Is a new beauty format on the horizon for CVS/pharmacy?


WHAT IT MEANS AND WHY IT'S IMPORTANT — The news that CVS/pharmacy is closing all of its upscale Beauty360 stores may have raised a few eyebrows — or perhaps not — but now it will be interesting to see the changes that occur in store and online in beauty.

(THE NEWS: CVS/pharmacy to close all Beauty360 locations. For the full story, click here)

With Walgreens exporting Duane Reade’s upscale Look Boutique from New York to Walgreens locations throughout the country, is it possible that we are not far off from a new beauty format for CVS? Perhaps a special beauty-forward format driven by its store segmentation initiatives?

CVS/pharmacy has, in fact, hinted that future iterations could bring more category-focused versions like the Urban Cluster stores that put a greater emphasis on food. During its Analyst Day in December 2011, Mark Cosby, president of CVS/pharmacy, told analysts that it plans to test “several volume-based clusters, including a program for our top pharmacy stores and a program for our top beauty stores.”

Furthermore, CVS/pharmacy hasn’t been bashful about its desire to capture a greater share of the shoppers’ wallet — especially within beauty. The company has indicated that its top customers spend 27% of their wallet on beauty with CVS and 73% of their wallet elsewhere. This upside represents a $1.5 billion opportunity in beauty alone!

And what about the services the retailer had been offering in the Beauty360 stores? Could some element — or all of it, the mini-manis, etc. — end up in store? Maybe not in all 7,300-plus CVS/pharmacy stores, but perhaps in those beauty-forward locations where shoppers already over-index in beauty purchasing? … Hard to tell for sure at this point, but it sure makes you think.

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