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Target’s five-step plan for success

BY Mike Troy


MINNEAPOLIS — Target is poised to become an even more significant player in the world of health, wellness and beauty in the coming years, assuming the company can execute a range of initiatives designed to grow sales to $100 billion and double earnings per share to at least $8.


Those targets represent huge increases from last year’s sales of $67.4 billion and earnings of $4, but chairman, president and CEO Gregg Steinhafel believed the figures are attainable within six to seven years. Earlier this month at the company’s annual meeting, he laid out the roadmap of how the company plans to get there.


First, much of the increased sales volume is expected to be generated by the ongoing conversion of the company’s base of discount stores to a new format known as PFresh. The addition of fresh food and an expanded consumables offering is the primary point of difference with PFresh, but as long as Target is putting stores through the disruptive remodeling process, it is using the occasion to upgrade other key areas of the stores. The end result is a more compelling shopping experience and a product assortment that more broadly satisfies shoppers’ needs and increases the frequency of visit and average transaction size.


The PFresh program, coupled with an increased emphasis on beauty care and pharmacy, as evidenced by the company’s “Ask Us” pharmacy campaign, has driven sales results in the broad category the company defines as household essentials — pharmacy, beauty, personal care, baby care, cleaning and paper products — to account for 24% of the company’s annual sales, up from 22% two years ago.


Since the PFresh concept was developed in 2009, Target has been remodeling stores at a rapid pace, including 341 stores last year that gave it a year-end total of 462 stores in the PFresh format. The company’s plans call for another 350 units to be remodeled this year, and at the end of the first quarter, 98 of those remodels were completed. Now 550 of the company’s roughly 1,500 conventional discount stores have been converted, and additional conversions will take place in the coming years.


But before that happens, Target has a major relaunch planned for its e-commerce business later this year that includes a heavy emphasis on mobile. “Our new site will offer an integrated and engaging online shopping experience. It will also give us a powerful platform for future multichannel initiatives that are authentically Target and relevant to our guests’ lives,” Steinhafel told attendees at the annual meeting. “This will significantly strengthen our ability to deliver a simple, differentiated brand experience that guests can access anytime, anywhere via a variety of channels.”


Looking ahead to the following year, another growth initiative outlined by Steinhafel involves the opening of the first City Target stores in Seattle, Los Angeles, Chicago and San Francisco. These stores are expected to produce useful insights around urban operational challenges and desired product assortments prior to what is expected to be a more meaningful rate of expansion in subsequent years.


Simultaneous with the PFresh remodeling activity and the major online push, Target is counting on a program called REDcard Rewards to contribute to same-store sales growth. Launched last fall, the program offers an immediate 5% discount to shoppers who pay with a Target credit or debit card. It quickly has gained acceptance and now stands at about a 7% penetration rate — and it puts Target at price parity with Walmart.


The biggest boost to Target’s topline will occur in 2013 when the company opens its first stores in Canada. The retailer acquired 220 Zellers leases, and after some extensive remodeling work, is due to open between 100 and 150 locations in Canada in 2013.


Target, along with all other retailers, is dealing with some major short-term challenges related to the economy and consumers’ ability to spend. However, Steinhafel is convinced a commitment to the company’s “expect more, pay less” value proposition will see it through difficult times.

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Retailers, suppliers band together to help Joplin, Mo., residents

BY Antoinette Alexander

JOPLIN, Mo. — It has been weeks since a massive tornado ripped through Joplin, Mo., bringing with it widespread destruction and a death toll that, by most recent reports, has surpassed 150. As residents now work to clean up the devastation and piece back together their tattered homes and shattered community, several industry members have stepped up to show their support.


“This is a horrible tragedy for the Joplin community. We’re deeply concerned by the devastation we’ve seen, and our thoughts and prayers are with those who have been injured or lost family members in the tornado,” Walmart said in a company statement issued one day after the May 22 tornado. “Our store near Rangeline Road was significantly damaged. Sadly, we had some injuries and fatalities as the tornado blew through the building. We extend our deepest condolences to the families of those customers in this extremely difficult time.”


To help with the relief efforts, Walmart pledged $1 million and soon began directing truckloads of water, food and other basic items to the area.


CVS Caremark stated that the tornado directly affected some of its PBM clients and their members in the area. To help them and the other residents, CVS Caremark donated about $40,000 in monetary and in-kind donations.


Upon hearing of the disaster, the Tide Loads of Hope mobile laundry program hit the road to bring its free laundry service to the area. Working with the American Red Cross, the program provided free full-service laundry to relief workers and residents in need.


Tide Loads of Hope was created in 2005 to provide free laundry services to families affected by Hurricane Katrina. The program since has expanded and, collectively, Tide has washed more than 44,000 loads of laundry for more than 35,000 families impacted by disasters.

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CVS to hasten Rx process with real-time ePA pilot

BY DSN STAFF

CVS Caremark will launch a pilot of a 
real-time, integrated electronic prior authorization capability, available to its pharmacy benefit management clients, to help speed access to prescription medications.


Obtaining prior authorization for prescription medications is a time-consuming process for prescribers, patients and pharmacists, and currently requires phone calls, faxes and hard-copy request forms. While some online solutions are available, they do not provide both a real-time solution and one that is integrated with available e-prescribing or electronic health record tools. Recognizing this gap in the marketplace, CVS Caremark has developed the ePA capability. A successful pilot would represent a significant first step toward the development of a technical standard the industry could use to achieve broad adoption of ePA.


The ePA pilot aims to enable prescribers that use a variety of available e-prescribing and EHR tools to coordinate a real-time ePA request when initiating a patient’s prescription. Prescribers also will have the option to access the process through a client portal. The prescriber will be able to send an ePA request detailing the related coverage criteria and receive a real-time status update regarding an approval for the medication. Requests that are denied will be communicated following manual review by clinical staff.


Surescripts is participating in the CVS Caremark ePA pilot to monitor and understand how what is learned can be applied to the industry. NaviNet, through its NaviNet Mobile Connect platform, will be participating in the ePA pilot. Also participating is Allscripts, whose client base includes all former users of CVS Caremark’s proprietary iScribe e-prescribing tool, which was transitioned to the Allscripts ePrescribe solution last year. CVS Caremark added that MedPlus has indicated its intent to deliver ePA functionality in a future release of their tool. Additional vendors have expressed their intent to deliver ePA functionality in future product releases upon the successful completion of this pilot.

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