Biggest news to take note of? MinuteClinic’s continued growth
WHAT IT MEANS AND WHY IT’S IMPORTANT — One very quiet bit of news worthy of a bit more attention: MinuteClinic is up to 645 clinics. Clinic revenues were up more than 15% during the quarter, and the company expects MinuteClinic will break even as planned by the end of the year. That’s important because the third quarter isn’t exactly a big cold-and-flu month, which means that patients are starting to use clinics for more than just sick care. Third quarter is back to school, which suggests the clinics likely were busier doing other things, such as vaccinations and physicals.
(THE NEWS: CVS’ Merlo: PBM continues to demonstrate success. For the full story, click here)
CVS already has reached its goal for this year of 100 new clinics for the year. It has told analysts it will deliver at least 100 more in each of the next couple of years, leading up to implementation of the Patient Care Act. DSN believes that as policy-makers begin to understand what they are, what they do and how they help bend the cost curve, retail clinics will play a much larger role in the American healthcare system. This will happen regardless of the direction health reform goes in this country — even if the entire thing is somehow repealed, which despite recent polls, is very unlikely to happen. DSN doesn’t see the Supreme Court throwing it out.
But let’s just say it did, though. You still can’t put the genie back in the bottle. Without some mechanism in place to check the rising cost of healthcare, DSN anticipates the continued growth of consumer-directed care, with more of the onus for managing cost on the patient. As this kind of cost-sharing increases, consumers will vote with their feet and retail clinic visits will continue to increase. And if health reform continues as planned, 33 million people who didn’t have insurance suddenly will. That could create even more pressure on Medicaid, forcing CMS and the states to look for cheaper ways to provide care.
That’s why DSN thinks the MinuteClinic news deserves more attention.
Q&A: Upping standards
Drug Store News spoke with Category Management Association managing partner and director of best practices Gordon Wade.
DSN: What is the Category Management Association? What is its mission?
Gordon Wade: The Category Management Association is an industry association whose mission is to improve standards of performance in category management by sharing best practices among our members and providing certification standards for industry practitioners at the corporate and individual levels. We conduct share groups on numerous subjects on a weekly or biweekly basis. We have an annual conference in late October in Atlanta, and we publish a weekly newsletter. Our members are retailers, manufacturers large and small, industry service providers and academic organizations. We are recognized as the industry leader in establishing and certifying category management standards for various job descriptions within category management. We provide transparent standards and a common industry language. DSN: What types of companies do you work with?
Wade: Our members are retailers and manufacturers across all major channels. These companies range from huge multibillion-dollar global enterprises to niche companies and regional retailers. We also have third-party solution providers as members, including some of the world’s leading data and analytics companies. Lastly, we have an active group of colleges and universities who attend our conferences and serve on advisory boards.
DSN: Category management certification — how does that work? What’s involved?
Wade: Our certification board, working with a broad industry coalition, developed a set of capability standards for three different levels of category management job performance. These standards include multiple “course requirements” in which the applicant must demonstrate proficiency. That most often is accomplished by passing accredited courses, which themselves have been certified by our board. So we do no training ourselves. We certify the course work of companies and third-party trainers, the applicants present their credentials from these courses and when they have met all the course qualifications from whatever accredited source, they then are certified at the appropriate level. Think of us as a super accreditation board similar to those who certify degrees in chemistry, business administration or English at the BA, MA and PhD levels.
DSN: Have retailers and suppliers lost touch with core category management disciplines? Why is category management certification important?
Wade: When category management exploded upon the scene in the mid-1990s, retail buyers were one day handed business cards saying “category manager”; and at manufacturers, salesmen were given new business cards saying “director of category management.” Training was sometimes nonexistent and nearly always inconsistent across the industry. At some companies, category managers were highly trained, sophisticated marketers but at others, they barely understood the concept of the seven-step category management process originally promulgated by the ECR committee in 1993. This became a problem and, in some cases, an embarrassment for human resources directors who tried to hire category managers only to discover that no standards existed. Certification goes a long way toward solving these problems. The standards are clear, well defined and rigorous.
DSN: Why do retailers need to be working with the Category Management Association — what’s in it for them?
Wade: Retailers are in a very demanding competitive environment. One of their biggest potential assets is their people, yet most retailers under-invest in training and development. By joining the CMA, retailers get a window on the world that can help them improve their people by participation in share groups, by accessing our comprehensive website and by attending our conference. Participation in the CMA lets retailers see best practice from manufacturers, other retailers and third-party solution providers. Every week retailers are becoming more and more active in the CMA and certification because they see how this helps them develop their greatest asset: their people.
DSN: Same question regarding suppliers.
Wade: Manufacturers must sell their products through various retailers and retail channels. Category management provides the intellectual platform and process for communicating with and convincing retailers. The CMA, in turn, provides a platform for sharing best practice, [and] for improving their capabilities in this important and rapidly changing discipline. For example, in recent share groups, manufacturers have been exposed to new developments in mobile device shopper marketing and to new HR techniques for embedding category management. In our newsletter, we have linked them to 10 recent articles about new developments in CatMan around the world. Our manufacturer members know we are laser focused on this discipline, so they count on us to keep them current.
A&P enters agreement to receive $490M to sponsor plan of reorganization
MONTVALE, N.J. — Bankrupt grocer A&P has entered into an agreement to receive $490 million of debt and equity financing from investors that will enable it to complete the restructuring of its balance sheet and emerge from Chapter 11 as a private entity in early 2012.
The financing is from private investors comprised of the Yucaipa Cos., Mount Kellett Capital Management and investment funds managed by Goldman Sachs Asset Management. The investment will form the basis of A&P’s plan of reorganization, which the company anticipates filing prior to Nov. 14.
The agreement is subject to approval of the U.S. Bankruptcy Court for the Southern District of New York.
“This investment commitment is a very important step in A&P’s financial and operational turnaround,” A&P president and CEO Sam Martin said. “It positions us for a bright future with solid financial backing from sophisticated investors who know our company and industry well, and who also share our vision for A&P’s future.”
Martin continued: “We have been working diligently over the last year to execute a successful turnaround at A&P by enhancing the value and in-store experience we provide to our customers and by successfully driving substantial efficiencies across our operations and supply chain to reduce our cost structure. Going forward, these investors are committed to supporting further operational and service improvements. With this fresh capital investment and the court’s approval of our plan of reorganization, we anticipate emerging from Chapter 11 early next year in a much stronger competitive and financial position.”
Following the closing of the transaction and the company’s emergence from Chapter 11, A&P’s current board will be dissolved, and a new board will be appointed in accordance with the terms of the plan of reorganization.
During the company’s exit process, A&P intends to continue to operate its stores normally with the excellent products and service customers expect.
A&P and its subsidiaries filed voluntary Chapter 11 petitions on Dec. 12, 2010.