Three years after abolishing tobacco sales, the nation’s largest drugstore chain is reducing space devoted to junk food and general merchandise.
CVS Health plans to accelerate a store renovation project, devoting more floor space to nutritious food and health products.
CVS executives said Wednesday that they would implement the new format at several hundred stores by the end of 2018, demonstrating the company’s commitment to remake itself as a beacon of healthy living rather than a place devoted primarily to treating illnesses and selling candy bars.
Although you’ll still be able to score a bag of chips, candy bar and sugary drink at CVS, the company said it would reorient 100 feet of aisle space per store toward products such as nutritious food bars, natural supplements and makeup without harmful chemicals.
The company will sell fewer seasonal products and other general items that are suffering against online competition, namely Amazon.
CVS said it had already introduced the redesign at 800 of its 9,700 stores, with the upgraded locations experiencing an average sales increase of 2.5%.
"It's a whole reimagined store design," CVS Pharmacy division President Helena Foulkes said in an interview.
The move comes amid mounting pressure on the retail giant to bolster foot traffic after the pharmacy business lost tens of millions of prescriptions heading into 2017. Retail, non-pharmacy sales at stores open at least a year fell 2.9% in the fourth quarter. Those sales represent about 11% of the company's revenue, according to UBS.
"They’re looking to do this because they want to remain relevant with their customers and be viewed as a local destination for healthy products and items and help fulfill their customers’ health needs," said CFRA Research analyst Joe Agnese, who tracks CVS. "It helps them keep up with what everybody else is doing."
The overhaul includes abandoning the typical smorgasbord of candy at the front counter, moving those items farther back and devoting that coveted shelf space to healthier choices, including organic foods, sugar-free items and protein bars.
CVS is also betting on items connected to helping people sleep, skincare and healthy "eat-on-the-run" snacks, said Judy Sansone, senior vice president for the front store business and chief merchant.
That reflects the fact that American consumers have shifted from three large meals per day to five smaller meals, she said.
"We’re doing this because this is actually what customers want. This is what they’re buying," she said.
In makeup, a category that has been disrupted by nimble competitors such as Sephora and Ulta, CVS is cutting chemicals such as parabens, phthalates and formaldehyde from its store-brand products.
"Most of our growth is coming from these new, indie cosmetic brands," Sansone said.
Foulkes declined to say how much the store upgrades would cost, but said it falls in line with previous capital spending plans.
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