CVS Invest In Curbside: Relationship Between Retailers & Start Up

It is pretty rare to see the name of a retailer (aside Amazon obviously) hitting the headlines of Techcrunch. But this time, pharmacy retailer CVS has invested in a Silicon Valley startup named Curbside, which allows customer to shop on mobile, and prepare the basket in store for pick up.

Aside of the innovative concept, which provides a better shopping experience, and is capitalizing on the large store network of CVS, I wanted to underline to me another very interesting trend.

Retailing is a business focusing on operations. And it needs to in order to leverage great results. But in our nowadays commerce land that is changing very fast due to Ecommerce, digitalization and mobile devices, using technology both to improve customer experience and to get an edge on competition is key.

We see in a lot of other industries companies acquiring innovative start up to get knowledge and technologies that could not be developped in a large corporation due to its structure and lack of reactivity.

And I believe retailers should really look closely at it. I know Carrefour has participated to a lot of start up events in order to build a bridge. But those investments will really pay off soon.

I believe it is time for start ups to look closely at retailing, and retailers at start up.

Drugstore and Pharmacy Business: Rite Aid To Merge With Wallgreens

It is very interesting what is going on in the healthcare retail business. Indeed, we can clearly see a lot of transformation into this business:

• Less regulation, and the will of governments to empower more retailers in order to ease the access to medications.
• New category approaches by market leaders, especially CVS
• A lot of new competition coming from other retailers, especially FMCG specialists such as Walmart or Target.

Recently, Rite Aids and Walgreens have agreed to merge their business, to create a healthcare tycoon counting for 40% of market shares.

Obviously, the terms are still discussed, especially as antitrust regulation will probably apply. But why this deal? Primarly because the market is getting tougher, and in order to secure high profitability for both companies, they'll need to leverage synergies, especially in terms of negotiation powers against the major pharmaceutical companies.

This merger has also a strong goal:

“With the physician shortage, the access to primary care physicians will likely be lowered for many patients,” Turk said. “Instead of seeing your primary care provider, you may have to interface with someone at Walgreens to help you dispense your medication.”

Obviously, it is a main trend going on in the healthcare business, and having a strong network of pharmacies with skilled and trained employees to help you with your medication is a key in order to keep groing the business and also to answer some real questions about what the future of health care will look like.

CVS Category Management Plan To Adapt Important Market Changes

I have previously discussed about CVS, one of the leading pharmacy network in the US, as they have decided to shut down their tabacco activities due to uncompatibility between this category and their brand image. They hence turned down $2 billions in sales by this move. Recently the Times published an article on their new strategy and their CEO Larry Merlo. 

CVS, as a nationwide pharmacist takes a large responsability in its role for the society: "He thinks CVS can save lives - and hundreds of billions of dollars in unnecessary health care costs annualy - by efficiently treating Americans' routine sniffles and aches, nudging them to take better care of themselves and making sure they take their medications when they're supposed to.

Most of the time, Europeans are joking about US pharmacy as they can shop for beers, milk or chips, something unconceivable in Europe. But I highly like the way CVS is working on its stores in order to adapt to the changes in the way health care is dealt in the US, especially since the Obama Care is effective.

The developpement of Minute Clinic

Minute Clinic is an initiative to provide health care advices in store in order to ease the access to medicine. They use big data in order to access the information of patients in order to provide a clear diagnostic to the patient in order to heal him. 

Obviously, while discussing about category management, the health care business is far from being the same from fmcg. But what I like about CVS actions in term of category management, is that their choices are meant to fulfill a clear strategy. A strategy which is actually in harmony with what the stakeholders really need.

Category Management: CVS Go On With Its Strategy With A New Store Concept

CVS is a very interesting category management example. I have already in the pastdiscussed about their decision of quitting the tobacco category, for strategyand positioning purposes.

CVS now needs to move beyond with its concept.

The mission statement of CVS is clear: Today,consumers are taking a more active role in their healthcare decisions and areincreasingly searching for ways to take care of themselves proactively. 

 Hence, CVS has undertaken a clear category management strategy in order to stick with their core mission. And it is expressed in their new store concept.

“We are trying to help educate her right at the shelf so she can make some really good decisions for herself,” Foulkes said. One area in which the company has tried to raise the bar is in women’s wellness, where it has expanded offerings to provide a wider range of solutions to address the different stages of a woman’s life — not just prenatal but also post-natal; not just products to help manage menopause but also, perimenopause, Judy Sansone, SVP, front store business, told DSN.

“As we look to continue to strengthen our brand, we are looking to do some more innovative things in our core categories. The CVS/pharmacy brand is actually the No. 1 brand in our stores and as we think about it in our core categories first aid is a great example,” said Cia Tucci, VP, store brands.  “We just recently launched an expanded wound care line, which is an exclusive relationship with a supplier who specializes in hospital-grade wound care. … This is one way we are strengthening the core of our brand and we are really excited about this.”

CVS is working on its product range and service to provide a comprehensive shopping experience. You can see it in the example below:

Specific end of the aisle specific display to promote some categories

A reshape of the beauty sections, with lower shelves and a lot of marketing on the point of sales.

Clear labels to explain the different categories of products. Also an extensive work on categories, that go beyond medication, with food (gluten free, organic...)

I am convinced CVS made the right move, and we will soon enough the results of those initiatives.

CVS Abandonning Categories To Mark Strategic Changes

The year has already started, but I wanted to share with you some insights I  found on Retail Dive on the retailers you should look at in 2015.

One of the trend I would really like to look at is CVS Health move to abandon the distribution of tabacco in its stores. The retailer used to count on $2  billion thanks to this category. But they have decided to stop it in an effort to change the position of its store, and to set its chain as the leader of health retailing.

Indeed, it is difficult to claim you are working on health products if you sell cigarettes. But what I like about this move is the retailer is eager to quit one profitable category in order to have a comprehensive shopping experience and have a clear position in the market. Retail marketing is a difficult trade, and it will be interesting to see the results both in terms of store concept and in sales.

Here is a video of CVS CEO discussing about the topic. I like the way he emphasizes the long term benefits for CVS businesses of this move.