CVS Sees Food Growing Urban Business

Discussion
May 07, 2010

By George Anderson

Back in January, 52 percent of respondents to a RetailWire poll
said Walgreens’ plan to introduce fresh and prepared foods into its stores
was a "very
good" or "somewhat good move" for the drugstore chain.

Now comes
word that Walgreens’ rival CVS is looking to add fresh salads and sandwiches
to stores located in urban areas. About 20 percent of the more than 7,000 stores
operated by CVS are in urban locations.

Dave Denton, chief financial officer
for CVS, said the chain is focused on tailoring product selections to meet
the needs of consumers in specific store locations.

"We have a select group of stores currently reconfigured where we are
tailoring our assortment to how the consumer shops that store," Mr. Denton
told Bloomberg
News
. "One of those items is expanding grocery and different food
products that meet the busy lifestyle of people in those kinds of locations."

Discussion Questions: What will it take for CVS to succeed with the sale
of salads and sandwiches in its urban locations? What other retail channels are
most at risk from drugstores getting into the fresh and prepared foods business?

Please practice The RetailWire Golden Rule when submitting your comments.

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11 Comments on "CVS Sees Food Growing Urban Business"


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Ian Percy
Guest
11 years 11 days ago

Let me give you the secret word for future success in the food arena: ANTI-OXIDANT MEALS. Health-related retailers like CVS especially should look not at just providing the typical salad & sandwich fare everyone else has; do something different. Don’t feed–nourish. Create unique combinations of various foods based on their anti-oxidant qualities and market them that way. One thing for sure–we don’t need another source of subs!

David Livingston
Guest
11 years 11 days ago

I think it will be an uphill battle for drug stores to succeed in fresh foods. Especially in urban areas where fresh healthy foods really doesn’t mix with the McDonald’s dollar menu and TV dinner culture. Perhaps in the higher income urban areas, fresh salads and sandwiches might do ok, impacting the local neighborhood competitors that sell similar items. Still, I associate drug stores with sick people and pharmacies, and it doesn’t sound appetizing.

Jerome Schindler
Guest
11 years 11 days ago

I agree that they will need anti-oxidant meals–but for a different reason. Those foods will sit in the cooler for so long they will need all the preservatives they can get. I predict that after about three reputation-damaging recalls CVS will give up that experiment.

Sandy Miller
Guest
Sandy Miller
11 years 11 days ago

CVS should carefully observe the strengths and opportunities in the CVS programs. Then they should set up several formats and products which fit the shopper profiles. Then use focused, powerful appetite appeal messages. This is often the missing ingredient.

Paula Rosenblum
Guest
11 years 11 days ago

Boy, that’s a tough sell. Everyone knows food is a customer magnet, but it’s just not easy to make money on. And if CVS does fresh as “well” as it does ice cream…I see trouble.

Jonathan Marek
Guest
11 years 11 days ago

C-stores and grocery stores have been pushing in this direction for years with only limited success in the US. Even the successes have been from players with much more credibility in the consumer’s mind. If it has any chance of success, this will require a long time and large scale testing and tweaking to get it right. It’ll be interesting to see if CVS (or Walgreens) have that kind of commitment.

Dan Desmarais
Guest
Dan Desmarais
11 years 11 days ago

It sounds like CVS has taken a trip to the UK and toured some Boots stores. Boots maintains at least seven distinct store types from massive stores down to “booths” in train stations. Most of these store types have versions of the salad and sandwiches to go.

Food in drug stores is only missing in North America.

Anne Bieler
Guest
Anne Bieler
11 years 11 days ago

Everyone is trying to consolidate trips. If foods are fresh, in the right assortment to fit with a health and wellness position, and it’s consistently executed, it night work. Urban shoppers have choices and will be hard to please. Still, a good option for growth with the right program.

Ed Rosenbaum
Guest
11 years 10 days ago

CVS better be well prepared with better quality and selections than those they will compete against. Going in a CVS now to purchase something does not give me a good sense that the staff currently employed can in any way offer good customer service in a food market setting. But we are a copycat world. If one company does something successfully, others will follow, well prepared or not.

Michael Beesom
Guest
Michael Beesom
11 years 10 days ago

If CVS rolls out a limited assortment of fresh foods, some salads, sandwiches and a couple other types of grab and go items–and uses local vendors for supply–it might do well.

Key are prime urban location–lots of foot traffic.

Key also is using the local vendors. Make a deal with them to absorb a portion of the shrink, for example.

I would start small. Test. Go from there.

Shilpa Rao
Guest
11 years 8 days ago
I think that over years, the image of CVS has changed from being a drug store to being a neighborhood convenience store that also sells drugs. Most urban CVS stores are 24-hour stores and shopping trips range from a milk run or weekly top-up or a beer run to shopping for vitamins or pet-food. The range is wide. For stores located in office areas, I think the meal run could be a great occasion to capitalize on. What CVS offers, which most grocery stores don’t, is convenience–smaller stores, easier to find things, quicker checkouts, and great prices. Now what CVS needs to do is to study the market well before introducing these salads, etc. Not all urban stores can drive salad sales. Only a select which have high mealtime traffic would be appropriate for salad introduction. For example their Cherry Hill, NJ store is busy throughout the day and has significant mealtime traffic. The other thing they have to consider is what are they going to take out to make space for the salads? They… Read more »
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