Judy Sansone, CVS Health
BEAUTY CARE

Merchandising ‘Better Health Made Easy’

BY Michael Johnsen

Two years ago, CVS Pharmacy made the bold decision to walk away from tobacco. It was the right move for a lot of reasons, but the fact remained: There was a $2 billion sales hole that needed to be plugged.

(To download Special Report: Double Down on Health, click here.)

In the wake of the tobacco decision, the company began a journey to make its stores the physical embodiment of its corporate mission to help people on their path to better health. Central to that has been one key pillar of its five-pronged strategy for revitalizing growth in its stores — something it calls, “Better Health Made Easy.”

As health care continues to shift ever more rapidly to a consumer-directed model, with an increasing share of the burden for rapidly escalating costs continuing to shift to the patient, that shift in strategic focus — to try to create a self-care center of excellence at retail — really couldn’t have come at a better time.

“As the leader in health [and] OTC, we have a heightened awareness of the importance of consumer health care to the overall well-being of our customers and patients,” Judy Sansone, SVP front store business and loyalty and chief merchant for CVS Health, told Drug Store News. “The move from sick care to self-care is happening, as customers are more educated about the benefits to proactive wellness.”

From a broad merchandising strategic view, that has meant jumping on emerging wellness trends early, “leading with an assortment that helps our customers take care of their health both proactively as well as when they need acute care,” Sansone explained. Products “geared to vitality are trending strong” at CVS, including naturals and alternative remedies, premium vitamins “typically only found in specialty stores, sleep solutions, digestive health innovations and genetic testing” — all examples of how the company is “innovating in health care,” she added.

In the fourth quarter, CVS Pharmacy will roll out new end caps in the healthcare quadrant of its stores designed to help simplify the shopping experience. Earlier this year, CVS dedicated 25% of the checkout area in all stores to better-for-you snacks, and added core health care to its checkouts partially converting an area once dominated by candy bars and chewing gum.

Health is more than OTC

“Better Health Made Easy” doesn’t stop at the OTC quadrant of the store. Earlier this year, CVS Pharmacy expanded its assortment of healthier-for-you foods and beverages to more than 2,900 locations. In many stores, the front aisle of bagged candy has been converted to such healthy snacks as nuts. And 75% of CVS shoppers say they intend to shop more often for on-the-go snacks at CVS.

“Healthy snacking is the anchor” of the CVS front-store transformation, noted Brian Owens, director retail insights at Kantar Retail. “If you have any part of your portfolio that talks about health or has anything to do with snacking, you have incremental opportunities within this store.”

“This expansion is an important step as we continue to evolve into a premier health destination by making better health easy for our customers,” Sansone said. “By supporting active lifestyles and healthy choices, our customers are responding by switching to better options,” she added. “A great example is that today CVS Pharmacy sells more water than soda.”

Sansone noted that three-quarters (77%) of CVS Pharmacy shoppers reported that having greater access to healthier food offerings was either important or very important to them. Even more CVS Pharmacy shoppers (82%) were impressed with how CVS expanded its healthy eating options, according to company research.

“We work closely with the better-for-you brands we offer to inspire the evolution of healthy foods at CVS,” Sansone said. CVS’s Fit Choices shelf tagging program includes more than 520 items that are tagged in store as either a good source of protein, heart healthy, gluten free, sugar free, organic or non-GMO project-verified.

Beauty also represents a strategic priority for CVS Health, having expanded its assortment in categories linked to health expertise, including a sharper focus on organic and clinical beauty products. “Beauty is a cornerstone for CVS,” Owens noted. “Beauty is where [CVS] has very loyal shoppers, and beauty is the emotional [component] of CVS’s health-and-wellness strategy — the wellness part.”

“Beauty is important to our best customers and is often the gateway into our stores,” Sansone said. “We’re capitalizing on the success of last year’s ‘Elevation’ of the beauty department, and expanding the refreshed offerings to more stores and categories this year with enhanced navigation, exploration and inspiration,” Sansone said. To help invite more exploration and discovery in beauty, a part of CVS’s Elevate Beauty strategy included updated signage in the aisles and an emphasis on inspirational/educational display. “Other enhancements, [such as] mirrors on the cosmetics wall, product regimen trays and products grouped into categories customers most care about, have also added to the enhanced experience” in beauty Sansone said.

In addition to enhancing its health and beauty product offerings, CVS Pharmacy also has focused on personalizing the shopping experience for its most loyal consumers. “Personalization is a high priority for us because it delivers immediate value to our customers, while also helping us optimize our business,” Sansone said. “We are committed to continue to move aggressively from mass promotion to personalized value. Today’s customers expect us to offer relevant value. At the core of CVS’s personalization efforts lies ExtraCare, the longest-running loyalty program in the drug store channel.”

“Over time, our approach toward ExtraCare has evolved from offering all our customers the same offers to looking at each customer individually to better understand their behavior and deliver value that is more relevant to each of them,” Sansone explained. “For some, that could be a coupon for a specific item at a specific time. For others, it may be introducing them to new products.”

Another way that CVS is trying to become more relevant to its best customers lies in its store segmentation efforts, including — perhaps most notably — its CVS Pharmacy y más stores. Built based on insights from its 2014 acquisition of Florida-based Navarro Discount Pharmacy, the CVS Pharmacy chain now includes 12 CVS Pharmacy y más locations in Miami and nine in Los Angeles. About 80% of the products in its Los Angeles CVS Pharmacy y más store are sourced from local vendors and distributors in California, and about 300 of the products in those stores also are manufactured in California, Sansone told DSN, including such brands as El Alteño, Betel, De La Cruz, Don Francisco, La Llave, Bactimicina and more.

CVS is making bold moves to meet the customer everywhere she wants to be, with convenience and value.

“This month we launched curbside nationally in over 4,000 stores,” said Sansone. “Customers expect to shop any number of ways and we are making it easier for them, either at CVS.com, via mobile, or in our stores.”

CVS Pharmacy will continue to lead in health and beauty with a customer first mind-set.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

Helena Foulkes of CVS Pharmacy
BEAUTY CARE

Double down on health: CVS Health is leading a retail health revolution

BY Jim Frederick

Who’s leading the retail health revolution? One of the chief innovators in the transformation of U.S. health care is surely CVS Health.

(To download Special Report: Double Down on Health, click here.)

The decision CVS Pharmacy made two years ago to get out of the tobacco business cost it $2 billion in front-end sales, but it underscored the company’s determination to become a healthcare company. Dumping tobacco, said company leaders, was an essential turning point in CVS’s evolution to becoming a full-service, integrated provider of retail and managed-care pharmacy and health solutions.

“Since CVS Pharmacy became the first and only national retail pharmacy to remove tobacco from its shelves in 2014, the next natural step in the evolution of our retail business was to expand our focus to health and beauty in the front of our stores,” said Helena Foulkes, EVP and president of CVS Pharmacy. “We’ve continued to take critical steps as the company continues to evolve into a premier health and beauty destination.”

Indeed, the sacrifice of the predictable tobacco income stream was just the tip of a large iceberg. No company has done more to build and weld together the components needed to create a complete, cross-functional health solutions model to serve patients and their health plan payers.

CVS Health’s arsenal of health resources is unmatched in pharmacy retailing:

  • Undisputed market leadership as both the leading U.S. pharmacy retailer and the nation’s top source for specialty medicines, as well as the leading supplier of medicines to long-term care facilities. In all, CVS dispensed or managed the dispensing of 1.9 billion prescriptions in 2015, and its 30,000 pharmacists filled 21.6% of all U.S. retail prescriptions.
  • Through CVS Caremark, the company operates the nation’s second-largest PBM, with some 75 million members. “CVS Health doubled its PBM revenues in the last five years,” Forbes reported in 2015.
  • Employing embedded nurses certified in rare disease management — and offering such services as Specialty Connect, which allows patients with chronic and serious conditions to pick up their meds at any CVS pharmacy instead of waiting for home delivery — CVS Specialty has become the nation’s largest specialty pharmacy, generating nearly $40 billion in revenues in 2015. “More than 54% of our specialty patients prefer in-store pickup, along with the opportunity to consult with a pharmacist face-to-face,” president and CEO Larry Merlo noted in the company’s most recent annual report.

Its stores have become the “true embodiment of CVS Health’s enterprise mission to help people on their path to better health,” Foulkes told DSN, as the company seized upon the impetus of its decision to dump tobacco to fine-tune the role of its stores.

More and more, “CVS stands for health,” declared Brian Owens, director retail insights at consulting firm Kantar Retail. With the predicted shortage of some 90,000 primary care physicians, he added, “they’re trying to corner the market when it comes to supplemental primary care.” As a result, Owens said CVS is “making a huge imprint on the U.S. landscape. It’s about how they’re able to take care of you from soup to nuts — before you get sick or when you are sick.”

‘A huge undertaking’

To that end, CVS Health has been on an expansion tear over the past two years. Its most dramatic recent move was the acquisition of Target’s pharmacy and retail clinic network in 2015, vaulting the company to more than 9,600 retail pharmacies and more than 1,100 in-store clinics. As of July 2016, CVS operated 9,652 retail pharmacies in 49 states, the District of Columbia, Puerto Rico and Brazil, as well as 1,136 retail clinics across 33 states and D.C., staffed by more than 2,400 nurse practitioners. Those clinics have seen more than 30 million patient visits since their inception, according to CVS.

Absorbing the Target pharmacies was “a huge undertaking,” Foulkes told DSN. CVS this summer completed the integration and conversion of more than 1,600 Target pharmacies to the new CVS Pharmacy at Target format, which also included welcoming some 14,000 pharmacists, pharmacy technicians and advance practice clinicians into the fold.

“We faced the challenge by putting together a fantastic cross-functional team” and completing the integration “ahead of schedule,” she said. “I am so proud of the work they accomplished by working closely with our Target partners. I’m also proud of all of our core CVS Pharmacy colleagues who also played a role in making the transition a success along with our new Target colleagues.”

“But we’ve just scratched the surface when it comes to our pharmacies in Target. With all the CVS Pharmacy systems and branding now in place, we’re turning our focus to introducing our new patients to our innovative pharmacy care and digital offerings — [such as] … Maintenance Choice, Specialty Connect and Ready Fill — that can help increase medication adherence and drive improved clinical outcomes,”  Foulkes said.

With its acquisition last year of Omnicare, CVS also became the largest pharmacy provider to long-term care facilities, serving some 2 million patients. “A lot is happening within Omnicare. In early 2016, we introduced the use of CVS pharmacies to speed the delivery of first fills and emergency needs to the facilities Omnicare works with,” Foulkes said. “We now fill nearly half of all emergency prescriptions through CVS Pharmacy.”

“We’re also piloting our transition-of-care program … to better serve patients as they transition across different care settings,” Foulkes added.

Recharging the front end

Much is happening at the front of the store as well. CVS is building its front-end growth strategy along five “strategic themes” that Foulkes said “are driving growth and positioning us as a leading health and beauty destination.” Among those initiatives are:

Better Health Made Easy

Making health products readily available and affordable, including carving out space for OTC health products that are covered by many customers’ health insurance plans, and expanding healthier food choices. To that end, Foulkes said, “in 2015, we expanded our … healthier food offerings in 500 stores,” with “better-for-you snacks along with a broader assortment of fresh foods and refrigerated grocery items, such as almond milk, yogurt and cheese, along with an assortment of trusted organic brands.”

The move is “driving growth and has been well-received by customers,” Foulkes explained, with 77% of surveyed customers saying that access to more healthy food options at CVS was important or very important to them, and 82% indicating they were impressed by the new offerings.

Based on that positive feedback, CVS will expand the healthy foods assortment to an additional 2,900 stores, Foulkes added.

In addition, she said CVS has “transformed almost a quarter of our checkout space, which traditionally features candy, to feature better-for-you grab-and-go snacks.”

Elevate Beauty

Enhancing department visibility and product selection in such areas as cosmetics and skin care, so far CVS has introduced its new-look in beauty in more than 2,000 stores.

“We enhanced the beauty shopping experience featuring modern displays where shoppers can easily find the hottest new trends, latest beauty innovations and best-sellers, as well as a fully revamped beauty assortment with 1,200 new products, including many prestige-like exclusive brands at incredible value,” Foulkes said.

Those and other front-store efforts are paying dividends. “In the front of the store, our average basket size in 2015, after excluding the impact of our exit from tobacco, increased 2%, and 4% in our core health and beauty businesses,” Merlo reported.

MyCVS

Expanding and refining its store clustering initiative — which draws on store-specific sales data and localized demographic findings to tailor store designs to the needs of customers within a specific trade area — CVS has introduced its new CVS Pharmacy y más format in 20 locations thus far in Miami and Los Angeles, where consumers have access to hundreds of Hispanic-oriented products and services.

In addition, the company continues to explore and test other store cluster concepts, including more upscale beauty and urban formats.

Personalization and digital innovation

CVS is using “digital technology to personalize the individual shopping experience,” Foulkes explained.

The company continues to fine-tune its industry-pioneering ExtraCare loyalty program, which will focus increasingly on rewarding its best customers with more personalized offers versus offering blanket discounts to all customers.

In addition, “we’ve seen great adoption of our CVS Pharmacy app, and in 2015 we opened our Digital Innovation Lab in Boston, a facility that is focused on developing cutting-edge digital services and personalized capabilities that offer an accessible and integrated personal pharmacy and health experience,” Foulkes said.

The Digital Innovation Lab “embodies our mission to run like a start-up,” she added, “accelerating speed-to-market and impact of digital innovation across the enterprise.” The Digital Innovation Lab is allowing it to move quickly “to rapidly test, improve and implement new programs — including CVS Curbside and CVS Pay, which both launched this year,” Foulkes said.

American consumers have clearly embraced the CVS Health business model, but so, too, has the investment community. Fast Company named CVS No. 3 on its annual list of the 50 most innovative companies of 2016, in part for “becoming a one-stop health shop.” According to investment research firm Seeking Alpha, “CVS Health has managed to build, both organically and through major acquisitions, one of the best positioned businesses in the healthcare industry. The company has grown from a major pharmacy retailer to a major player in the nation’s healthcare system with an integrated business model.”

To be sure, in the two years since it pulled the plug on tobacco, the company has literally doubled down on health. In an exclusive special report, DSN examines the work CVS Health is doing across the organization to ensure that bet pays off. Download it here.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

BEAUTY CARE

Walgreens introduces Ship to Store program

BY David Salazar
DEERFIELD, Ill. — The latest offering from Walgreens will allow its customers to pick up eligible online and mobile app orders in-store at more than 7,600 locations, the company announced Monday. With the new Ship to Store program, customers who order items to a local Walgreens or Duane Reade store for pick up will receive free shipping with no minimum order requirement. 
 
“Our new Ship to Store program provides value to our customers by giving them access to a wide range of products that are typically not found in-store,” Walgreens SVP merchandising Joe Hartsig said. “With Ship to Store, customers have the ability to ship orders to their preferred Walgreens store if their residence or workplace isn’t a secure option.”
 
Orders placed online or through the Walgreens mobile app typically arrive within one to three business days, and customers will receive an email notification when their order is ready for pickup. Customers can also use Walgreens paperless coupons, Balance Rewards benefits and other digital promotions for Ship to Store orders. 
 
“As a leading omnichannel retailer, we’re continually looking for innovative ways to provide anytime, anywhere convenience by offering the best health, wellness and beauty products with just a few clicks,” Hartsig said. “And with Walgreens stores within five miles of 75 percent of the U.S. population, this service is another way we can offer convenience by providing more choices to improve the shopping experience for our customers.”
 
The company said it also offered free shipping to a customer’s home or other address for eligible orders over $35. 
 

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES