The Butt Stops Here: CVS’ Foulkes recaps busy first year
Innovating on behalf of the consumer.
That’s what has always excited CVS/pharmacy president Helena Foulkes about the business ever since she took her first job in retail, some 22 years ago, at the only retail company she has ever worked for.
By that measure, this past year has been a good one, Foulkes told DSN, in a late October interview, looking back on her first year at the helm of the company’s retail stores, her vision for the business, the biggest influences in her life and career, and what it is that still feeds her passion for retail, a job she calls the perfect blend of “art and science.”
Certainly it has been a busy first year on the job for Foulkes. Consider some of the bigger headlines:
- The February decision to exit tobacco sales in its stores, a move that became official in October;
- The changing of its name and corporate logo to CVS Health to better reflect the larger thinking behind the tobacco move and its broader corporate mission to help people live healthier lives;
- The acquisition of regional powerhouse Navarro Drug in September, a move much more strategic and far-reaching than just the simple addition of 33 stores in Florida;
- A massive personalization effort around its industry-leading Extra-Care loyalty card, a program Foulkes herself pioneered for the company some 15 years ago; and
- The solidification of her key leadership team — SVP merchandising and retail pricing Judy Sansone, EVP retail operations Scott Baker and SVP retail pharmacy Josh Flum — a group Foulkes says truly compliment her strengths, and each other’s, and allow her to focus on what she’s best at: staying one step ahead of what the customer wants next.
“I’m really passionate about the consumer, … so for me it’s very natural to think about innovation and growth — I get excited about disruptive things that can really change shopping for our customers, or change health care,” Foulkes said. “It also means I have to have a great team around me who give me that reality check and help me understand, ‘OK, that’s a great vision; now let’s talk about how we execute against that.’”
But if you ask Foulkes what has been the big highlight of her first year on the job, there really are no butts about it.
“What was most exciting for me was to see how our people and our company came together as an organization around our tobacco announcement, and really rallied around our position as a healthcare company,” Foulkes said. “The sense of pride it created, and also our organization’s ability to execute that transition across 7,700 stores so flawlessly, reminded me of all the strengths of our company. And I think in many ways it has challenged and emboldened us to think more about what we can do to innovate on behalf of the consumer to help her on her path to better health, which is really our key purpose.”
As a company, CVS Health has quite a bit to gain from the decision to throw tobacco products out of its stores. Globally, the company continues to serve a growing group of customers outside of its stores — health plans, hospitals and doctors — through the healthcare services side of its business, which is expected to grow considerably in the years ahead. It becomes a difficult proposition for a company like CVS Health to position itself as a partner to those types of organizations, and still sell a product that’s known to kill people, Foulkes explained candidly. For sure, the move creates additional leverage and differentiation in the marketplace, as CVS Health sells its PBM, Specialty Pharmacy and Medicare products and services to payers. Long term, it’s worth a lot more than the $2 billion a year it was making selling tobacco products in its stores.
But as president of CVS/pharmacy, in charge of the retail stores, that $2 billion falls squarely on her P&L. As for the business, as the chain cycles through the short-term impact of being out of a very large category, Foulkes expects the stores to re-emerge a year later “on a much faster growth trajectory,” she said. Sansone and her team of merchants will look to drive more growth from the core of its business — particularly, in health and beauty, which Foulkes describes as the company’s “bread and butter,” but also in other core front-end businesses, like seasonal, where CVS made a significant push on Halloween merchandising this fall.
Despite any challenges in the short term, Foulkes still swears exiting tobacco was the right thing to do. It’s good business because it is so personal — and not just for Foulkes, who lost her mother to lung cancer, she explained, but also for many of its 200,000-plus associates throughout the company and millions of its customers.
“From a pure consumer perspective, the reaction has been tremendous,” she told DSN. “In our industry, there is not enough differentiation among the players, and we’ve heard lots of stories from our customers telling us, ‘Thank you.’ We know that 7-of-10 smokers want to quit, and what has surprised me the most is the extent to which these stories have emerged.”
In September, the company embarked on a major new ad campaign with a catchy tagline that says everything you need to know about the name change — “CVS Health … Because health is everything.” — and a hot new social media campaign around the hashtag #One-GoodReason.
Perhaps as passionate as she is about innovating on the behalf of the consumer, Foulkes is almost equally excited about the opportunities around “the retailization of health care,” and the role CVS stores play — and the pharmacists, and in some cases nurse practitioners and/or physician assistants inside those stores.
“The power of the company’s [integrated pharmacy] model is that in the American healthcare system, payers really matter, and so being a PBM allows us to have a conversation with the people who are paying for the bill. But that’s not enough,” she said. “Because payers don’t have relationships with consumers, and we do in our stores. We serve 5 million people a day; we’re in the neighborhoods. What we’ve been able to do is marry the best of those worlds: To have deep relationships with payers, where we’re helping them meet their needs around cost and access, and yet we’re also bringing it to life for the consumer [in our stores] in a way that resonates.”
A perfect example of that — the company’s Pharmacy Advisor program, which identifies potential medication adherence issues and gaps in care for CVS pharmacists at the point of care. “Historically, the stand-alone PBMs have had clinical programs [like Pharmacy Advisor], but the only way they could change patient behavior was with a phone call. What we did was build the integration, so as the patient is picking up their prescriptions in our stores, … the pharmacist has the ability to have a two- to three-minute conversation, ask the right questions and get that patient back on their medication or fill a gap in their care.”
Another opportunity that has Foulkes excited lies in the July acquisition of Navarro Discount Pharmacy — a deal worth much more to CVS than the stores themselves.
“We didn’t acquire Navarro because we saw an opportunity to merge them and improve their performance. We bought Navarro because we know that they really understand the Hispanic customer, and we have a lot to learn. For us the opportunity is not just the 33 stores in Florida, but really to apply those learnings to hundreds of stores in the CVS network,” she said. “We have a lot of stores where the population we serve is 50% or more Hispanic, and today I don’t think we do a good enough job.”
Whereas today, CVS might have “a small 4-ft. section of specialized products” in its Hispanic stores, Foulkes explained, Navarro’s merchants had built in a relevant assortment of brands “in every single planogram that speaks to that customer, and they have a different value proposition.”
The long-term plan is for the Navarro team and brand name to remain in tact, not only running the stores, but “at the same time, helping us think about how we apply those learnings in CVS stores.”
That’s just the kind of thing that has always fascinated Foulkes about this business — studying the customer and what resonates with her. So by that measure, you could say it’s been a good first year on the job for Foulkes as head of CVS’ retail business. And by any measure, that business is in very good hands.