Inside This Issue - Opinion
Test and Learn is watchword for CVS execs
June 2nd, 2014
“All life is an experiment. The more experiments you make, the better.” American essayist and poet Ralph Waldo Emerson expressed that thought in a journal entry from the early 1840s. The current management of CVS Caremark Corp., where new ideas are viewed as the engine that drives progress toward its objective of helping people on the path to better health, might well echo it.
The approach has strong advocates at CVS/pharmacy, where the process of trying out innovations has been formalized under a program called Test and Learn. Helena Foulkes, who became president of the drug chain in January, knows the benefits of that method firsthand.
“When I started working on ExtraCare, which was in 1997, there were three years of testing and learning before we launched it nationally,” she says about the start of the retailer’s loyalty program, which currently has some 70 million active members. “Now we have had 16 years of data and consumer insights to help us personalize our services and offerings to individual customers.
“If I told you that I knew everything about what we need to do going forward, you should give me a funny look, because the bottom line is that we’re constantly learning. ExtraCare continues to help us understand what matters to the consumer and the best way to communicate with her, as well as providing insights about how to merchandise products and categories in our stores.”
Many of the projects that the drug chain has embarked on will, like ExtraCare, evolve over the long term. New approaches to store concepts and store clusters are now being field tested, with the goal of replicating the success of CVS/pharmacy’s urban format, which places special emphasis on convenience food and beverages. Work continues on myWeeklyAd, a digital tool that individualizes the traditional weekly circular for ExtraCare members. Launched last October, the initiative is changing even as it gains momentum.
“We’ll keep refining myWeeklyAd, which is a big piece of our personalization strategy,” Foulkes notes. “There isn’t one simple answer for how to crack the code on personalization. It will continue to be a journey for us. But we have a strong team in place that’s curious and constantly asking questions, and that will get us to a better place.”
Test and Learn is not limited to large-scale projects. The concept enables the retailer to evaluate all aspects of its business, including products, merchandising, pricing and promotions. Robust analytical tools give CVS/pharmacy and, in the many instances in which they are involved, its supplier partners, information on such things as demographics, customer segments, trip types, store formats and other competitive factors.
Judy Sansone, senior vice president of merchandising and retail pricing at CVS/pharmacy, says Test and Learn gives the drug chain the means to try new concepts — everything from adding or deleting brands to a given product segment to whether a category performs better if it is merchandised vertically rather than horizontally — very efficiently through a targeted series of in-store trials. When the results, which she indicates have a high degree of statistical accuracy, are favorable, the company does not hesitate to take advantage of the knowledge it has gained.
One Test and Learn project involved merchandising internal and external analgesics, along with daily living aids, in a pain relief center. Consumer response was so strong that CVS/pharmacy quickly rolled the concept out to all of its 7,600 stores.
“This strategy has really sped up our time to market,” says Sansone, adding that hundreds of the experiments have already taken place and that the retailer has 60 or so projects in the field at any given time. “Our supplier partners frequently play an important role in this process.”
The health solutions-oriented approach embodied in the pain relief center is increasingly evident at CVS/pharmacy. Examples include a set for eczema and psoriasis in beauty care, dedicated acne and sun care sections, and the increasing prevalence of healthier food and beverages.
“It’s important that we think holistically about the consumer,” says Foulkes. “At the end of the day, our job is to be really meaningful to people who are visiting our pharmacy frequently and be a real resource for them in the front store as well.
“As Judy and her team are making decisions every week around planograms, they are not just looking at how many units of this SKU sold last year. They’re actually looking at who is buying the SKU and whether that is the kind of person whom we may need to invest in. So we’ve started thinking in a much broader way about the products we carry and how we merchandise them.”
Test and Learn, together with ExtraCare, will be invaluable tools as CVS/pharmacy’s managers execute that strategy.