With permission from Sharon Terlep at the , Healthy Lombard is happy to share the following story that was published in the WSJ on June 28, 2017.
Kevin Heath was wandering around his local CVS pharmacy in search of licorice for his wife, stymied that the candy display was no longer in its usual spot at the front of the store.
With help from a store employee, he found the treats in a section farther back. “Eh, I’m retired. I can take a little extra time,” said the 66-year-old from North Arlington, N.J.
Meet the new CVS Health Corp. CVS -1.56% Three years after eliminating tobacco products from its shelves and adding “health” to its name, the company is taking more steps and moving most junk food away from the storefront, banning sales of low-protection sunscreens and eliminating foods containing artificial trans-fats.
The changes are part of CVS’s effort to stand apart from rivals by focusing on health-care goods and services, said Helena Foulkes, who runs the company’s retail business. It puts the company on a different path than its main competitor.
Walgreens Boots Alliance Inc. says it isn’t a retailer’s job to keep shoppers from their vices and that consumers should be able to make unhealthy choices if they want to. But like CVS, it is trying to boost sales by appealing to a more health-conscious shopper.
Walgreens sells cigarettes but offers smoking-cessation help in the form of specially trained pharmacists and quitting aids. It is keeping candy up front but has added fresh fruit and vegetables in other parts of the store. It also has a loyalty program that rewards shoppers with points for exercise and health monitoring that can be used on purchases.
“How do you still give customers the choice and not tell them what is good for them, but help them make healthier choices?” Walgreens Boots co-operating chief Alex Gourlay said in an interview. “There’s a level of making things available so it’s the customer’s choice, and there’s a level of incentivizing the customer.”
Drugstores are becoming an ever-larger piece of the health-care supply chain as a result of deals with the nation’s biggest pharmacy-benefits managers. And Walgreens is seeking antitrust approval to buy No. 3 player Rite Aid Corp.
CVS’s latest moves are subtle. It will still sell candy bars at the front register but is moving the main snack aisle, with its bags of candies, sweets, chips and other munchies, to the middle of the store. Candy accounts for roughly 5% of overall drugstore revenue, according to Nielsen.
CVS has stopped selling tanning oils and sunscreens with SPF lower than 15, which the Food and Drug Administration says don’t help prevent cancer. This month, the company will quit shipping foods with artificial trans-fats, more than a year before an FDA ban on the products takes effect.
“We make a distinction between indulgent products and damaging products,” said Judy Sansone, CVS’s chief merchant. “We are giving more healthy-choice options and making sure the customer can find them.”
The modifications aren’t expected to dent sales as did the tobacco ban, which the company said cost it $2 billion in annual revenue.
Retail sales account for a shrinking share of overall revenue for both CVS and Walgreens as both chains have more quickly grown their pharmacy and health-care businesses.
For CVS, retail sales amounted to 46% of total revenue in 2016, down from 52% in 2013. For Walgreens in the U.S., that number fell to 33% last year, from 37% in 2013.
A nudge toward healthier behavior can appeal to some shoppers but can also backfire, said Phil Rubin, CEO of marketing firm rDialogue, which focuses on customer loyalty. “A big part of visiting a drugstore is habit, and you can risk alienating customers if you change things up and disrupt that habit.”
CVS says it thinks consumers largely are seeking healthier options and won’t be deterred by the changes. It is gradually rolling out its new format; just four U.S. stores, including the one in North Arlington, have received the makeover so far. CVS plans to put the new format in several hundred of its 9,700 stores by 2018.
Gary Mocik, a retired police officer in North Arlington, likes that his local CVS no longer sells tobacco products because the store attracts children from an area school. He isn’t so sure about the other changes. “We’re adults. We can make our own decisions,” he said.
Write to Sharon Terlep at firstname.lastname@example.org