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[14 comments]

CVS revs up omni-channel for the holiday season

August 7, 2014

Through a special arrangement, presented here for discussion is a summary of a current article from the Retail TouchPoints website.

CVS is reaffirming its position as a top holiday destination by providing stocking stuffers, gift cards, décor, gift wrap and last-minute gifts, acting as a one-stop-shop for customers. But like many retailers, the pharmacy is also working on optimizing its omni-channel reach.

"Our physical stores are only one piece of the puzzle, and we have put a lot of thought around the behaviors and habits of customers who may prefer to browse or research online before coming into the store, while others are more likely to leverage digital technology while actually standing in the store itself," said Erin Pensa, director of public relations at CVS. "For us it's about connecting with our customers to deliver content that is meaningful, relevant and at the right time, in the channel they prefer."

On Thanksgiving Day in 2013, online traffic increased 21 percent over 2012. At its peak at 10 p.m. on the holiday, mobile traffic reached 9.2 million page views per minute. Ms. Pensa added, "We expect this trend to continue as more shoppers look to easily and conveniently make purchases before or after their Thanksgiving Day meals."

As a result, digital and mobile features are being improved to enhance the in-store experience over the holiday period.

"MyWeekly Ad, a personalized digital circular, is a great example of this," Ms. Pensa said. "Shoppers can easily browse weekly deals personalized with what they buy most — and those we might recommend for them — and can also build a digital shopping list featuring the deals they'd like to take advantage of each week."

Shopping lists are personalized to CVS/pharmacy locations consumers shop at most, and tell them where they can find products in each store.

In 2013, more than 335 million personalized offers were issued between Nov. 10 and Dec. 28 via its ExtraCare loyalty program. Both in-store and digitally, the offers will be more personalized and targeted this year.

"We've also been making it easier for our customers to send those offers digitally to their rewards cards, whether it be from their computer at home or on an iPad or smartphone while they're on the go, so they can take advantage of those personalized deals without having to carry paper," said Ms. Pensa.

A Ship & Save online program, which allows shoppers to receive timed deliveries, was also recently rolled out.

"Consumers never have to worry about running out and always enjoy 20 percent off plus free shipping," Ms. Pensa said. "They can enroll items marked 'Ship & Save Eligible' and choose the delivery, frequency and quantity. Consumers can also easily change or cancel an order online anytime."

FINANCIALS:     [NYSE:CVS] [ ]

Discussion Questions:

What's unique about coordinating omni-channel tactics over the holiday selling season versus other times of the year? Which practices — digital circulars/shopping lists, digital store maps, in-store personalized offers, in-store pickup, etc. — will be expected by consumers this coming holiday season?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Which of the following mobile/omni-channel practices will be most beneficial for physical stores this coming holiday season?

Comments:

Any brick-and-mortar not implementing BOPIS and omni-channel this upcoming holiday season should be shamed. QR/UPC shopping posters, iBeacon, geo-fencing, click-and-collect and local delivery have been tested for quite some time. This is the year for retailers to shine and show they are on top of the latest trends and technology for the consumers, and consumers are going to expect the "wow me with convenience" approach, rather than the failed doorbusters discounting approach for their 2014 holiday shopping experience.

Ed Dunn, Founder, (Stealth Operation)

Omni-channel is about customers, not channels. That having been said, I do not see any significant customer shopping behavior differences between the holiday selling season and other times of the year. Consumers still seek value and convenience regardless of the shopping time or occasion.

Consumers expect tools that facilitate their desire for value and convenience.

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Richard J. George, Ph.D., Professor of Food Marketing, Haub School of Business, Saint Joseph's University

A few quick thoughts on what separates the holiday season from everyday marketing/merchandising:

  1. Stock issues related to blockbuster SKUs. If a retailer can make local in-store stock levels transparent (and better, offer BOPIS or ship-from-store), they can convert more browsers to buyers. See this Target example in the toy department.

    In more recent years, pre-ordering and targeted/segmented promotions for high-lifetime-value shoppers have become more popular among retailers.

  2. Gifting. Of course people indulge themselves over the holidays, but many are shopping for others. Recommendation engines and wish lists/registries are just two features proven to improve both conversion and build order/basket size. Amazon has captured a growing share of my holiday spend simply by offering wrapping as a service, and by making it painless to ship to extended family across the country.

  3. Price competitiveness. This may be less of an issue for CVS given its convenient real estate and overall value proposition, but for mass retailers (and increasingly category specialists), maintaining absolute and perceived price competitiveness on KVIs during the holiday season is even more important than during everyday periods. Hence much more prominent communication around pricing on key items in recent years, and stronger commitments to match store-based and online competitors on both regular and promoted prices. (But not Amazon's third-party marketplace!)

  4. Personalization. Not only of messaging and offers, but of product. Greetings, gift wrap, gift cards, etc., are all increasingly being personalized through in-store on-demand printing systems that ingest photos and social metadata from Facebook, Instagram and Pinterest. If points one through three are true, and most retailers are competing to convert shoppers searching for the best price on high-velocity SKUs to give as gifts, retailers that can differentiate with some form of personalization stand to gain.

  5. Returns/exchanges/gift card redemption. The two weeks that follow Christmas drive a massive volume of in-store returns and exchanges, along with opportunities to up-sell and build baskets. This is a very quickly evolving area from a systems, policy and operational perspective as omni-channel expands.

Looking back over the last five years, the holiday season tends to be a peak period for deploying new digital innovations at retail. Looking forward to this year's steps forward.

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Keith Anderson, VP, Strategy & Insight, Profitero

The real difference is effectively processing demand. Secondly, there is the not-so-little problem of creating that demand at a time when all retailers are doing everything they can to capture every cent of consumer spending.

I look to see an increase in digital communication (not necessarily circulars). You have to get them into the store before you can use all those navigation tools.

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Ryan Mathews, Founder, ceo, Black Monk Consulting

The difference at the holiday season is the increased stress and demand put on all parts of the process in combination with high expectation of consumers. Consumers want what they want, when they want it, at a good price. Between Thanksgiving and Christmas the demand is higher with increased expectations and demands.

In terms of what consumers want—everything! They want any advantage they have seen in store, online or with call centers anywhere in every store!

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Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

The biggest difference between omni-channel marketing during the holiday season as compared to the rest of the year is the amount of clutter that a marketer has to break through to reach their customer. During the holiday season, retailers and e-commerce companies are sending emails almost hourly, and it can be very difficult to get your target customer to pay attention to what you are saying while everyone else is shouting at the same time.

Since customers often have more urgency during the holidays, the tactics which expedite in-store shopping will have the greatest benefit. Store maps and in-store pickup will be more prevalent this year and may play a greater role in keeping customers at their most commonly shopped retailer.

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Mark Price, Managing Partner, LiftPoint Consulting, Inc.

The holiday season is the largest shopping season of the year, so "hitting the ball out of the park" at this time of year proves the winning game for the whole year.

Whether consciously or not, shoppers are seeking efficiency in their shopping experience, and NO ONE is more efficient than Amazon, because online eliminates massive wasted "warehouse" space, AKA those insane, interminable aisles in traditional brick-and-mortar stores; as well as the cost of the virtually "parked" inventory there, that frustrates shoppers looking for what they really want.

We discussed BOPIS (buy online, pickup in-store) here recently, and for the brick-and-mortar retailer, this is salvation for both them and the shopper in managing the urgently-needed but poorly-selling long tail. Running BOPIS properly not only puts the brick-and-mortar retailer in the same game as Amazon and other online competitors, it gives them a leg up in the rest of the business.

Brick-and-mortar retailers WILL end up mostly running two classes of merchandise: "routine and long-tail merchandise" AND "surprise/delight/NOW!" merchandise. That second class is often on the perimeter, but some of it is stupidly buried in center-of-store aisles, or their equivalent in any of 95-plus percent of rat-maze stores, whether FMCG/CPG or general merchandise.

The surprise/delight/NOW! is the ace-in-the-hole for the brick-and-mortar retailer, and properly integrated BOPIS can make them impregnable to online competitive assaults; leveling the playing field online, maybe even tipping in favor of the brick-and-mortar/BOPIS retailer.

Surprise and delight is what most retailers would like to think their stores are all about, but typically there is plenty of routine/autopilot driving the store, with an unhealthy admixture of frustration and angst. See: "Three Purchase States (Modes of Purchase Hypothesis)."

Surprise/delight/NOW! has two components, but both should be urgent priorities for retailers. The surprise/delight is obviously specials, new items and high volume items (needed by more shoppers, more often.) The NOW! component is the generally neglected one-to-five item basket, purchased because of IMMEDIATE need that online cannot adequately service (although same day delivery is getting there.)

These NOW! small baskets typically constitute 50 percent of the shopping trips, even if they only amount to 30 percent of total store sales. However that 30 percent has a far greater significance than is immediately apparent. Upselling a one, two or three item basket to two, three, or four items is vastly easier than upselling a 10, 20 or 30 item basket to 20, 30 or 40 items. The significance is in "total store lift." A 10 percent lift in all those small baskets will give a three percent lift to the total store. Maybe you can get a three percent lift for the total store with a four-to-five percent lift on the big baskets.

But shoppers with small baskets are a lot easier to upsell, on a percentage basis, than shoppers with large baskets. For two reasons: they are in a hurry and buy fast; they are NOT price shopping. This means consistent upselling strategies for the small basket are immediate and enduring valuable strategies

This post is worth a fortune to any thoughtful brick-and-mortar retailer, regardless of your class of trade.

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Herb Sorensen, Ph.D., Scientific Advisor TNS Global Retail & Shopper, Shopper Scientist LLC

With the exception of a promotion specifically targeted for holidays or other special times, if an omni-channel concept works, why only use it part-time? No doubt offering consumers options on how they shop with you makes it easier, convenient, personalized, etc. That's why we give consumers a choice on how they like to do business with us.

Will consumers expect more omni-channel "tactics" over the holiday season? Yes—but not because it's the holidays. It's because that is what consumers are used to. The concepts, tactics and strategies are becoming more and more accepted and main-stream.

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Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

The main thing is urgency and availability. The availability and timing expectation is much more critical in terms of hitting that Christmas Eve window. The failure at the transportation last year cannot be repeated, and one way of solving it is with pickup at store.

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Kenneth Leung, Director of Enterprise Industry Marketing, Avaya

I love Ed Dunn's comment about "wow them with convenience." Transactions have to be frictionless now, or as frictionless as possible. Retailers that can't police their inventory, or have brochure sites (you know who you are) or take too long to ship are going to be in trouble.

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Cathy Hotka, Principal, Cathy Hotka & Associates

I think it's good CVS has created a digital shopping list and browse weekly deals. But what people will care about is the ExtraCare loyalty program that will show deals relevant to that individual? I like that CVS will be able to tell them where items are at. I've tested Walgreen's "Aisle 411" and found it very helpful. "Ship & Save?" I'm looking forward to seeing that. I've participated in a few on-line programs that ship you what they think you will want, but I actually really like this idea for the CVS consumer. For the most part, items they buy can be timed with relative accuracy. Shampoo, soap and other consumables are something that can be timed with pretty good accuracy, so I am excited to see how they do in this space.

What's unique about the holiday versus other times of the year? The same things that are always unique. Volume increases and you're always trying to stay ahead of your competition. Most marketers believe that marketing has changed more over the past 2 years than in the past 50 years. The omni-channel is completely disruptive. We just posted an Omni-channel Basics video on our YouTube channel today that talks about how the Omni-channel is not just necessarily where the consumer buys... it's about the entire customer experience.

The biggest issue related to the Omni-channel for both retailers as well as consumer goods manufacturers has been a very NEW form of competition. Today instead of competition coming just from the outside, competition comes from within.

There are 2 areas I would warn both retailers and CPG manufacturers to watch out for as it pertains to the Omni-channel.

1. First, DON'T COMPETE WITH YOURSELF! Integrate your sales and marketing efforts ASAP! I know, easier said than done. But every company we go in to has traditional sales teams separate from social media marketing and e-commerce sales. The single biggest agitating Omni-channel issue consumers have is lack of continuity in pricing and offerings. Retail teams view the social media teams as pimple-faced, rookies who don't know the business. While social media teams view the retail teams as stodgy, old-timers who just don't get it. Across the board, this is a problem. There are ways to solve this issue that I discuss in other venues.

2. Second, WATCH OUT FOR COUPON STACKING! With offers coming from everywhere and with reality TV shows touting the "coolness" of saving money and getting $400 worth of items for $8, more and more generation X people are doing their best to "coupon stack." It's a huge problem and will just become worse. Knowing the problem exists and how to fix it is key.

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Janet Dorenkott, VP & Co-owner, Relational Solutions, Inc.

Yes, holiday is the biggest selling time of the year. So, get them in, and then wow them with the selection and price and personalization as much as possible.

The lead said, "CVS is reaffirming its position as a top holiday destination by providing stocking stuffers, gift cards, decor, gift wrap and last-minute gifts, acting as a one-stop-shop for customers."

The items mentioned are impulse, last minute buys, not the main items on your shopping list, but important to be done in person. Omnichannel can remind shoppers that these items are available, while promoting the actual merchandise.

I don't buy into the BOPIS procedure to make Holiday Shopping easier or better, because it, too, can run into shipping problems, out-of-stocks, and lines at checkout to pick up the items.

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Naomi K. Shapiro, Strategic Market Communications, Upstream Commerce

The amount of spending dollars that are at stake, the heightened expectations of shoppers and the degree of competition make holiday season selling particularly unique over others times of the year.

Consumers are expecting greater relevance of an offer and its timing.

The last few years have seen a disruption of sorts in terms of consumers shopping journeys, and retailers and brands are still trying to figure out how to make sense of it and shape their offers at the right time and place.

It is going take a lot of deep understanding of consumer behavior, data, applied science, testing and learning before getting it right.

The questions have not changed, but the methods have become complex.

My view; I don't think there are any slam dunk answers yet. Retailers need to keep testing what works in a thoughtful, nimble, lean, smart manner.

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Mihir Kittur, Co-founder and Chief Innovation Officer, Ugam

Omni-channel tactics are definitely important over the holiday shopping season, however, it's just as important to maintain that standard during the rest of the year. Traffic will definitely increase during the holiday season, but why not get shoppers accustomed to that convenience or those omni-channel offerings during the rest of the year?

Customers' expectations of retailers keep increasing, especially with the influx of retail technology. If one retailer lacks personalized offerings or the convenience of in-store pickups, another retailer will be prepared to make that sale. It will be a fight for retailers this holiday season, largely because customers know they have options.

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Alexander Rink, CEO, 360pi

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