Dare to be different: exclusive-brand focus reflects strong commitment

Drug Store News,  Oct 10, 2005  

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Perhaps no other single initiative the chain currently is working on strikes deeper at the heart of CVS' mission to be different than its focus on private label and exclusive brands.

Currently, private label accounts for about 13 percent of CVS front-end business. The goal in the next three years to five years is for CVS' team of merchants to take that number up to 18 percent to 20 percent, CVS chairman, president and chief executive officer Tom Ryan noted during an investors conference Goldman Sachs hosted last month.

If that doesn't tell you CVS is serious about private label, perhaps its early results in the Eckerd stores it acquired last year will mean more. "At Eckerd, private label was about 8 percent [of front-end sales], Ryan said. We have gotten that up to about 12 percent."

But it goes beyond private label, which CVS uses-primarily to reach value-driven customers in its mix. Perhaps an even larger focus, and certainly a bigger differentiator in the marketplace, has been CVS' work to develop partnerships and pull off deals for exclusive brands. "The distinction is, there is only one place you can get these brands: CVS," Ryan added.

Early success stories have included the oft-mentioned Lumene skin care line, which CVS merchants found in Scandinavia, as well as Pure Digital's disposable digital camera and, more recently, the company's one-time-use video camera.

Even more reflective of the chain's commitment to exclusive brands has been its acquisition of the Nuprin brand from Bristol-Myers Squibb in 2002. CVS has since expanded Nuprin beyond pain relief tablets into a number of key, trip-driving OTC categories, including topical analgesic balms and patches and cough-cold remedies. While CVS can't afford to spend what the top OTC vendors spend to promote Nuprin, the brand plays a key role in its store circulars and other promotions. And when CVS acquired Nuprin, it still had 70 percent brand awareness among consumers.

And the beat goes on. CVS recently signed an exclusive deal with Hasbro to bring in a line of Playskool-licensed baby care products, such as diapers and wipes, from Hasbro.

Certainly, Lumene has been an extremely positive experience for CVS, as well, enabling it to steal some department store business. Our research indicates that customers buying this brand were not shopping the category before," Chris Bodine, CVS executive vice president of merchandising and marketing, has said. "These customers are typically out of the department store class of trade."

Targeting the professional, dermatologist lines that are gaining popularity, CVS recently added the nine-SKU Dr. Jeffrey Dover Skin Effects line. It is targeted to older woman concerned with aging skin who either don't have the time or inclination to visit a doctor's office. Earlier this year, CVS added NeoStrata's NeoCeuticals skin care line and its CoverBlend by Exuviance Multi-Function Concealer SPF 15 to its exclusive lineup.

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