ECRM & RangeMe SVP of Retail Wayne Bennett held a virtual fireside chat with Jake White, Vice President of Merchandising, Consumer Health and Wellness | Supplemental Benefits at CVS Health to discuss its omnichannel approach, innovations in its assortments, shifts in consumer behavior post-pandemic and how the chain seeks to become “the front door to healthcare in America.”
White also shares why emerging brands should want to do business with CVS, as well as recommendations on what they need to have in place before approaching its buyers.
Read full Q&A below!
ECRM: Tell us a little bit about CVS Health’s journey to becoming a much more digitally centric retailer, and how are you succeeding in your omnichannel strategy as it relates to delivering health and wellness products and services?
White: This is something that’s really on the top of our mind every day. Our leaders, Michelle [Peluso, EVP and Chief Customer and Experience Officer of CVS Health] and Musab [Balbale, Chief Merchant, CVS Health] have come from very digital backgrounds. So I think it’s really in the DNA of the people that are at the head of the business as well as myself. I’ve had a lot of digital experience prior to CVS, and so if we take a step back, we want to win on convenience and we aspire to be an easy place to shop and omnichannel is really a major way that we do that.
Our digital experiences have a really big impact on our in-store shoppers. We have about three times the number of customers who use our app or site before they go into the store then actually even end up transacting online. And so they’re really using it to prepare for their shopping [in the store]. We provide a great resource to do that. We’re also leaning into new delivery and pickup options.
Many of our loyalty program members already get free shipping and we’ll be launching new benefits in 2024. Customers love to buy online and pickup in the store. Customer repeat purchase rates are improving strongly in 2023, and our digital experiences are really becoming a lot more personalized. So those include better recommendations, search enhancements and personalized deals and awareness around localized health events.
ECRM: What other innovations are you making around health, healthcare assortment and healthcare services?
White: If you think about what our CEO Karen Lynch has said, we more than any other retailer are becoming the front door to healthcare in America. We’re focused on innovation and authority around the consumerization of health in America and the broader healthcare industry landscape in total. From a consumer perspective, we’re trying to make healthcare more accessible and use our authority to do that in the space and highlight our “Here for Her” campaign around women’s health, which by the way was originally an idea that was sparked with one of our most strategic suppliers in the fem care and baby categories; it shows us that when we partner together, we can go further and faster with authority. We’re making bold moves to support women.
A classic example of this is when men’s and women’s razors that are just pink versus blue are priced differently at retail, and I’d use this opportunity to actually call on my supplier partners to make sure that their costs are the same. Just because something has three more micrograms of vitamin B12 doesn’t mean it should cost a dollar more because it’s also in a pink package. Doing this actually only raises the health cost disparities, which is a huge problem in America. We’re also working to eliminate the tax on menstrual products. Can you believe that in 13 states, these products are taxed as luxury items? So CVS is actually paying the tax on behalf of consumers in relevant states, and we’re partnering with period.org to remove that tax.
We also reduced the price of our store brand period products by 25%, and this has driven great results for us as well. From a business perspective, we have 25% of awareness for the first six months, which is comparable to our tobacco exit. Trips in the femcare category, inclusive of menstrual products are up four times over competition and we’ve got 41 million impressions.
From a total healthcare industry perspective, we’re working to implement supplemental benefits programs across a wide range of payers. This healthcare service really helps our payer partners differentiate their health plans and makes their members more loyal. And CVS actually makes it really easy to use those benefits with us. Our customers already trust us for healthcare, and we’re really a natural leader in this supplemental benefits space.
ECRM: What are you seeing out there with regards to the post-pandemic consumer’s mindset? How has the pandemic changed consumers’ behavior?
White: We’re seeing really covid actually resurge in some ways, and I think it shows the endemic nature of the virus at this point. It’s still part of people’s planning and has really changed their behavior. I think the pandemic made people realize three things. First, they started to take their health really seriously. Second, they can easily understand or they should expect to be able to easily understand their personal health status. And finally, they increasingly recognize the efficacy of OTC products in managing their health and wellness. So there’s a ton to be excited about in consumer health and wellness and CVS is a destination in the space.
We’re seeing incredible innovations all over the market from pharmacy to new OTC categories like hearing aids, Naloxone or Narcan and birth control, and making these products more accessible to Americans. We’re becoming America’s testing destination for OTCs. Consumers now understand the power of the OTC tests and expect to be able to understand their health status more easily. So whether that’s from a vitamin deficiency test or an STI or covid test, we’ve launched a line of CVS health testing products in the space and we expect a lot more innovations to come.
Consumers are treating their symptoms more aggressively and they’re preparing for healthy living more diligently as well. I think the last several years have led people to try new items, really realizing how effective those OTC products can be in managing their symptoms and then at the same time expanding how they think about immunity, hydration and general wellness preparedness.
ECRM: CVS Health is a formidable retailer. You’ve got thousands of stores now amplified by a growing digital platform. Can you share for our audience, why should CVS Health be a primary launch partner for new products?
White: I’ll be honest, I don’t think that we’re the right partner for every single brand out there, but we do aspire to have two times fair share on any major launch that we undertake. When we get behind a brand, we really are thoughtful to make sure that we’re capturing the customer and we’re setting that brand up to win. I would say to all the brands out there, listen to what we’re saying in terms of product improvements and launch planning, how to make yourself stand out. And we have awesome capabilities to drive success as well from our loyalty programs, which boast 70 million members to our more limited store rollout options to sort of test into scale with a major retailer like CVS.
ECRM: What are the three recommendations you can offer up to these suppliers that have great innovation, unique products and are looking to break through?
White: We see a lot of brands out there, and so you’re competing in a vast space. So tell the story about why you are different. Everybody knows that I love Liquid I.V., at least around CVS. As an athlete, not only does their message really resonate with me, but it seems to also be true. The product just works really incredibly well for me. So develop that unique and innovative product.
Second, the details really matter. From packaging to marketing, really make sure that your product stands out and works well in a busy retail environment, not just from an operational perspective, but also from a consumer perspective. And make sure that you’re able to articulate the specifics to your buyer on why your product will be or is already a success.
And third, really build relationships over time. Most brands don’t have a huge end cap launch or take over an aisle to start with. They prove themselves by developing awareness, a really loyal customer following this takes smart marketing responses to customer and buyer feedback on the product, and sometimes fortuitous timing. So I think about a brand like Honeypot in our women’s health business. We went from a 10 store test to end caps and wide ranging distribution and items in multiple categories over a few years. That’s really a great success story for us.
ECRM: Next year, ECRM is celebrating its 30th anniversary, and CVS as an organization has worked with us probably since the early days. I know currently your team also uses RangeMe. Can you share how your team leverages ECRM and RangeMe throughout the year and how that adds value into your process?
White: ECRM and RangeMe are business critical for CVS – end of story. So thanks for all the work that you do for us. You’ve been an incredible partner and so has your team. Our buyers are incredibly busy running the business both operationally and strategically. ECRM and RangeMe really bring together everything under one roof or platform. And through our partnership, you all really know what we’re looking for and help us let the cream rise to the top. We leave ECRM sessions with renewed energy and focus on our customers with these innovations that are being brought to market. With RangeMe, we have an incredible digital resource that makes it quick and easy to find brands in areas that we’re looking to grow. So we are very close working partners along those lines. And it’s been a great ride with you all.