expand its OTC selection and make OTC an integral part of adherence and post-care support.

CVS/pharmacy is also bolstering its selection of on-the-go healthy food — a move that is in line with its decision to pull tobacco products from its shelves.

“After we stopped selling tobacco we asked our customers, ‘What’s next?’ The first thing on their list was healthy food and we are listening and reacting to that,” said Foulkes, who noted that it represents a $1 billion sales opportunity. 

CVS/pharmacy is also looking to enhance beauty through exclusive offerings, enhanced merchandising, as well as leveraging its partnership with MinuteClinic.

“We plan to continue giving our customers what they want to enhance the beauty experience at CVS, leveraging our enterprise assets to create an unbeatable beauty proposition,” Foulkes told analysts. “We’re driving the beauty experience further. We will continue to launch with new and exclusive brands .... We will bring the look and feel of our beauty offerings up-market to create an accessible specialty look and feel and permanently dedicate some of our most valuable space to elevated beauty offerings.”

Over the next year, shoppers will see an upgraded cosmetics wall in many stores, a stepped up facial care look and feel, endcaps dedicated to beauty elevation, and an increased focus on naturals and healthy solutions.

“Our very best stores are going to get the full effect and a total revamp with all of the above and much more,” said Foulkes.

The company is also leveraging its MinuteClinic locations to offer, for example, eyelash lengthening consultations and services.

“You can expect to see these ties strengthen and expand going forward,” said Foulkes.

Capturing the high-growth Hispanic cluster

Foulkes said the company is taking its learnings from the Navarro Discount Pharmacy acquisition to invest in the Hispanic cluster.

“Our demographics continue to change and one key part of that trend is the growth in the Hispanic cluster. In the next 10 years, the Hispanic population is expected to grow by almost 15 million,” said Foulkes. “We believe that any localization or clustering solution must account for the importance of the Hispanic customer.”

In light of this, the company is investing to learn and serve. With its acquisition of the Miami-based pharmacy, CVS/pharmacy is leveraging Navarro’s deep understanding of the Hispanic market.

“We are gaining insights about how Navarro merchandises products differently in every category and we’re leveraging their expertise to learn more all about the services, products, value and atmosphere that resonate with the Hispanic cluster,” said Foulkes. “… We intend to use the Navarro expertise to help us make our existing Hispanic stores across the CVS chain even more relevant to the customers we are serving every day.”

Digital Innovation

“We view digital as complimentary to our assets. Our digital offering drives our store sales and our store offering drives our digital adoption,” Foulkes said.

The digital strategy includes three integrated experiences enabled by digital —

• Integrated pharmacy to deliver a channel-agnostic experience to help patients manage and order prescriptions;
• Integrated health tools, which are an entry point to connecting people with health; and
• The integrated front store experience is the entryway to personalization to enhance the shopping experience.

“In the last year, we’ve made a lot of progress and investments in our digital strengths,” said Foulkes

In pharmacy, it launched a top rated app with 10 million-plus downloads across Android and iOS, and added 6 million new pharmacy users, a 46% increase from 2013.

For its integrated health tools, it launched a revamped web site and specialized adherence reminders through text and app. In 2014, it sent out 14 million text adherence messages. It also launched “next in-line” text alerts to enable MinuteClinic patients to browse the store while waiting.

In front store, it has seen personalized traffic increase 2.5X with the launch of its MyWeeklyAd and redesigned sites. The company also launched “offers on the go” so shoppers can see and redeem offers on their mobile device and an inventory checker.






 

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