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Social media does not replace brick-and-mortar retailers, study finds

BY Alaric DeArment

NEW YORK — Despite nearly half of shoppers using social media every day, less than one-fifth shop through them, according to a new study by PwC.

The study, “Demystifying the Online Shopper: 10 Myths of Multichannel Retailing,” included a global survey of 11,000 shoppers in 11 countries, finding that of the 49% who use social media daily, 12% use them to shop, while 59% use them to follow, discover and provide feedback on brands and retailers. Overall, the study found, digital technology has changed the ways companies and consumers interact, but social media are not replacing the in-store experience. Forty-five percent of consumers continue to shop in brick-and-mortar stores, indicating that social media are not a major driver of traffic to online stores.

“Retailers should have realistic expectations when it comes to channels and devices, as shopping trends may not change drastically, and social media and tablets are likely not taking over any time soon, according to our survey respondents,” PwC U.S. retail and consumer sector leader Susan McPartlin said. “While many forecasts point toward devices and social media dominating in retail, companies today need to utilize their multiple channels to engage with consumers and use social media as a marketing and communication tool to create value. Our report finds that the physical store remains the centerpiece of the purchase journey, while devices are used significantly for product research and deals.”

The “myths” listed in the report were:

* Social media will soon become an indispensable retail channel. Instead, the report finds, social media aren’t likely to become an important retail channel anytime soon and are currently a driver for more shopping across all channels.

* Stores will mainly become showrooms. The physical store remains the centerpiece of the purchase journey, the report found.

* The tablet will overtake the PC as the preferred online shopping device. The report found that tablets and smartphones are typically used in the store while shopping, i.e. at the end of the purchase journey.

* As the world gets smaller, global consumers are becoming more similar. Retailers still need to cater to local trends and account for differences in consumer behavior.

* China is the future model for online retail. While China is at the forefront of some key trends, its multichannel and online model is unique to the culture.

* Domestic retailers will always enjoy a “home field” advantage over global retailers. In fact, the report found, foreign retailers are making inroads into consumers’ lists of favorite multichannel retailers, but still must keep in mind that they compete with local and global retailers alike.

* Global online pure players will always enjoy a scale advantage over their domestic counterparts. Many domestic online pure players are holding their own as they have better access to local market knowledge, the report found.

* Retailers are inherently better positioned than brands because they’re closest to consumers. Consumers are shopping directly from manufacturers and many no longer distinguish between retailers and their favorite brands, according to the report.

* Online retail is cannibalizing sales in other channels. Consumers were found to spend more with their favorite multichannel retailers, as opposed to just shifting some purchases to other channels.

* Low price is the main driver of customer spend at favorite retailers. Customers, the report found, value quality and innovative brands over price when shopping at their favorite multichannel retailers.

“A multichannel retail strategy can be extremely advantageous,” PwC retail and consumer sector advisory leader Lisa Feigen Dugal said. “The more minutely retailers can identify how consumers are utilizing the different channels, the more success they will have.”

 

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Spiker International releases Spiker Beach Beverage Holder

BY Jason Owen

VALDOSTA, Ga. — Spiker International Corporation has released the Spiker Beach Beverage Holder, a product made in the USA.

The Spiker Beach Beverage Holder is easy to use: simply spike it into the ground next to your beach chair or towel. It can be used to keep your drinks off the hot sand or to hold your travel items to keep them from accumulating sticky grains of sand.

Spiker International was recently named one of the 60 Finalist awarded for the 1st Annual IHA Innovation Award of 2012 and pharmacy retailer Walgreens recently signed them as a supplier.


Have a great product that’s "Made in America"? Send us a message on Twitter with hashtag #MadeinAmerica.

 

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CVS Caremark pulls lid off Brazilian bombshell, posts ‘strong’ Q4

BY Antoinette Alexander

WOONSOCKET, R.I. — CVS Caremark executives expressed optimism Wednesday morning as the company posted record fourth-quarter results, raised its 2013 guidance and continues to work to leverage its distinctive business model to help people on their path to better health amid a rapidly changing healthcare environment.

“We are very pleased with the strong results we posted in the fourth quarter and full year 2012 with solid performance throughout the enterprise,” CVS Caremark president and CEO Larry Merlo told analysts during Wednesday morning’s conference call. … Our fourth-quarter results reflect strong performances at the high end of our expectations in both the [pharmacy benefit management] and retail segments.”

The quarter exceeded the high end of the company’s guidance by 3 cents per share.

Net revenues for the fourth quarter ended Dec. 31 increased 10.9%, to $31.4 billion, up from $28.3 billion in the three months ended in the year-ago period.

Income from continuing operations attributable to CVS Caremark for the quarter increased 2.7% to $1.13 billion, compared with $1.10 billion during the year-ago period. 

During the call, CVS Caremark told analysts that late last week it closed on the acquisition of privately held Brazilian drug store chain Onofre. Merlo said the acquisition of the 44 stores is not financially material to CVS Caremark; however, it does mark CVS Caremark’s foray into the international drug store space.

“As you know, we have been exploring opportunities for possible international expansion, and we have said many times that our approach would be measured and we would exercise financial discipline,” Merlo said. “We believe this acquisition is a great example of that strategy and action.”

According to Merlo, Onofre has a strong reputation in the marketplace and is successful in tailoring its stores to market to different customer segments.

“We view Brazil as an attractive market given that health care and pharmacy are expected to grow double digits for the next decade, and while chains are prevalent, it is still a highly fragmented market. So, we see nice opportunities to grow the business over time,” Merlo said.

It has been reported in published reports that Onofre is the eighth-largest drug store chain in Brazil in terms of revenues, posting gross revenue of BR1.2 billion in 2011.

In touching upon its business segments, Merlo stated that the PBM segment has experienced no material change in the 2013 selling season since the company’s Analyst Day meeting in December and its retention rate stands at 96%.

On Analyst Day, the company reported net new business wins for 2013 of about $400 million and, while the company has had some additional wins since Analyst Day, Merlo said the impact of the recently announced CMS sanction essentially offsets the recent wins.

As previously reported by Drug Store News, CVS Caremark is working to resolve service issues related to its SilverScript Medicare Part D prescription drug plan. Issues with SilverScript enrollment processing resulted from an enrollment system conversion and brought about an increase in call volume and issues related to claims processing, including, in some instances, not being able to have claims adjudicated at the pharmacy. As a consequence, the Centers for Medicare and Medicaid Services has placed SilverScript on intermediate sanctions.

The company’s differentiated offerings — Maintenance Choice and Pharmacy Advisor — continue to gain attention in the marketplace and enjoy robust growth.

Revenues in the pharmacy services segment increased 17.4% to $18.6 billion in the quarter, fueled primarily by 2012 client starts, drug cost inflation and the growth of our Medicare Part D program.

As for the retail business, Merlo said the company had “a very strong quarter” with same-store sales increasing 4%. Pharmacy same-store sales also increased 4% as front-end same-store sales increased 3.9%. Revenues in the retail pharmacy segment increased 5.1% to $16.3 billion during the fourth quarter.

Merlo noted that quarter benefited slightly from flu-related scripts, and flu shots increasing during December, as well as the retention of scripts gained during the Walgreens and Express Scripts impasse. As expected, CVS Caremark retained at least 60% of the scripts gained during the impasse, and it expects to continue to retain at least 60% of the scripts in 2013.

Eager to touch upon the company’s ExtraCare loyalty program, Merlo told analysts that the program continues to be a “key differentiator” with the scale of the program increasing dramatically in 2012 despite increased competitive activity in the loyalty program space.

“Increased engagement of our ExtraCare members is driving meaningful results. As an example, we have doubled our email program to more than 15 million active participants. Many have received over 60 million personalized email offers; that’s up 69% versus the prior year,” Merlo said. And its ExtraCare Beauty Club program now stands at about 11 million members.

Meanwhile, the chain announced Monday the launch of the ExtraCare Pharmacy & Health Rewards program, which allows members to earn larger and more frequent rewards when filling prescriptions or making healthy decisions, as well as providing another choice for members and giving them the ability to opt-in to parts of the program most relevant to their needs and preferences.

“While ExtraCare has been in the marketplace for 15 years, I think these [enhanced programs] are examples of how we are not sitting still,” Merlo said.

MinuteClinic
The company’s MinuteClinic business reported strong revenue growth during the quarter. On a comparable basis, sales were up more than 38% versus the year-ago period. As the company headed into January with the strong flu season, patient visits at MinuteClinic reached “unprecedented daily levels,” Merlo said.

The company continued to expand the services offerings within MinuteClinic and focus on wellness programs, along with programs aimed at treating chronic conditions. For example, the company has developed a provider education program with the American Heart Association to support the hypertension evaluation visits, and it is piloting enhanced smoking cessation and weight management programs.

During the quarter, the company opened 31 net new clinics and ended 2012 with 640 clinics. As the company announced on Analyst Day in December, it is ramping up expansion plans and expects to open another 150 clinics this year. It plans to end 2013 with just under 800 clinics.

Given its solid results throughout the enterprise, the company raised its earnings guidance for the full year 2013 to reflect the anticipated 2 cents per share of EPS accretion related to the debt tender and refinancing that was executed during the fourth quarter of last year. The company currently expects to deliver adjusted EPS of $3.86 to $4 and GAAP diluted earnings per share from continuing operations of $3.61 to $3.75 per share in 2013. The company confirmed its 2013 free cash flow guidance of $4.8 billion to $5.1 billion, and its 2013 cash flow from operations guidance of $6.4 billion to $6.6 billion. These 2013 guidance estimates assume the completion of $4.0 billion in share repurchases.

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