September 12th, 2014
CVS Tobacco Exit Marks Sea of Change for Its Retail Model
Can you name the country’s top 10 retailers from 1990?
If you’re struggling, here’s why. Many of those retailers are off today’s list and are no longer relevant. Meanwhile, new retailers whose models didn’t exist back then are dominant.
The lesson: Retail models have evolved dramatically. This evolution isn’t just due to the surge of ecommerce. Other macroeconomic trends have led to many chains’ demises and the births of others that are central to shoppers’ lives and are the lifeblood of manufacturers.
So, with this week’s announcement by CVS that they beat their self-imposed October 1 deadline, and as of Labor Day weekend, have nipped their $2 billion tobacco products sales in the butt, er bud, it’s clear there’s more at play than the health of Americans. The health of their retail model just got a huge strategic boost.
CVS is looking forward to the next couple of decades and placing a bet on relevance that will be centered on health care services and prescriptions. Their tobacco cessation coincides with an official company name change, from CVS Caremark Corp. to CVS Health.
Already, the company is testing and rolling out alliances with local health care providers to bring more health services under the roofs of their stores. They’re taking advantage of Affordable Care Act mandates that command efficient, accessible primary care for millions who previously forwent it or resorted to the hospital emergency room. Consumers can get healthcare services and the prescriptions they need affordably and easily at their neighborhood CVS store.
The face of retail continues to evolve. And CVS is aligning its brand, its product offerings and its strategy to be the retailer of tomorrow. With this obvious foresight, it’s a good bet that CVS is one name that won’t fall off the top 10 list of the future. Blockbuster didn’t have this foresight and it led to their demise. Other retailers should take note.