Posts Tagged 'CVS'

Was dropping tobacco a mistake at CVS?

CVS garnered a lot of publicity a few years ago when it stopped selling cigarettes and related smoking products. More recently, the giant pharmacy chain is making a bigger push into “wellness” categories, at the same time that its comp sales show some softness. Here’s my take, from a recent RetailWire discussion:

The comp-sales problem at CVS seems unrelated to their decision three years ago to drop tobacco products. It was the right decision then, and the “healthy” brand positioning makes sense. CVS is not operating in a vacuum, but is competing against Walgreens — which seems at times more interested in being the neighborhood C-store than in selling health-related products.

The trick now for CVS is to build on its tactical steps and brand equity to grow its topline sales.

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CVS vs. Walgreens: Who’s easier to shop?

Upon reading a RetailWire discussion about new store merchandising initiatives at CVS, I weighed in with some recent observations of my own:

Given a switch of insurers last January, I’m shopping less at Walgreens and more at CVS. I’ve always had a problem with the navigation issue at Walgreens: It’s just as difficult to find things in my newly remodeled neighborhood store as it was before. And the overassortment of categories having nothing to do with health and wellness may be good for Walgreens’ position as the “neighborhood convenience store,” but it certainly doesn’t help the customer figure things out.

The competing CVS is noticeably easier to shop, with wider aisles and better directional and product signage. If the company takes its execution to the next level — as reported — it could be part of a broader competitive advantage over Walgreens.

Walgreens and RiteAid: The big get bigger

From a recent RetailWire discussion, here’s my comment on the proposed acquisition of RiteAid by Walgreens. The drive to consolidate has never been stronger, and it makes particular sense in an industry wrestling with cost control issues:

Consolidation in the pharmacy industry parallels the same trend among health insurers — not to mention just about every other industry you can think of, from brewers to airlines. Whether the combined Walgreens/RiteAid company can develop more pricing leverage from pharmaceutical suppliers is a different question, even though their store count now far exceeds CVS. Unless I’m mistaken, CVS (through its Caremark subsidiary) is a bigger player in the “pharmacy benefits” side of the industry, so Walgreens still has an opportunity to become a more vertical company in the future.

CVS stirs up controversy

Many RetailWire panelists agreed with my point of view about CVS and its announced policy to charge a higher health care premium to employees who do not disclose health and weight issues. Beyond the legal aspects of privacy policies lies the broader issue of whether this is smart PR for a company in the healthcare business. Here’s my opinion:

I understand the merits of a healthier population bringing down the cost of health care and insurance, but in this case and similar ones the real issue is privacy. The punitive aspect of the policy (the extra $50 premium per month) might or might not stand up to the privacy guidelines in HIPAA and other legislation — somebody with more expertise would need to weigh in (so to speak) on that subject.

Does CVS intend merely to punish employees who don’t subject themselves to the health screenings, or do they plan to provide incentives (in the form of lower premiums) to those who lose weight, manage their cholesterol, and otherwise improve their health profile? I’m skeptical on the second possibility.

Target’s small-format “urban” strategy will need assortment editing

Target and other national chains (such as Best Buy and Kohl’s) have opportunities to open small-format stores, not only in urban markets where a smaller footprint is required, but also in smaller markets that can’t sustain the volume of a full-size prototype store. The challenge to Target in particular is to consider how to edit its businesses and assortments to suit the urban customer. Does it focus on consumables, HBA and other convenience-based categories? (If so, it runs the risk of being perceived as a large-format Walgreens or CVS.) It’s easier to determine which businesses ought to be eliminated completely (I would start with categories like CDs and automotive) than to decide which categories to focus on. But if Target plays to its strengths in trend apparel and home goods, its brand positioning becomes a lot more consistent, despite the company’s more recent emphasis on food.