CVS 2010 Annual Report Download - page 21

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than 5,000 store brand items that are less expensive for
shoppers and help create loyalty. They provide us with
higher margins as well. Their excellent value has certainly
appealed to consumers in this challenging economic
environment. Moreover, many of our store brand offer-
ings are far more than just “me too” versions of national
brands. We’ve actually introduced products that either
have no national-brand equivalent or offer innovative
packaging that appeals to more than the just the
price-sensitive shopper. We expect to add around
900 new store brand offerings in 2011.
The ExtraCare loyalty program remains one of the main
drivers of our industry-leading performance in the front
of the store. The largest loyalty program among all
U.S. retailers, it now boasts more than 67 million active
cardholders. In 2010, they received $3.2 billion in
ExtraCare savings and Extra Bucks
® rewards.
Our 10 years of experience working with ExtraCare
enables us to fine tune our promotional programs and
spend our advertising dollars most efficiently and
effectively. It also helps us tailor our merchandise mix
to best suit customers’ needs and improve productivity.
We are currently developing some new customized store
layouts based on our research and have already recon-
figured several locations. In our “urban cluster” stores,
where the front end can exceed 40 percent of sales, we
have added assisted self-checkouts to improve checkout
speed and expanded certain categories such as baby and
grocery. We have converted more than 200 such stores
to date. The early results are promising, with trips, sales,
and margins all up significantly. We are in testing phase
with two additional clusters and look forward to sharing
more information on our results as we delve further into
this opportunity for future growth.
In closing, we operate in a dynamic and growing
industry. Over the past few years, we have set up
an infrastructure that will position the company to be
very productive for years to come. We want to take
this opportunity to thank our colleagues for their
dedication and hard work. We have a sense of urgency,
an engaged workforce, the right assets, and the right
technology. We are extremely well-positioned to play
an important role in the evolving U.S. health care
market, and we are committed to driving strong growth
and returns to shareholders. On behalf of our Board of
Directors and our 201,000 devoted associates across
the nation, thank you for your continued support.
Sincerely,
Thomas M. Ryan
Chairman of the Board and Chief Executive Officer
Larry J. Merlo
President and Chief Operating Officer
February 18, 2011
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