Building an armada of manageable clusters
Another key area, in which the learnings of ExtraCare are helping to inform the overall CVS Caremark retail strategy and personalize the shopping experience is in the way CVS Caremark designs and merchandises its stores.
Further leveraging the insights from ExtraCare, CVS Caremark continues to evolve its myCVS store clustering initiatives, which began in 2011 with the rollout of a special store format designed for its urban cluster stores. The urban cluster stores are designed to serve as “general stores” in dense trade areas with limited supermarket competition and feature vastly expanded consumables offerings, among other key features.
By the end of 2012, the company operated 450 urban cluster stores, with plans to have more than 500 by the end of 2013. Currently, the company also is piloting a suburban cluster format that features an “amplified health and beauty presence,” SVP/chief marketing officer Rob Price told DSN.
These PATH stores, as the company has identified them — short for “Personalized Access to Health” — offer “a more complete assortment and a more elevated experience, with a more shop-able and better integrated healthcare quadrant, ... both in terms of physical access and navigation, and also how it integrates into pharmacy,” he said.
CVS Caremark also is applying the insights from its store-clustering initiatives to refreshes and remodels of its existing stores, as well into its regular planogram reviews, resets and new product introductions on an ongoing basis.
And along the way, it also is learning that some of the insights that come out of one cluster or another are not necessarily exclusive to those stores. “Many of these insights are generalizable — or ‘cluster-agnostic,’ as we call it,” Price added. “We see a lot of promise with some of these insights being weaved into our day-to-day business.”
One key example of how CVS Caremark has been able to take learnings from its store clustering initiatives and apply them more broadly to larger swath of stores is the healthcare resets it began about a year ago. Studies from its suburban cluster pilot program indicated that vitamins needed to have a bigger presence in the healthcare quadrant of the store. The reset repositioned the vitamin and nutrition categories opposite the pharmacy counter, replacing magazines and As Seen on TV, with wider-set aisles and the addition of aisle breaks to allow customers easier navigation of the vitamin assortment. According to CVS executives, the move has resulted in double-digit increases in vitamin category sales and a 3% to 5% increase in the entire healthcare quadrant in the reset stores. The plan was to roll the reset into 600 stores in 2013.
“You’re going to see these insights come to life in a number of ways. So, as we understand our clusters, we can modify our planograms — that’s a very standard process, ... [but] now we can do it in a richer way,” Price said. “When we open a new store, we have the analytical sophistication to [know] which cluster that store is, so we design the store around those particular requirements. But then ... we [also] know what customers are in which stores. So then, [we also] highlight those elements in targeted communications and promotions to [those customers] that best amplify the things we know they are going to be interested in. [That] is where all of our customer insights and all of our clustering insights come together — where we have these customer touchpoints.”
While the overarching strategy of store clustering might be personalization, the real goal is not to create 7,600 different variations on the store prototype. “If we had our druthers, we would individualize the stores based on visit,” Price said. “But what you can do is leverage the information, not to individualized stores, but to personalized stores, and tailor those stores into manageable groups that create an affirmative answer to the question: ‘Is this store for me?’”
The goal, Price explained, is a perfect balance of “trying to create customer delight at the broadest customer level, [while also] achieving scalable results,” he said. “The objective is not a handful of flagships — it’s a whole armada across 7,600 stores to make sure that we can harvest the insights from our cluster work ... and weave those insights into [more] of our stores. The objective is to have the most clusters that we can that are substantially different enough from one another, but the fewest that we can have to make it actionable and scalable [because] our partnership with our vendors is about results.”
No doubt, 15 years worth of ExtraCare data acquisition and the degree of engagement it has had with customers, “gives us an incredibly rich pool of insights to build stores that customers are going to love,” Price added, “but it’s a journey.”