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CVS leverages learnings to sharpen merchandising.

WOONSOCKET, R.I. -- Over the years CVS/pharmacy's senior vice president of merchandising and supply chain Mike Bloom has overseen the successful merchandising integration of key store acquisitions, including CVS' 2004 takeover of Eckerd Corp. drug stores and the 2006 acquisition of Albertsons Inc.'s Osco and Sav-on stores.

With every acquisition, CVS applies what it learned from converting acquired locations to its next retail integration. That process was certainly in effect after CVS purchased 521 Longs Drugs Stores units in 2008 and proceeded to convert them earlier this year.

"We leveraged a great deal of our learnings from the Albertsons acquisition, particularly their West Coast Sav-on stores, which were much larger than the typical CVS," explains Bloom. "We developed a better understanding about which categories and design elements to modify to meet the unique needs of California consumers. They shop these locations like general stores, so we modified our entire consumables approach to deliver what they wanted."

Bloom notes that CVS' merchandising strengths in pharmacy, consumer health care, beauty and personal care were combined with Longs' strengths in consumables, seasonal and general merchandise. "Longs stores were under-indexed in several of CVS' core categories, and my team did a great job in improving category and segment adjacencies in each of our key quadrants."

The former Longs units now incorporate the bright, spacious ambience of a typical CVS store, including the chain's signature carpeting as well as customer-tested in-store signage that allows customers to navigate the enhanced layout more easily. "By applying our Life Store prototype principles, such as the drive aisle to the pharmacy and lowered gondola runs, we leveraged the best of both CVS and Longs to create a retail pharmacy that is best-in-class in the California market," adds Bloom.

He says category item mix and store layout decisions were made early in the process by using a closed Longs store to experiment with before the remodel process began. This forethought resulted in the Longs stores in California, Arizona and Nevada undergoing smooth conversion while remaining open to continue serving customers.

Minimizing customer disruption and confusion was a critical goal for Bloom and his team, and that extended to the layout decisions they ultimately made.

"While we modified category spacing and adjacencies, we felt it was important not to turn the stores upside down," explains Bloom. "Our post-conversion customer research indicated that they appreciated the minimal disruption, allowing them to understand the positive changes we made to assortments, adjacencies, pacing, promotion and overall shopability."

As part of the CVS conversion, Bloom and his merchandising team integrated CVS/pharmacy store brands into the acquired Longs units even before the store remodels and name changes were completed in the fall.

"We wanted to introduce to Longs customers the quality and value of CVS brand products as quickly as possible," said Bloom. "This was an effective way to start familiarizing the marketplace with our name before the stores were renamed, and it helped demonstrate to our new customers that the CVS product mix was going to save them money while ensuring the high quality of our offerings."


This early introduction paved the way for the addition of 4,000 CVS brand items offered by the stores upon completion of their merchandising resets.

CVS performs extensive research to understand what elements optimize a shopper's experience in its stores and to understand what categories customers expect to be merchandised together. Bloom says such CVS prototype elements as color-coded perimeter wall signage and aisle guides for finding one's way help ensure Longs customers can easily navigate remodeled stores, the same way customers shop core CVS stores.

"Our layout and adjacencies are truly consumer-based and intuitive, which leads to a more convenient shopping experience and provides more browsing time for our customer to find the products she needs to look better and feel better," Bloom says. "And that is the expectation we set for ourselves at every CVS location, regardless of the market and regardless of whether it is an acquired store that was remodeled."
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Title Annotation:CVS CAREMARK: After Longs: What's Next?; CVS Pharmacy Inc.
Publication:Chain Drug Review
Date:Dec 7, 2009
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