In the field: experience is critical to conversions

Drug Store News,  Dec 13, 2004  by James Frederick

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Experience counts. And in the case of CVS' ability to absorb quickly some 500-plus Eckerd drug stores in Eckerd's home state of Florida--not to mention thousands of Eckerd employees who were eager to grab the CVS lifeline, but unsure of the future--that experience has been the critical factor in a massive and thus-far successful, nine-month transition.

CVS has been through this before. Clearly, its experience in integrating big drug chains like Revco D.S. and Arbor Drugs in the 1990s has played a huge part in its rapid-fire integration and overhaul of Eckerd's core Florida operation.

To oversee the combined CVS-Eckerd operations in Florida, CVS turned to one of its most experienced field managers. Brian Bosnic, area vice president for CVS' Florida region, is one of eight area vice presidents reporting to Larry Merlo, executive vice president of stores. His region encompasses all of Florida, with the exception of Tallahassee and the Panhandle in the northwest corner of the state.

Bosnic cited his company's deep-bench ability to develop management talent and fill key positions quickly. It was a need made acute by the acquisition of Eckerd's stores in Florida and Texas.

"Our ability to bring people into the market was a key thing, and that shows CVS' bench strength in developing people and getting them ready to go into field management is pretty darn good," he said. "The pipeline we've been able to develop over the past couple of years is really a key to our strength.

"That's enabled us to bring about 16 district managers just into [this area], whether from the Northeast or Midwest," Bosnic added. "Did they know the Florida market? No, but more important, for this type of integration, they knew CVS and what we wanted to do."

In turn, said Bosnic: "That brought the CVS knowledge and culture into Florida. And as we downsized and expanded control on the Eckerd district managers, we buddied them up and mentored them with the CVS people. They were able to teach the CVS people the market, and the CVS people were able to mentor them about the CVS culture, the systems, etc. It was a good match."

Key to CVS' overhaul of Eckerd's Florida operations, said Bosnic, was a big change in district management. "The number of units the DMs had was very high compared with what we run, and their frequency of visits to each store was very limited compared with what our DMs are able to do," Bosnic explained. "We basically cut the number of units each is responsible for to less than half what the Eckerd DMs had."

CVS was able to retain most of the Eckerd DMs and store managers, while simplifying the store management structure by doing away with the position of front-end supervisor developed by Eckerd and reassigning those people to other positions in store and field operations.

"There was another layer of management between the DM and the stores at Eckerd, and that was their front-end supervisor," Bosnic said. "The DM relied on the front-end supervisor to get into the stores and do a lot of the hands-on work and actual visits to the store. So Eckerd had their best people, the district managers, seeing each store once every two or three months."

To take up the burden, Eckerd "added more layers and support positions," said Bosnic. "My belief is that anytime you add more and more people, you lose accountability for what you're trying to do. We don't do that. We shrink the area of control from a unit standpoint, but there's a lot more accountability."

Some of the front-end management people are now being evaluated for store or district management positions, Bosnic said, as they "help us get through the transition."

"They're very critical people to us," he said. In general, Bosnic added. "Working with the Eckerd people here has been absolutely wonderful. I knew they'd respond well to all these changes, but what I didn't know is how well they'd do.

"Any time you go through an integration or conversion, it's always a lot of work," Bosnic continued. "And when you look at all the things we've accomplished so far, the [Eckerd] people have been fantastic. Their attitude and enthusiasm have been great. I know we have a lot to do in the stores, but we hear from them how glad they are to be part of a strong company. It's what they say they've been waiting for.

"I've worked in six different markets for CVS and Revco," Bosnic said, "and I can tell you from that perspective that these people are thrilled to be part of CVS."

Among the differences the Eckerd store employees and managers talk about is the strikingly different business philosophy between the two companies, Bosnic said. "They say that CVS focuses on top-line growth, and Eckerd focused on expenses and margin control" by squeezing payroll and other costs and cutting back store hours. The differences extend to the number of 24-hour stores: CVS operates several dozen in the state, compared with Eckerd, which operated "four or five" prior to the merger, according to the executive.