CVS Caremark Corp. is converting a growing number of outlets to its urban store concept.

CVS Caremark, urban store, urban store format, CVS stores, CVS, urban format, Tom Ryan, Richard Monks, drug store

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CVS rolling out urban store format

August 16th, 2010

WOONSOCKET, R.I. – CVS Caremark Corp. is converting a growing number of outlets to its urban store concept.

A spokesman for the drug store chain says that by the year’s end about 300 CVS stores in large cities across the country will sport the new look, which features more non-health care products along with a revamped floor plan.

“Our research showed that our customers who live and work in our urban markets shop CVS more as a general store, so we are adapting our product mix and store layout to better address their needs,” he says.

“We have taken steps in these stores to significantly expand our grocery, baby and household products, as well as add a grab-and-go section with fruit, salads, sandwiches and other prepared consumables.”

All told, the amount of space dedicated to consumables in some of the converted stores has nearly doubled, the spokesman says. One store in New York, for instance, has a 27-door wall of refrigerator cases devoted to soft drinks, bottled water, beer and frozen food.

The categories that have been reduced in size or eliminated to make room for the expanded consumables mix have not been the same across the country, the spokesman notes.

“Our consumables offerings have significantly expanded in stores that have been reset to the urban concept,” he explains. “Space reduction varies by store and depends on the shopping habits of each store’s customer base.”

Converting stores in urban areas is part of CVS’ plan to drive store traffic and grow both its customer base and its sales.

“These tailoring programs are focused on increasing the number of trips to our stores,” CVS Caremark chairman and chief executive officer Tom Ryan said earlier this year. “The pilot results have been very encouraging.”

While not providing a target date for the completion of the rollout of the urban store format, CVS says it expects to eventually convert between 1,300 and 1,400 stores, or about 20% of its base, to the concept.

Because many of its stores in urban markets are below the size of a CVS prototype, the company has had to make what some industry observers consider to be very un-CVS-like changes to the stores.

For example, CVS stores across the country tend to have shelving that is lower than most other chains. To accommodate the expanded mix in the urban stores, the company has had to install higher gondolas in some locations. Conversely, some of the stores have seen their gondolas lowered as the new planogram being used in the urban markets makes more efficient use of the space by paring back the mix in some categories.

Another noticeable addition to the revamped units is more self-checkouts — something that CVS says has benefitted the shoppers and the store staff.

“Customers have responded very positively to the ease and convenience of our self-checkout stations,” the spokesman says. “It has allowed us to deploy more store associates to the sales floor to assist customers and keep our shelves in stock.”

CVS executives say the redesigned stores have made the shopping experience more efficient for many consumers, allowing them to get in and out of the store faster.

“Urban customers are using our stores for immediate consumption as well as fill-in trips, so we’ve designed these stores to facilitate quick and convenient shopping visits,” the spokesman says.

While admitting that the urban store conversion project is still in its infancy, CVS says it feels the urban format will play an integral role in the chain’s future.

“We are still in the early stages of implementing this concept,” the spokesman says. “But the sales and traffic trends in the stores we have completed to date are very positive.”