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CVS gets down to ‘Just the Basics’

BY Antoinette Alexander

WOONSOCKET, R.I. —CVS Caremark has been heavily focused on the healthcare arena, leveraging its various points of care to improve medication outcomes and lower healthcare costs—but that’s not to say that the front end has fallen by the wayside. In fact, the retailer is in the midst of writing a prescription for front-end growth that involves a new store brand and new beauty innovations.

Speaking to analysts during the retailer’s 2010 analyst meeting on Oct. 8 in New York, Mike Bloom, EVP merchandising and supply chain, took the wraps off several initiatives aimed at further bolstering the company’s $18 billion front-end business. “While CVS continues to outpace the competition in just about all metrics, and our acquisitions are clearly on track for further growth, the consumer is still facing very challenging times,” Bloom told analysts. “The economy and unemployment rates continue to be a challenge. The consumer is time-starved, saving money wherever she can and always looking for value. So knowing this, we continue to develop strategies to ensure we [meet] her current needs and continue to drive trips to CVS.”

Among the strategies is a new store brand called Just the Basics, which will launch in February 2011 with more than 100 items. “The first thing we did is we conducted customer focus groups where we identified the need for an opening price-point value brand. We then defined that the brand would consist of everyday essential products that would help get her through her day,” Bloom explained.

Enter Just The Basics. What is significant is that the brand is not a national brand equivalent-type execution, but rather, more of a basic entry point, low-price alternative. “Now, while many retailers are stuck in the brand-follower mode of the 1980s, we have evolved to a leadership role,” Bloom said.

By design, the CVS name will not be on any Just The Basics products. As a key part of defining CVS’ new brand portfolio, the company has established the CVS brand as a “healthcare expertise” brand; therefore, current products in its portfolio, as well as any new brands launched in the future, such as Just The Basics, that do not meet this criteria will be re-branded over the next 18 to 24 months.

Bloom noted that private-label penetration at CVS is expected to grow from 17% to more than 20% in the next two to three years—a move that reflects a larger industry trend.

Turning to beauty—a $3 billion business within CVS—the company is leveraging the success of its Healthy Skincare Center concept, which currently is in more than 800 stores, with a new mini-format pilot in 120 stores that will enable the company to expand the concept to more store locations.

With regard to its high-end Beauty360 format, CVS currently has 25 locations and continues to seek out premium-brand partners. “We continue to gain learnings from the [Beauty360] pilot to validate that this is the right strategy. Our ExtraCare data confirms that 20% of the customers shopping Beauty360 are new to CVS, and a whopping 50% of the customers shopping Beauty360 are new to the beauty category at CVS,” Bloom said.

It addition, CVS will launch in January an ExtraCare Beauty Club, under which customers will receive a 10% “shopping pass” for signing up, $5 in Extra Bucks for each $50 spent on beauty and $3 in Extra Bucks on the cardholder’s birthday.

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Assured sees high rise in same-store sales

BY Alaric DeArment

FRISCO, Texas September same-store sales at Assured Pharmacy increased by 13.5% compared with last year, the specialty pharmacy provider said Thursday.

Assured, which specializes in treating chronic pain, said sales were $1.4 million, or around $66,253 per business day, compared with $1.23 million a year ago.

“We are pleased with our September sales results and our continued patient growth, with 3,064 patients serviced in the month of September,” CEO Robert DelVecchio said. “As these sales figures reflect, we remain on track for increased sales and market share growth, improved earnings at the store level and stronger cash flow.”

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Retailers, drug makers can help cut diabetes rate

BY Alaric DeArment

WHAT IT MEANS AND WHY IT’S IMPORTANT The dramatic rise in the prevalence of diabetes over the next several decades is likely to place huge strains on the U.S. healthcare system, costing the country hundreds of billions of dollars every year. It also means the diabetes market will continue to be a hot bed for innovation for decades to come.

(THE NEWS: Diabetes prevalence among Americans may increase to 33%, CDC study finds. For the full story, click here)

Barring a cure for the disease or a dramatic reversal of current trends, the plague of Type 2 diabetes is likely to get worse and account for numerous hospitalizations, as it already does. According to the government Agency for Healthcare Research and Quality, nearly 1-in-5 U.S. hospitalizations in 2008 were related to diabetes, with the greatest concentration in the South.

No individual, company or even government agency can reverse the trend on its own, but many — including retailers — can help. And that will continue to feed a frenzy of activity in this space.

Agrowing number of supermarkets across the country have used various means to promote healthy eating, ranging from easy-to-read nutritional rating systems to in-store nutrition experts and store tours. Meanwhile, pharmacists and retail clinicians, as healthcare providers, can use their expertise to spread awareness as well. Rite Aid stores will offer free Diabetes Solutions Days events Nov. 2 through 4.

Health insurer Anthem Blue Cross has won recognition for a pilot diabetes program, “Bridging Cultural Health Care Gaps: Diabetes,” which seeks to find culturally appropriate ways to communicate about diabetes to African-American and Hispanic members. Anthem conducted the pilot among 4,000 of its members in California and Georgia, and plans to expand the program to other states. 

More of these localized types of efforts — borne out of the spirit of the Ashville Project — continue to arise.

And of course, manufacturers continue to lead the innovation, and many are going beyond just products. Novo Nordisk recently released the BlueSheet, a report that promotes awareness and education in the prevention and treatment of diabetes.

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