Table of Contents
CVS Health’s partnership with and investment in Curbside could help CVS Pharmacy enhance its front-end business by picking up some purchases that may be migrating to online retailers, according to analyst Scott Mushkin of Wolfe Research.
‘Where Do You Buy Your Everyday Essentials?’ |
|
|
Source: Wolfe Research, “Pure Food Trend Matures” (4/1/16). |
CVS announced last week that it teamed up with Palo Alto, Calif.-based Curbside to develop CVS Express, which enables consumers to buy front-end products via the CVS mobile app and then pick them up in about an hour at the store.
That capability could prove appealing to the primary drug store shopper — women, many of whom are embracing the convenience of buying OTCs and other front-end items online.
“According to our latest report on food shopping patterns, women appear less inclined to purchase everyday essentials from mass merchants and drug stores,” Mushkin explained in a research note. “These purchases appear to be gravitating online, as online retailers gained the most share in our survey this year relative to last year. This could, in part, explain the lower front-end traffic trends as more of these sales move online.”
Sales growth for consumer packaged goods has been lackluster across retail trade classes, making the burgeoning online channel even more important.
Indeed, in a recent poll, Wolfe Research asked 2,089 women, “Where do you buy your everyday essentials?”. Supermarkets and mass merchants were cited by more than 60% and over 50% of women, respectively, while drug stores and warehouse clubs were named by more than 20% of respondents. Online retailers were cited by about 15% of women but saw the largest increase year over year.
“Drug stores tend to be higher-priced relative to other staples retailers. At the same time, dollar stores and online retailers arguably offer comparable — if not more — convenience relative to drug stores,” Mushkin wrote. “While the front end is still a relatively smaller percentage of total revenues for CVS, now that it owns Omnicare and Target (we estimate in the low double-digit percentage range), the company looks to be moving proactively to enhance convenience and ease of shop for their customers.”
