CVS Uses Data, Insights to Effect Change

Schaumburg, Ill. — The decision by CVS Health to halt tobacco sales in nearly 8,000 CVS/pharmacy stores last year is the biggest, boldest move yet by an organization acting on the wealth of shopper insights now available to retailers. One of the important lessons CVS has learned from the experience is that such a demonstration opens a virtual dialogue with consumers who will inevitably – and immediately – call for additional change.

“In an instant,” said Judy Sansone, senior vice president of merchandising and personalization for CVS, when asked how long after the tobacco announcement did shoppers collectively offer more suggestions for improvement. “They didn’t wait at all. They expected more from us that very day.”

Such is the power of today’s shopper, and, by extension, the power that shopper insights put in the hands of brands and retailers. Utilized efficiently, these insights initiate a process in which CVS and its CPG suppliers can better understand and act upon the needs of their customers.

This was the focus of Sansone’s general session presentation at the Shopper Marketing Summit in March. She shared the stage with WSL/Strategic Retail CEO Wendy Liebmann, and the two discussed how insights not only led to CVS’ groundbreaking decision about tobacco but also opened the door for more change from the retailer.

“We had great insights from our customers,” Sansone said. “What they told us was that carrying tobacco is in great conflict with who we are as a health retailer. And they were right; they expected more from us.”

With 90 million members in its 16-year-old ExtraCare loyalty program, a fully integrated pharmacy benefits management system, a newly leased 15,130-square-foot Digital Innovation Lab in Boston and a recently completed Digital Experience Center at the company’s Woonsocket, Rhode Island, headquarters, it’s safe to say that CVS has plenty of data and takes what it has seriously.

But having data and acting upon it are two different things. The tobacco mandate on Sept. 3, 2014, was only the beginning, Sansone said. “We have become more sophisticated in our use of data and the insights that come from that data. Our purpose is helping people on the path to better health, and changing our name to CVS Health and the tobacco exit have helped us align around that purpose. Our customers said they expect more now and these are the things they’ve asked to see.”

Sansone outlined five areas of growth to which the retailer has committed, based in part on shoppers’ positive reaction to the tobacco decision and their calls for even further change:

• Provide healthier food and snack options: An initiative called “Better Health Made Easy” is rolling out now to about 200 stores in response to shopper demand.
• Grow the beauty business: Also in response to shopper demand, Sansone suggested the retailer would be adding more brands to give the beauty shopper a greater selection.
• Personalization: The retailer’s biggest area of growth focuses on data, shopper insights and shopper marketing.
• Localization: As evidenced by the retailer’s October 2014 acquisition of Navarro Discount Pharmacy, a Hispanic-owned chain of 33 Miami-area drugstores.
• Digital innovation: Connecting every aspect of the business to save shoppers time and money, for which Sansone showed an animated clip of the newly upgraded CVS mobile app helping target shopper “Beth” manage her family’s health needs in a variety of different ways.

“Most people don’t realize that the store today is only 15% of our healthcare company,” Sansone said. “What you can expect to see is that it will become more of the face of CVS Health. Certainly, more healthy food, a beauty department that is exciting, a health department that is unmatched. These things the customer has said they expect from us will come to life in-store.”

An important part of the transformation, Sansone said, is how CVS will work with brands going forward.

“For people working with us, they should have the filter that we are a healthcare company first,” she said. “Many of our suppliers grew up with us as a retailer and they are going to have to shift a little bit to where now we are a healthcare company and we have a store.

“If you can take those two ideas and provide a proposition for us for growth, we’re going to be very interested. If you’re playing in areas that are not related to health and better health, those are less connected areas for us and our responses are not going to be the way you might remember them.”