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Editor’s note: Staying a step ahead of Amazon

BY Seth Mendelson

Whether CVS buys health insurer Aetna or not, any retailer that operates a pharmacy is about to see a dramatic change in how it competes in the future.

CVS Health has offered to purchase Aetna, the nation’s third-largest insurer, for a cool $66 billion in the hopes, according to industry observers, that it can cut out the middleman and drive drug prices dramatically lower. It all makes complete sense. The chain will have direct access to a major insurer, and can work more closely with pharmaceutical companies to keep prices lower for its customers. Lower prices equal happier shoppers, which means more store traffic in the never-ending battle for market share between retail operations. In other words, CVS will be able to dictate the rules to a much larger degree.

Who knows whether this deal will happen? At press time, few could predict whether CVS Health will go through on its offer, or if this was just a move by the drug store chain to dip its toe into the financial world and see how cold the water is. But, no matter whether CVS Health moves ahead or not, the damage is already done. Just the announcement that this could happen has three industries — retailers, insurers and pharmaceutical operations — in a tizzy about what this could mean for them, both in the short term and over the long haul.

What it means is gaining more control over the price structure of your business, while you still can. Am I the only one who thinks that the growth of Amazon.com and its move into retail, with the purchase of Whole Foods last summer, has something to do with this? It most definitely does. Amazon is going to get into the prescription business soon, and when it does all hell is going to break loose among retailers and suppliers.

CVS Health is trying to get ahead of the mayhem and establish itself as the go-to player in this market — on paper and in the minds of the consumer. Buying Aetna will give the retailer a step up on the competition, and that includes the big bad wolf — Amazon — hanging around waiting to enter the hen house.

If they have not done so already, other retailers, including Walgreens, Walmart and supermarkets, will have to react and look to develop their own partnerships or programs to keep the playing field as level as possible. That may include developing closer ties with insurers, distributors or even other retailers. But CVS Health’s overture is raising eyebrows and opening eyes to the reality that the days of simply staying the course and hoping for the best are long gone. Those that survive in the future will be the merchants who think outside the box more and more.

 

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Supervalu makes 2 leadership team promotions

BY David Salazar

MINNEAPOLIS —Supervalu has promoted one of its own. The company named Anne Dament as its new executive vice president of retail, marketing and private brands, effectively immediately. The company also announced the appointment of Stuart MacFarland to the role of senior vice president, general counsel and corporate secretary, effective Nov. 18. He takes over for outgoing executive vice president, general counsel and corporate secretary Karla Robertson.

Dament joined the company in January as senior vice president of retail, merchandising and marketing. In that role, she planned and implemented a strategy to improve Supervalu’s retail division, consolidating wholesale and retail marketing efforts while reorganizing retail merchandise groups, the company said. She has launched more than 350 private-label products this year and oversaw the launch of the company’s Quick and Easy meal solution program.

“Anne is a smart, creative, and dynamic leader and has made a significant impact on our team in a short time frame,” Supervalu president and CEO Mark Gross said. “Over the last year, she’s set a positive vision for our retail initiatives, particularly here in Minnesota, introduced exciting new product innovation to wholesale and retail, and brought greater collaboration between our retail and wholesale teams.”

Robertson is departing the company for a position at Pentair, Supervalu said.

“Karla is a highly respected leader who has been a tremendous asset to this company and to me personally,” Gross said. “She has been a great member of the executive team and contributor toward our growth and transformation. Not only has she provided excellent legal advice but she has also served an invaluable role as business partner and advisor to all of us. I thank Karla for her service to our company over the past eight years and wish her all the best.”

MacFarland has been with Supervalu since 2010, most recently as vice president, associate general counsel and assistant corporate secretary. The company said his work focuses on corporate transactions, mergers and acquisitions, securities and corporate governance. He was previously an associate at Los Angeles law firm Gibson, Dunn & Crutcher.

“Looking forward, we are very excited to have Stuart as our general counsel as we continue our transformation and focus on organic and new growth opportunities,” Gross said. “Stuart is an extremely intelligent, insightful, and hard-working leader who will hit the ground running with his knowledge of Supervalu and our industry.”

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Loblaw, Instacart to deliver groceries to Canadians’ front doors

BY Gisselle Gaitan

TORONTO — Consumers in Canada will now be able to get groceries delivered right to their door thanks to a partnership with leading food and pharmacy leader in the country, Loblaw, and the app Instacart. The tech-driven company who specializes in on-demand grocery delivery already serves more than 150 American markets, and will be looking to roll this service to Canadians beginning in Dec. 

"We are a customer-led company adding new ways to make shopping easier," Galen G. Weston, Chairman and CEO, Loblaw Companies Limited said. "We have stores minutes from most Canadians, the nation's largest Click & Collect network, and home delivery of online beauty and apparel products. For customers who want groceries delivered right to their door, Instacart is a new and complementary convenience."

To access delivery services, customers will need to either download the Instacart app or visit Instacart.ca, From there, they will be able to pick from a local store’s online inventory of 30,000 products and choose a convenient delivery window. Desired groceries can be delivered in as little as one hour or scheduled for one week in advance, the companies said. 

"Entering our first international market with national icons like Loblaw and its President's Choice brand is a strong starting point for both our company and the local customers we aim to serve," Apoorva Mehta, CEO, Instacart said. "I grew up in Canada and know firsthand the appeal of these supermarkets and brands. I also know that our Instacart technology and service will meaningfully add to their appeal and convenience."

Loblaw will not be the only grocer bringing items to customers front doors, as Instacart said it plans to work with Real Canadian Superstore and T&T store, who will roll out the same services beginning Dec. 6 in Toronto, expanding to the greater Vancouver area by January 2018. 

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