CVS 2012 Annual Report Download - page 6

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The ExtraCare® loyalty program and our store brands
continued to drive front store gains
In the front of the store, our 3.4 percent rise in same
store sales led the industry in 2012. We continue to use
our ExtraCare loyalty program to help deliver a more
personalized experience to each customer. We have
been building, refining, and perfecting this industry-lead-
ing program for 15 years. Today, we have 70 million active
cardholders who accounted for 84 percent of front-store
sales during the past year.
We leverage the insights gained from card use to support
each of these customers with promotions targeted to their
specific tastes and needs. We’ll be taking our efforts to
the next level in the coming year by, among other things,
personalizing the digital circular customers see when
logging onto the ExtraCare page at CVS.com® and by
offering incentives that encourage customers to shop
categories that are new to them.
The insights gleaned from ExtraCare also helped provide
a foundation for the myCVS clustering initiative currently
underway. In brief, we’ve begun to tailor our merchandise
mix and remodel store layouts to match the needs of
customers within certain trade areas. For example, we
began rolling out what we call our “urban cluster” in
2011. Designed as a general store for dense trade areas,
this concept increases our consumable offerings and
also features faster checkouts. We had 450 of these
stores in place at the end of 2012, and they saw notable
sales and margin gains. In 2013, we expect to convert
another 85 stores to the urban format. Building upon the
success we’ve experienced with these urban cluster
stores, we’re currently experimenting with other clusters
to better tailor our stores to match our customer base.
Our store brands represent another opportunity to
enhance customer value while increasing profitability.
These products are sold under a variety of proprietary
labels such as Gold EmblemTM and Just the BasicsTM.
They represent more than 17 percent of our front store
sales, and they accounted for 26 percent of our front
store sales growth over the past four years. We have an
aggressive plan in place to improve both the quality and
packaging of our store brands, and we believe that they
can reach at least 20 percent of front store sales in the
next few years.
As we work to drive growth in existing stores, we have
also continued to open locations and to enter new markets.
In 2012, we opened 150 new or relocated stores in the
United States. Factoring in closings, net units increased
by 131 stores. That equates to 2.1 percent retail square
footage growth for the year, in line with our annual goal.
Moreover, our acquisition of privately held Drogaria
Onofre in January 2013 marked our first foray into
drugstore operations outside the United States. This
transaction includes 44 retail locations in and around
Sao Paulo, Brazil, which we view as a highly attractive
growth market. I’ve said many times that our approach
to international expansion would be measured and that
we will continue to exercise strong financial discipline.
Onofre, with its strong reputation, represents an excel-
lent opportunity to grow the business over time.
MinuteClinic’s expansion included increased
focus on non-acute care, new locations, and
health system affiliations
A year from now, millions of Americans will begin to
gain access to coverage as part of U.S. health care
reform. This coming growth in demand will further
exacerbate the current shortage of primary care physi-
cians. Our expanding network of MinuteClinic locations
will help address both the access issues related to this
shortage as well as the rising cost of delivering care.
The largest and fastest-growing retail medical clinic
provider in the country, MinuteClinic has approximately
640 locations within CVS/pharmacy stores in 25 states
and the District of Columbia. Each offers convenient,
cost-effective care seven days a week without appoint-
ment. Insurers understand MinuteClinic’s value proposition,
which is why visits are covered by more than 250 different
commercial and government health plans.
CVS CAREMARK 2012 ANNUAL REPORT
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