CVS 2011 Annual Report Download - page 8

CVS CAREMARK 6 2011 ANNUAL REPORT
S H A R E H O L D E R L E T T E R c o n t i n u e d
We also leveraged the deep customer insights
gained through ExtraCare to launch our store
clustering initiative in 2009. To date, we have
remodeled more than 4,000 stores to tailor our
merchandise mix based on the way our stores are
shopped in certain locations. We have rolled out
two different clusters thus far – food convenience
and urban – and are seeing revenue and profit-
ability increases in each. In 2012, we will expand
our store segmentation approach by rolling out
additional cluster prototypes that will enable us
to customize our store fleet and meet the unique
needs of each store’s customer base.
The store brand category, which now accounts for
approximately 17.5 percent of front-store sales,
represents another growth driver in the front of
our stores. These products are less expensive for
shoppers, help create loyalty, and provide us with
higher margins. We believe that store brands can
reach 20 percent of front-store sales over the next
few years, and we are adding hundreds of new
products every year.
Our real estate program continued on pace as we
opened 247 new or relocated stores. Factoring
in closings, net units increased by 145 stores.
That equates to 2.6 percent retail square foot-
age growth, consistent with the level of the past
several years.
MinuteClinic Has Broadened Its Scope and
Forged Key Strategic Alliances
We now operate approximately 600 MinuteClinics,
most of which are in CVS/pharmacy stores across
25 states, with that number expected to rise to
1,000 by 2016. We believe MinuteClinic will play
an important role in addressing some of the cost
challenges related to health care in this country, as
well as access issues resulting from the national
shortage of primary care physicians. This situ-
ation will only be exacerbated when 32 million
Americans obtain health insurance beginning in
2014 through health care reform.
MinuteClinic has been expanding its scope of
services to focus more on preventive care and
monitoring for chronic conditions such as diabe-
tes, hypertension, and high cholesterol. We are
also partnering on patient education and disease
management initiatives through the formal affilia-
tions we’ve established with some of the nation’s
leading health systems. Taken together, these
health systems represent more than 125 hospi-
tals and 35,000 physicians. As part of our clinical
collaboration, some of these doctors now serve
as medical directors for their local MinuteClinics.
We are integrating our electronic medical records
with those affiliated health systems and, in the
future, we expect to play a collaborative role with
the Accountable Care Organizations that are an
outgrowth of health care reform.
The collaboration of MinuteClinic with our PBM
represents just one of our integration “sweet
spots,” allowing us to create programs for PBM
members that are difficult for any of our com-
petitors to match. For example, clients have the
opportunity to change their benefit structure
to substantially reduce or eliminate co-pays at
MinuteClinic, which will encourage cost-effective
member behaviors and expand access to high-
quality care. MinuteClinic also offers our PBM
clients flu vaccination and biometric screening