CVS 2001 Annual Report Download - page 8

Right Products, Right Locations,
Right Price
In each of o ur nearly 4,200
CVS/ pharmacy lo catio ns, the higher
margin front-end business is an
integral part of o ur lo ng- term
gro wth plans. We c o mbine the
use of techno lo gy, business
intelligence, and innovative
merchandising strategies to sto ck the
right pro duc ts, in the right lo catio ns, at
the right price.
This creates a measure o f co nvenience that
to day’s time- starved co nsumers cherish, but no o ther
class of trade can offer.
Our co re categories in the fro nt- end of o ur
sto res—such as health, co smetics, skin care, hair
care, and pho to—have been healthy with co ntinued
po sitive gro wth as we g ain share o ver co mpetito rs
in foo d, drug and mass merchandising .
Our pho to labs co ntinue to sho w stro ng g ro wth,
with o ne- ho ur labs no w present in 3,100 sto res.
Custo mers have flo cked to o ur digital pho to service,
having their photo s develo ped in o ur labs, and then
uplo aded to the Ko dak Picture Center®at CVS.c o m. To
date, we have uplo aded more than 50 millio n images
fo r o ur custo mers thro ugh CVS.c o m. We ho ld the #1
share of Ko dak’s digital business by far, and we are
Ko dak’s #1 custo mer fo r pho to pro cessing in o ur
markets. We’ve also aligned with Ko dak and America
Online to o ffer o ur pho to custo mers the o pportunity
to uplo ad their pictures directly to their AOL
addresses thro ugh AOL’s “Yo u’ve Go t Pictures”.
We have integrated CVS.co m
with o ur co re business to better
reflect ho w we do business with
o ur custo mers. We use a variety o f
means to drive sto re customers to
the website and draw website traffic
to the sto res, giving o ur custo mers
plenty o f co nvenient o ptions. We’re
also loo king at ways to make pro ducts
available o nline that aren’t practical to stock in
each of o ur retail sto res, giving custo mers an even
greater selectio n.
Beauty remains a stro ng co re catego ry in the
front end. We are #1 in o ur class o f trade and #2
acro ss all classes o f trade in the beauty business.
In fact, we are intro ducing a new sto re layo ut
that brings sho ppers into the beauty sectio n upo n
entry thro ugh the fro nt do o r. Our new layo ut creates
a “sto re within a sto re” fo r segments such as beauty,
fo o d and beverage, pho to and greeting cards, and
baby care—to create a mo re inviting , c o ntempo rary
and appealing feel.
We ro lled o ut o ur new sto re layo ut in 400 sto res
in 2001 and plan to have it in 600 additio nal sto res
in 2002. In the beauty area, the results so far
indicate custo mers spend mo re time shopping and
increase their rate o f purchases in sto res sporting the
new desig n.
Our private label business co ntinues to sho w
stro ng gro wth, particularly with the expansio n o f the
Essence o f Beauty®line of bath and bo dy pro ducts
into shampo o and hair c are pro ducts. These exclusive
CVS pro ducts have achieved great acceptance, even in
o ur new markets. Private label no w represents 12% o f
o ur fro nt-end business.
While we’re enjo ying success
in many critical areas, we
experienced slo wer front- sto re
gro wth than pro jected in
the first 9 mo nths o f
2001 due to the
slumping eco no my
and the co mpetitive
atmo sphere. So we
wro te o urselves a new
CVS Corporation
6
High margin CVS privat e label products feature
top quality merchandise at affordable prices.
Taking Extra Care Of
Our privat e brand Essence of Beaut y®line of
bath and body product s successfully expanded
to include shampoo and hair care offerings.
One-hour phot o labs, digital imaging services
and photo processing make t he phot o cat egory
one of CVS’ st rongest lines of business.