Merchandising ‘Better Health Made Easy’
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.
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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