Save-A-Lot opens in Albany, N.Y.

BY Allison Cerra

ALBANY, N.Y. New York state’s capital is getting a new neighbor.

Discount grocery chain Save-A-Lot opened its doors in Albany, N.Y. The company’s newest store will host a ribbon cutting Thursday, joined by the town major and country legislature.

“Save-A-Lot is committed to building stores in neighborhoods that want convenience and access to fresh, nutritious food at a great low price,” said Bill Shaner, the company’s president and CEO. “We are proud to be a member of the Albany community and look forward to serving budget-conscious, value-seeking families in the area.”

In line with its grand opening, Save-A-Lot has donated $2,500 to the Regional Food Bank of Northeastern New York and The Cure Foundation to help with their mission to reduce hunger as part of their commitment to the community.

In addition to the newest store, Save-A-Lot currently operates 42 stores throughout the state. The company plans continued growth as it plans to double its size over the next five years.


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Which area of the industry do you think Amazon's entry would shake up the most?

11th Drug Store News Industry Issues Summit


Q: Has the current STATE OF THE ECONOMY caused you to re-evaluate your business, perhaps evolving away from a PURE GROWTH STRATEGY to more of a MARKET-SHARE STRATEGY? What about the consumer—have shopping habits really been reshaped forever as many have suggested? For the retailers on our panel, with SHOPPING TRIPS down year-over-year, how are you GETTING CUSTOMERS INTO YOUR STORES? And, for the suppliers on our panel, given these changes, how do companies like yours effectively reach consumers to engage them to STIMULATE THE PURCHASE DECISION?

DAVE FONG, SAFEWAY: That’s a great question.… I believe that retailers [used to] invest more heavily on developing strategies and tactics to capitalize on new and emerging market opportunities. Given the current volatility of the marketplace, I believe companies are much more focused on basic ‘block-and-tackle’ initiatives to optimize operational excellence and explore integrated store approaches that would provide offerings based on a better understanding of shoppers and their shopping behavior during these tough times, and ways to maximize their spend and frequency of visit in the store.

From a pharmacy perspective, we have noticed that shoppers are much more cost-conscious about their healthcare spend. Shoppers seem more interested, and are asking a lot more health-related questions and seeking options on how to avoid or address their medical conditions, thus encouraging sales in health-related categories of the store.

BRYAN SHIRTLIFF, RITE AID: I think there are a couple of pieces to it. One is: Are you measuring pure [sales] growth, or are you looking at market share? We’ve always done both. I think it’s really dangerous to only measure pure growth because you can be thumping your chest, thinking you’re doing great and still have some huge opportunity gaps. We look at it both within the channel and across channels, as some businesses continue to migrate to different channels.

That being said, what are we doing to drive the customer in? Our primary vehicle 52 weeks of the year is the 12 to 16 pages we have on the street. We’ve gotten more aggressive in our traffic categories. I think the way the consumer has changed—wanting value, using coupons—I’m of the mindset that they are deselecting retailers at home. They’re sitting down, and they’re looking through the ads or they’re looking on the Internet. You’re getting deselected before they even get in the store. So, how do you get them into the store? You’ve got to get on the shopping list. Customers are creating lists, trying to control their spend. And that’s the real magic, at least in the retail drug channel, to make that list—to not get deselected—make it into the store and then provide an environment where hopefully you’re building the basket, both in count and size.

I think [the customer] has changed; I think she has changed forever. I mean, it’s not uncool to shop the dollar channel now, whereas…three to four years ago, it wasn’t necessarily the ‘in’ thing. Now it’s cool to say, ‘Look at the deals I’m getting at the dollar store.’… [Dollar chains] certainly are doing pretty well in this economy.

DEWAYNE RABON, WINN-DIXIE: I think, yes, the consumer has changed, and I don’t think it will be a short-term change. When you look at the economy today, I don’t think I believed I would ever see a day when I had to worry about whether my bank was going to be open the next day or not. But that’s the reality of the [economy] we’re in today. So I think the consumer—whether it be corporate brands or whether it be value-priced—I think they have been reshaped, and I think they’re looking for something different when they come into our stores.… We have always looked at market share along with top-line sales growth, but we are focusing equally now on market share as much as we are on growth because there are certain categories where, nationally, sales are down across the board.… You have to be careful when you only look at sales growth.… You could either be leaving something on the table or missing some opportunities where you thought you might be doing well. So the market share piece of the equation has become more relevant as we analyze our data each week.

JOEL CARDEN, PACIFIC WORLD: I think the consumer’s shopping habits have changed; I think the focus on value is a big—and a very important—aspect of the equation, [and it] is here to stay for a long time. And I think…to get back to the question of growth versus market share, we absolutely continue to look for growth, but also market share. We have to continue to look at ways to meet what the consumer is looking for right now. We talked about it a year ago at this meeting, and it’s still true: They’re looking for value, and we have to create new ways to bring value to the consumer in this economic climate.

DAVID HOWENSTINE, PFIZER CONSUMER HEALTHCARE: The landscape has changed; it’s largely good news with some new challenges. Retailers are becoming savvier about how to market to their shoppers. Our customers are working with us today to create differentiated and creative ways to engage their shoppers—our consumers—at the point of sale. At Pfizer Consumer Healthcare, we are investing in new capabilities, such as shopper insights and shopper marketing, to take advantage of these opportunities.

Historically, manufacturers had access to syndicated data, typically retail and household panel data. We could reliably analyze traditional trade promotion tactics, such as TRP’s, features and displays. Those kinds of events will continue to be important, but I think the challenge for us going forward as an industry is how to effectively understand how all segments of the in-store experience contribute to the success of a category or broader solution set. That’s a gap for suppliers and retailers today. We need continued collaboration and smart thinking in order to gauge what is truly creating demand in store. It’s an exciting time.

SHARON GLASS, CATALINA MARKETING: According to Google, the No. 1 word that’s [currently] being searched is ‘coupons,’ which [is an area] Catalina Marketing excels in… And, we’ve seen new consumer shopping trends emerging that also indicate consumers are looking for increased value. Catalina Marketing works with our manufacturer and retail partners to focus on two primary initiatives: insulating current loyal shoppers and protecting against defection.

A great deal of the focus has been on adapting our solutions and strategies according to what our retailer and manufacturer partners are looking for in order to aid them with maintaining their current user base and uncover the potential new user. Consumers are shifting their behavior. For instance, someone who bought a department store lipstick a year ago…is now buying it in a regular drug store, and they’ve adapted to that lipstick. They may not change and go back to their old ways because they have decided they are satisfied with the quality and value available for less. So, we look at these new consumer trends and buying behaviors, and adapt accordingly. We speak to them based on what it is they’re buying today, and we predict how they may change in the future. This is one way we utilize our data to support and uncover opportunities for our partners.

CHARLIE BURNETT, COSTCO:In the past, it has been quite different because we never spent any kind of promotional money on advertising of any kind. We now do quite a bit of internal promotion through multi-vendor coupons, and we run those a couple of times a month.… And it has…driven our frequency of visits up to the two- to three-week level. So our traffic is up, our sales are up. We’re up in the 3% range right now over last year.

DRUG STORE NEWS: Is there anything specifically in the pharmacy that you’re doing to drive shopping trips?

CHARLIE BURNETT, COSTCO: Sure. On the pharmacy end, we’ve developed a couple of programs—one for people who don’t have insurance. We’ve been able to approach the manufacturers to provide us with the same rebates that they give to the [pharmacy benefit managers], and we pass them straight through to people that join our program. It’s a no-cost program to the individual, but they cannot have any other form of insurance, and they have to be a cash-paying customer. We enroll them in the plan just like any other one, it’s adjudicated through a PBM. And it has grown; we have about a half-million people in it right now, and it’s been very good. It’s called the Costco Member Prescription Program.

MIKE VOADEN, ALBERTO CULVER: There’s always light at the end of the tunnel. I think as far as our business, we look at different scenarios. In the value area of our brand portfolio, certainly top-line growth is something we can take advantage of right now—and we are. We also have some premium brands, we have salon brands, and in that case, I think it’s really more about taking market share because of the current trade down. It’s sort of a tactical answer in terms of where you are, and what your brands—or what you as a retailer—bring to the marketplace.

Q: In recent years, retailers have placed a premium on such things as dropping sight lines, REMOVING ‘CLUTTER’ from the aisles, RATIONALIZING SKUS, etc., in hopes of improving shopability and optimizing the customer experience. Do the COSTS OF REMOVING MERCHANDISE OUTWEIGH THE BENEFITS of an open, airier SHOPPING EXPERIENCE? Why or why not? Is there a happy medium somewhere in between?

CRAIG NORMAN, H-E-B: The customer has told us time and again: They want a clean and clutter-free shopping experience. So—everything from lines of sight to how much is on the floor to what’s on the endcaps and how is it signed and identified to them—they want to be able to know what it is they’re looking for and go to that item, and be able to get in and get out. So yes, it puts pressure from a SKU rationalization standpoint, and I think at H-E-B we’ve done a much better job over the last few years in making sure that we’ve got the right items in all of our stores. I think the challenge for us now, what I understand from our folks, is rationalizing all the different sizes available; the size selection issue has just gotten out of hand, and you can see that in almost any drug store.

MIKE VOADEN, ALBERTO CULVER: There are two elements that you need to look at: One is the clutter at the shelf, which can confuse shoppers in their ability to make a decision; the second is promoting seasonal merchandise. Clutter comes in different forms, so if you’re shopping from a destination point of view into hair care, you want to make it easier. We’ve made it hard for people to make that decision with too many choices and poor presentation of the shelf. Shelf presentation should flow the way shoppers shop for hair care, and in most cases, [it doesn’t work that way]. Alberto has a team of experts that can help with the organization and presentation that best reflects shopper behavior.

In the case of promotional and seasonal, it’s a challenge because, executionally, it’s all or nothing.… It [may] not be productive in a lot of stores,…and that’s everyone’s challenge. So, there’s a right way and a wrong way to do it. The careful thing to consider, though, is this: We didn’t get here by accident. There were some good reasons for all of that ‘clutter’ in the first place, so as we pare it back, we need to consider that and be careful not to throw it all away, because some of it is the right thing to do—and some of it isn’t.

BILL BERGIN, RITE AID: I’m a big fan of the clean-store policy. It never really made sense to me to have…toys stacked within 6 in. of the ceiling so when a woman comes into the store, she can’t see the pharmacy and can’t see the aisle markers to navigate her way around.

I think it is a delicate balance, though. I think you need to be careful that stores don’t become too sterile—I see a little bit of that as you travel.… I still think there are value-oriented customers that are kind of looking for the deal, looking for that treasure hunt.… I think it’s really a question of how we strike that balance—that we don’t have stores so cluttered that people can’t navigate their way around, yet there is something that creates an exciting, new shopping experience when a woman comes into that drug store.

JOEL CARDEN, PACIFIC WORLD: I would agree with Bill [Bergin] that we do have to look for a happy medium in this equation. I think to understand how we got to where we are, it is important to understand how we arrived here to begin with. In reality, it is the ‘perfect storm’ that brought us here; the SKU proliferation, store clutter and lack of shopability in the stores were all factors that played into our current situation. I think in many ways, the retail [community]—and the vendor community in particular—have been guilty of creating what now needs to be fixed. We’ve been addicted to the pipelines of new product introductions and launches, many of them without significant reason for being.… That said, there has to be a balance; we don’t want to be eliminating good product launches [just] because we’re trying to rationalize the SKU process down.

Q: How do you RATE MANUFACTURERS? What are the most important attributes that you look for in a trading partner?

BRYAN SHIRTLIFF, RITE AID: We have a fairly sophisticated supplier P&L that I think gives us a good snapshot. But beyond that, I think we measure our good supplier partners as those that can provide strategic teams to our business, and that’s across all functional areas—merchandising, marketing, supply chain. Also, bring new innovation.… There are a lot of other ways to innovate, whether it’s in merchandising strategies, placement of product in the store, education, way-finding.… Our good strategic partners bring that to us, and I will tell you that our good strategic partners are not just the largest suppliers; some of our best strategic partners are the mid-sized and smaller suppliers, as well.

We like to collaborate with all of our suppliers, but we do ask them to bring intellectual resources to the table—human resources to the table in terms of people that have insights and creative ways of thinking about the business, and how we go to market, that understand what our strategic plan is as we begin to segment our stores…and how do your brands and your strategies tie into that? How do you make us better as we move forward?

Really critical.… I love to test things—I don’t want to test anything that we wouldn’t want to roll out across 4,800 stores, but I love to be first to try something even if it’s a little bit out there because some of that is the best stuff that we find.

Certainly a supplier P&L comes into play, but it’s really the team. It’s really got to happen at the desk level.

I think we’ve got so much technology, so much e-mail and text messages, and all that stuff that we don’t know how to do business anymore. We never sit down and go face to face and talk to each other…when we’ve got a problem. When we’ve got an issue, let’s sit down [and talk about it]; let’s not exchange 4,000 e-mails and copy everybody’s bosses—and their bosses’ bosses on top of it. It’s a struggle; I get 350 e-mails a day, and you get so caught up in it that you never really sit down and have time to strategically think about the business and get the right players in the room. And it doesn’t need to be a top-to-top; it needs to be the three key players from my side and the three key players from your side, and let’s figure it out—let’s just have a conversation about how we drive the business. I don’t think we do enough of that. So, shame on us, and shame on you for creating an environment where we just don’t have time to do that anymore.

But I think we’ve got to make time to do that, and if it means not answering a couple of e-mails, then so be it. It’s critical that we all understand that and get better at doing it. It’s absolutely out of control.

Q: With the coming census, there has been much attention given to the MASSIVE CULTURAL SHIFTS that continue to redefine shopper demographics. For instance, the iconic American family—married with children—accounts for only 22% of all U.S. households. For the retailers on our panel, how does this change the way you go to market?

BILL BERGIN, RITE AID: To me, it’s bigger than the whole ethnic issue; it’s more about segmentation. And I think the exciting thing is that we live in a day and age that we have access to such robust data that we didn’t have a few years ago. We have the ability to mine that data, look at each store differently and understand what the customers’ wants and needs are, based on the geography of the store. That is a tremendous opportunity. And if that happens to give you an opportunity in ethnic, then I think that’s great, but it could be an aging population, a caregiver-type situation, a young mom.… Different neighborhoods skew differently.

Rite Aid has really taken a very hard approach to segmentation in the way we look at stores and trying not to take a one-size-fits-all approach. I think that’s really where the big win is, and if that happens to align with whatever ethnic initiatives you may have as a retailer, that’s great.

CRAIG NORMAN, H-E-B: This is an area that H-E-B has really excelled in. For many years, it’s been a focus to tailor each of our stores, not only from a demographic standpoint, but also from an ethnic standpoint. We literally serve every type of shopper that you could think of—everyone from the low-income ethnic consumer, to all ages, sizes, shapes and income levels.₀ Our focus has been to create that differentiated shopping experience in each of our stores. You can talk to customers in any of our trade areas, and they will refer to it as ‘My H-E-B.’

DEWAYNE RABON, WINN-DIXIE: I agree completely with Bill [Bergin]. We operate everywhere from New Orleans to Miami—and those markets are completely different—so when you sit down and you look at the consumer in Hialeah, Fla., that consumer may have an affinity to buy hair care, hair color products, beauty products because [they’re] very, very important to them. But 15 or 20 city blocks away from there, we may have a store where those particular categories just aren’t very important to those consumers at all.

As we move forward, we’re looking at each store individually. That has pros and cons: The cons are that it adds complexity—it adds complexity to the number of planograms that you carry; it adds complexity to the itemization that you carry in your DCs.

But when you look at the upside, what it does help us do—earlier we’ve talked a lot about SKU rationalization—as more retailers start doing…SKU rationalization based on segmentation, those items that are coming out [are the ones] we [had] put in broad-based. Mark [Cieslinski] from Mentholatum made the comment that when he takes a new item to retailers today, he doesn’t go in with the assumption that it’s going into every store that that retailer has.

I think that together, we’ve got to continue to work toward looking at items and understanding where that item makes sense, and where that item can be successful. Because where we get in trouble is down the road when we start scrutinizing our inventory, our turns, our cash flow and realize that we put that item everywhere. That’s the easy thing to do—put it in every store. But the right thing to do is only to put it in the stores where it’s meaningful. I think that can save us a lot of money and time down the road.

MIKE VOADEN, ALBERTO CULVER: I think the days of traditional mass marketing are behind us. I think we can all agree on that. The fact is…‘shoppergraphics,’ ‘consumergraphics’ are more diverse and are going to require new identities. And we’re going to have to measure the subsets that have enough critical mass to pursue product concept, application and messaging. So is it Twitter, is it Facebook, is it blasted off of networks and TV? Where are you going to communicate to whoever that subset is? All that stuff has to be understood; and I think the way that we’re going to look at new product introductions is going to be tied to understanding those subsets, and that’s going to change the way we do things. Retailers will need to understand how to execute store-level marketing going forward. The information to identify customer needs at the store level is becoming more clear with loyalty data, but the real application is still murky.

JOHN SULLIVAN, KAO BRANDS: From an ethnic marketing perspective, there are areas that many manufacturers participate in, such as bilingual packaging and displays, as well as multicultural print and TV advertising. However, from a strategic level, how we engage with those demographic trends is by doing our homework upfront, looking at the beginning of the process, from where we begin to create your innovation and NPD; understanding what your research is telling you internally within your company, quantitatively, qualitatively; and then marrying that with the demographic trends from a consumer standpoint and focusing on the core consumer.

Q: The MOVE TO PROMOTE GREATER SUSTAINABILITY is affecting decisions on everything from how stores are built and powered to the products on the shelf—how they are packaged—and all the way down to how we dispose of old pharmaceuticals. How can retailers and suppliers work together to co-create in this area to help reach business objectives?

JOHN SULLIVAN, KAO BRANDS: I believe our industry has an obligation to promote greater sustainability, and at Kao Brands we’re driven to lead in this area. I don’t think the trade community realizes that we are a $14 billion global company. Our size allows us to embrace sustainable efforts with a focus around the three ‘R’s: reduce, reuse and recycle. This includes activities such as reducing the size of our displays and reducing the amount of plastic or corrugated material. These are just a few tactical ways that we can get there, but I don’t think that we’re going to get to the next level, the next wave of sustainability until two things happen: until we truly lower costs, or the shared costs, between the retailers and manufacturers, as well as find a way to reward those suppliers that are proactively doing more with sustainability.

CRAIG NORMAN, H-E-B: Well, everyone wants to be green. Suppliers want to be green with their products and their packaging; retailers want to be green with our buildings, our power plants and everything that we do to go to market. But I guess the question is: How much of a priority does the consumer place on a green product? And, quite frankly, how much are they willing to pay for it? We could put green products on the shelf all day long, but if they’re not priced appropriately…they’re not going to pay more…[just because it’s] recyclable.

So, I think the big challenge between the retailers and the suppliers is how we educate the consumer better as to what products are green, what products are derived from recyclable sources and then how they can benefit from buying those products. So it’s really around education and what a consumer is willing to pay for it.

JOEL CARDEN, PACIFIC WORLD: I think we’re all aware that we have to be more [focused on] sustainability in the way we go to market—and in the way we design our packaging, our products—and the total way that we manage and conduct our businesses. It’s an all-encompassing thing.… Certainly the younger generation is demanding it, and we all know that ultimately it is the right way to do business. I think it’s something that we have to be aware of. At Pacific World, we are looking at this very seriously, taking a lot of steps to be more sustainable in all aspects of the way that we conduct our business.

Q: There has been much talk in recent years about SKU RATIONALIZATION. For the suppliers on our panel, could this change the way you choose to introduce new products or how you support existing brands in the future?

MARK CIESLINSKI, MENTHOLATUM: Being a smaller manufacturer, one of the things that we used to look at just a couple of years ago was new item launches. And we’d look at them…by class of trade launch. That’s gone.

Now when we launch new items, it’s all about specific retailer launches. And we have the assumption now that we’re not going to get 100% ACV as we go out. So how that changes us is…almost each launch of a new item is customized to a specific retailer, and being a smaller manufacturer, we have the ability to roll out quickly for our retailer partners who decide to get on board with our launches. One of the things that we also try to do is, after we put our national program in place, we spend a lot of time overlaying the retailer-specific marketing programs that we can utilize [so] that we can target that retailer’s specific shopper.

SCOTT PATRICKI, PHARMAVITE: The vitamin category has experienced phenomenal growth in 2009. It’s one of the few HBA categories that has realized significantly higher growth rates since the economy began to soften as people embrace and take ownership of their own preventive health regimens. New product innovation has played an important role. As retailers’ product assortment expectations have evolved, they expect suppliers to be able to quantify what the incrementality is going to be, not only for their brand, but…[also] for the…segment that product will compete in and the entire category. Suppliers that can demonstrate that…will be more successful at surviving the SKU rationalization process.

DAVID HOWENSTINE, PFIZER CONSUMER HEALTHCARE: Manufacturers in the development of new products have got to be much more sophisticated than perhaps they were 10 years ago. Today, companies such as Pfizer Consumer Healthcare do extensive market research upfront to understand what the volumetrics of a new item might be, not only for the item that’s going to be launched, but also in terms of incrementality to the category, which is of vital interest to our customers. So, I would suggest the companies that are adding value in the marketplace are spending a lot more time and resources upfront before a product’s even launched to simulate those market conditions and [measure] how successful that product will be.

Q: With Rx SALES GROWTH SLOWING, what should retailers and suppliers do to optimize front-end sales and keep consumers engaged in health, beauty and wellness?

DEWAYNE RABON, WINN-DIXIE: We have found that the cholesterol screenings, blood pressure checks, flu shots and those types of things are great ways to engagethe consumer. One of the things that we’re really looking for from our suppliers is₀how can we make [these types of events] more…ongoing? We [all] do it kind of as a flash in the pan; we’ll do it one month, and then we’ll move on to the next event. But we continue to look for ways to reach out to our consumers [all year round].

Whether it be through coupons or value-addeds or products that you might have that tie into their particular needs, we need to put it into that consumer’s hands whenever we have that opportunity. That’s one-on-one time with the pharmacist—it’s an individual the consumer trusts—and when they hand something off to that consumer during that inoculation or that cholesterol check or that blood pressure check, it’s meaningful to them. We see a lot of value there, and we think there is an opportunity for us to continue to engage that consumer and then get them over to the OTC aisle and maybe even [get them to] look at preventative care that will help them, and also help our sales grow.

The second piece of that is our card information—we’ve been looking at a lot of different promotions. Is the consumer just looking for dollars off on the front end? Are they looking at ‘Buy X, get Y?’ And since we are a [loyalty] card company, it allows us to measure what the consumer’s doing. Unfortunately, a lot of the time, what a consumer says and what a consumer does are two completely different things. So by using a card and analyzing those promotions, it gives us an opportunity to find out if they really responded, and which segment of our customers responded, so that we can tailor those promotions to our individual consumers.

DAVE FONG, SAFEWAY: I believe that pharmacy plays a significant role contributing to the total store, especially with the heightened awareness by consumers on seeking answers to questions on how to better manage their personal health. I would encourage that suppliers include pharmacy in discussions with other non-Rx category directors within a company on key cross-educational and cross-promotional opportunties. Leveraging the trust of…our pharmacists can contribute toward achieving success as we create the right promotions.

DAVID HOWENSTINE, PFIZER CONSUMER HEALTHCARE: I think the examples that the panel used about connecting the dots between the shopper, consumer, and health and wellness is an untapped opportunity to grow front-end sales. It is easier said than done, however. Health and wellness is hard to define, and as a result, strategies and tactics have yet to be optimized. We are working today with our customers to better understand these opportunities through shopper insights work, and testing and learning scenarios.

I also think there’s an opportunity in the physical space of the pharmacy and OTC area—and it’s just not a retailer challenge. There’s an equal burden on the supplier community, as well. Take the OTC departments, for example. It’s largely a sea of pills and liquids in bottles.… Together, we could and should do more to create a better atmosphere, especially if we think these categories could better serve the needs of those looking for better consumer healthcare products, solutions and services. Look what’s evolved in the beauty and skin departments of the drug, mass and food channels. Some retailers, with help from their supplier partners, have completely transformed those departments. It’s inviting.… And the results appear to be significant and sustainable—even in a challenging economy. Why can’t we do the same in the healthcare departments?

SHARON GLASS, CATALINA MARKETING: I actually sat with a retailer partner recently, and he mentioned a similar stat where in the future, the prescriptions are going to be about $4. His concern was, ‘How do I drive total store health and wellness when I’m not going to get the margins that I do today in my pharmacy?’…

Retailers have great insight into consumers’ health-and-wellness management practices. When a shopper comes into the store, it’s not about just the pharmacy; it’s also about driving pharmacy to center-store based on that NDC that they’re filling, or it’s driving center-store shopper profiles based on what they have in their basket. Customized communications can be offered to each shopper designed to motivate or improve upon regiment usage, provide recipes and tips, and overall support through health-and-wellness campaigns, and/or messages to go meet with the in-store nutritionist or dietician.…

Lastly, one important component to successful health-and-wellness strategies is ‘the regimen,’ and I think where we do a disservice is when we run a one-time, short-term program geared toward a specific disease state, and then do nothing the remainder of the year. Conditions have to be managed all year long, and the support given to shoppers and patients should mirror the same level of commitment.

MARK CIESLINSKI, MENTHOLATUM: We’ve worked with Sharon [Glass] on a couple of programs and tests on how to collaborate and bring that Rx shopper over to the OTC aisle. And one of the programs we worked on—I’ll be a little specific and then I’ll speak more in general—was at Walgreens, and it involved segmenting a customer who…has similar demographics.… They bought a selected prescription and received a coupon giving them information about one of our OTC products. I graduated in the middle part of the bell curve in colege, so I’m not a brain surgeon, but I can tell you this: Our product’s consumer is a younger female (18-30), so we worked with Sharon and her group to say, ‘Anyone buying birth-control pills in Rx, get them the info on our OTC product.’ I’m guessing 100% of those are female, and a high percentage of that is younger—30 years and younger. That’s our key demographic.

Q: We have heard that some retailers feel that CATEGORY MANAGEMENT has become less relevant given the emergence of shopper insights. What is more important—category management support or shopper insight capabilities?

SCOTT PATRICKI, PHARMAVITE: What we have observed and heard from many of our retail partners is that there is a need for both category management and shopper insights. These two disciplines are not…mutually exclusive. The biggest challenge for the industry is how to develop a more synergistic process that fully integrates both, so that they work synergistically together versus as two separate silos within the supplier and retailer organizations.

For example, if there are certain segments within a category that have been deemed strategically important by a retailer and that particular retailer is losing share within those segments, typically there would be large amount of ad-hoc category management analysis that would go into the process. This would entail using different syndicated data sources that identify different sales causal variables, including promotions, planogram merchandising segmentation, product assortment, pricing, etc. These data sources provide valuable insight that provides a foundation for shopper insights to be built upon. Layering on the customized insight from that retailer’s shoppers helps identify the attitudinal causal variables for the supplier and retailer that affect those segment buyers’ purchasing process, need-state, shopping mission, etc. Category management and shopper insights, when fully integrated, are a very powerful combination and can provide valuable business-building insights.

There is a lot of upside potential [here]. We are just beginning to tap into it in terms of retailers and suppliers being able to fully integrate and link the two disciplines. Simply put, it’s about being able to effectively bring the right resources together within the retailer and supplier organizations via a formal process that provides the structure necessary to facilitate the integration of the learnings from the two disciplines.

CHARLIE BURNETT, COSTCO: Well, we have never been a category company—that was decided long before I came to Costco. We look at it item by item. That doesn’t mean we don’t have a fair representation within a category. But usually it’s only the top five or six items in that category, and we look at them as items.

So, I’d say consumer insight is valuable to us and to what the trends are, and what we should be looking at. We kind of use our e-commerce site as a test platform, and if we’re not too sure about how successful an item is going to be, we’ll put it up on e-commerce and see what happens. [The Web is] a beautiful platform for that because you don’t have to buy very much inventory.… And it’s an intelligent way to experiment…to test an item and see what the trend may be.


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Which area of the industry do you think Amazon's entry would shake up the most?

CVS’ fourth quarter lands sales-side up

BY Antoinette Alexander

WOONSOCKET, R.I. —CVS Caremark may have closed the books on a fiscal 2009 that brimmed with a good deal of accomplishments, but the pharmacy healthcare provider has hit the ground running in 2010 as it enters several new markets and kicks off a string of health fairs for those living in underserved areas.

“While we reported another solid quarter this morning, rounding out 2009 ahead of our initial plan, we did accomplish a lot last year,” Tom Ryan, chairman, president and CEO, told analysts during the Feb. 8 conference call. “And while we were not happy with our overall [pharmacy benefit management] selling season, our enterprise-wide financial performance was very good.”

Aside from generating total revenues that rose 13% to a record $98.7 billion in 2009 and income from continuing operations that climbed nearly 11% to $3.7 billion, several highlights included the repositioning of its sales message to focus first on its PBM capabilities; continued growth of its Maintenance Choice program, which is now approaching more than 470 clients; and an increased investment in Generation Health to expand pharmacogenomic testing to its PBM clients.

Meanwhile, its MinuteClinic business, which now stands at 570 clinics in 56 markets, continues to offer new products and services. For example, it rolled out in the fourth quarter asthma monitoring screenings on a national basis and is piloting a diabetes monitoring service for patients already diagnosed with diabetes. A key focus going forward: adding protocol-driven monitoring services for such common chronic illnesses as hypertension and high cholesterol.

The bottom line is that, in 2009, CVS Caremark made good progress on strengthening its position as “the largest pharmacy healthcare provider in the nation with the broadest capabilities.”

But if the first few months of 2010 are any indication of how the coming fiscal year will play out, then CVS Caremark will, once again, deliver a string of milestones.

In January, the company entered the St. Louis market with the opening of four stores, with a fifth location slated to open in the fall, and the chain also opened its first store in the city of Memphis, Tenn., with more stores expected to open in Memphis later this year. Then in mid-February, the retailer officially opened its first two store locations in Puerto Rico—one in San Juan and one in Bayamón—with a total of nine stores slated to open on the island in 2010.

Meanwhile, the company recently kicked off its “A Su Salud” (To Your Health) health fairs for 2010, and has 800 events scheduled for the year in cities including Los Angeles, San Francisco, Sacramento and Fresno, Calif.; Houston, Dallas/Fort Worth and Corpus Christi, Texas; and Miami.

In 2009, more than 195,000 people were screened during the events, with CVS/pharmacy providing free and lowcost medical screenings and services valued at $49 million through the A Su Salud program and direct referrals from the events.

There’s no doubt that CVS Caremark has kicked off the year with a bang, and the momentum is unlikely to subside as the healthcare battle continues and patients, employers and third-party payers increasingly look for ways to curb costs and embrace innovative healthcare solutions.


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Which area of the industry do you think Amazon's entry would shake up the most?