CVS/pharmacy hits milestone with 7,000th store

A lot has changed since CVS/pharmacy opened its first store in Massachusetts in 1963, initially under the “Consumer Value Stores” banner.

Over the years, CVS has evolved from a quaint health-and-beauty-aids retailer—etched in the memories of its shoppers and in aged black-and-white photos—to a modern, vibrant company with innovative concepts and an uncanny knack for meeting the health-and-beauty needs of the 4 million-plus shoppers who visit the stores each day.

The company undoubtedly has achieved some significant milestones over the years but, most recently it was the opening of its 7,000th store in Little Canada, Minn. The opening marked the company’s 41st location in the state. CVS entered Minnesota five years ago and today employs more than 1,000 people in the state.

“With 7,000 locations, we are the largest retail pharmacy in America. As part of CVS Caremark, we are the No. 1 provider of prescriptions in pharmacy-related health services in the country,” Larry Merlo, CVS/pharmacy president, told attendees of the Sept. 24 grand opening celebration. “CVS Caremark is the only fully integrated pharmacy healthcare company in the United States, and our pharmacy care services actually allow us to provide greater convenience and choice for patients to improve patient outcomes and lower overall healthcare costs.”

Historically, CVS has grown through acquisition, including 2,000 stores from Revco, 240 stores from Arbor Drugs, some 1,260 Eckerd stores, 700 stand-alone Sav-On and Osco drug stores from Albertsons, and, one year ago, Longs Drug Stores’ 521 retail drug stores in California, Hawaii, Nevada and Arizona, as well as its Rx America subsidiary—not to mention the acquisitions of retail-clinic operator MinuteClinic and pharmacy benefit manager Caremark.

The well-oiled acquisition machine has a proven track record of acquiring stand-alone drug store chains and quickly assimilating the acquired operations into the CVS footprint.

In the company’s second-quarter conference call on Aug. 4, Tom Ryan, chairman, president and CEO, told analysts that the company has made a great deal of progress on the Longs integration and, so far, has remodeled about one-third of the continental U.S. stores to the CVS look and feel. The stores will be reintroduced during the fourth quarter. In July, it officially launched the ExtraCare program in the acquired Longs stores.

“We still have lots of opportunity for growth. California is now our largest state with over 800 stores, and it was back in 2005 that we opened our first organic stores in the Los Angeles/Orange County market, and we had about 20 stores at the time we purchased the Sav-On/Osco stores and then obviously the purchase of the Longs stores,” Merlo told Drug Store News during the 7,000th store grand-opening event. “It gave us a terrific presence in that state. We are pretty comfortable with the growth opportunities that we have across the country.”

Merlo said CVS is looking to open between 275 and 300 stores a year nationwide, which, not including acquisitions, is pretty consistent with its number of openings in the last three to four years.

While the company’s geographic expansion is impressive, it’s the inside of the box that certainly has helped make retail pharmacy what it is today.

There is, of course, the “Life” store modernization program that was unveiled more than five years ago and became the model for many other chain store makeovers, with lowered sight lines and reduced SKUs to improve shopability. Then there’s beauty.

Continuing its legacy as an innovator in beauty, the retailer has raised the bar even higher via a pilot of its new concept store called Beauty360. The high-end beauty concept was unveiled in November 2008 at a Capitol district CVS store in the center of Dupont Circle, and there now are a total of four locations. In addition to Washington, D.C., there’s a Beauty360 in Mission Viejo and Palos Verdes, Calif., and Ridgefield, Conn.

The concept is stocked with high-ticket and specialty skin care, cosmetics, men’s grooming and fragrance brands, including Clarins, Elizabeth Arden and Juicy Couture, with some price points as high as $140 or more for certain items.

With blue-greenish sea foam and brushed metal accents throughout, the upscale concept borders on retail-theater. Special Innovation Stations highlight product technology, while “Play Stations” allow for extensive product testing. Beauty consultants are on hand to help shoppers and provide an array of services, including manicures and facials.

In typical CVS fashion, the retailer is walking before it runs, carefully gauging the success of the pilot and tweaking it as needed. The rollout plans have been a bit vague; however, CVS has indicated that the Beauty360 concept could easily fit in 1,000 stores.

“Programs that we’ve put in place over many years—in fact, over the last four or five years—like the ExtraCare card, our pharmacy service initiative that improves service and lowered costs, our new ‘Life’ store layout that makes it easier for customers to find what they want, are all bearing fruit,” Ryan told analysts during the most recent quarterly conference call. “We have multiple new retail, revenue and cost initiatives that will continue to drive retail revenue and profits well into the future.”