WOONSOCKET, R.I. — Shortly after CVS Health decided in February 2014 to eliminate tobacco products from the merchandise mix at its drug stores, the company’s retail leadership team took the opportunity to reexamine the business. During those deliberations, beauty care quickly emerged as an area ripe for innovation.
“We started the journey by interviewing thousands of customers to understand what changes we needed to make, if any, to maintain our place as America’s preferred beauty destination,” recalls Alex Perez-Tenessa, who has been vice president of merchandising for beauty and personal care at CVS/pharmacy since January 2013. “We learned that while customers loved the convenience and value of our stores, they were expecting more from us in terms we broadly called elevation — elevation of the store experience, elevation of the assortment, elevation of our marketing.”
Armed with that input, Perez-Tenessa and his team set out to transform the beauty experience at CVS/pharmacy and, in the process, raise the bar for the entire mass market. Unveiled in June of this year, the changes — part of the broader rethinking of the front end that also included the addition of healthier food and snacks — touched most aspects of beauty care. Specially designed end-caps were used to delineate the department and draw the shopper in; impulse displays and hot spots guided her toward emerging trends; and the skin care aisle was enhanced to improve navigation and provide better information.
Individual beauty products were scrutinized with an eye toward quality. In the process of reviewing the entire assortment, the team made decisions about what items to include in the mix and how to merchandise them by determining what’s optimal for consumers.
“The boundaries between mass and prestige are truly blurring,” explains Perez-Tenessa, who prior to joining CVS/pharmacy was a partner at McKinsey & Co. for 14 years. “Our focus is on understanding our customers’ needs at a deep level and providing them with the best selection of quality brands that we can find in the global market to meet those needs.
“Because we are continuously looking at ways to delight our customers with new and better products, and scouting the globe for brands we can bring to them, our exclusive and prestige brands are among our biggest growth segments in the business. But we are not losing sight of how traditional brands remain highly relevant to the majority of CVS/pharmacy customers, and we continue to partner closely with our suppliers to drive market-leading growth in those brands as well.”
Examples of the retailer’s skill at supplementing mass market brands with exclusive beauty offerings are Jouviance, a prestige skin care brand from Canada; Promise Organics, a premium natural skin care brand; and the Make-Up Academy brand of professional quality cosmetics.
At the same time, CVS/pharmacy hasn’t lost sight of the central role that major brands play in beauty care. The relationship between the retailer and those companies is closer than ever.
“Our suppliers are core to the success of our business,” notes Perez-Tenessa. “We’re working with them to bring our beauty customer new and on-trend products in a manner that inspires her — from the easy-to-browse displays showcasing new innovations to elevated trend-focused end-caps that include the latest looks and innovations from top brands such as L’Oréal, Maybelline, Neutrogena, Olay, Dove and Pantene.
“Our suppliers’ consumer insights, passion for the business and outstanding innovations have all been core components of our beauty program, and we have been proud to drive their brands in our enhanced beauty stores.”
Together, CVS and its business partners have worked to satisfy an increasingly sophisticated cadre of beauty shoppers, none more exacting than members of the Millennial generation.
“The Millennial beauty customer is one of the segments that we track most closely in beauty,” says Perez-Tenessa. “It is a very demanding, highly educated, ‘always on’ customer who understands and expects the highest quality. To cater to this customer, we are significantly expanding our selection of on-trend brands in our stores, like NYX in cosmetics.”
Another feature of the Elevate Beauty initiative, one that fits closely with CVS’ mission of helping people achieve better health, is the creation of “health beauty” sets. The displays make it easy for shoppers to locate products with advanced clinical benefits in such categories as skin care and hair care.
Important as those elements are, Perez-Tenessa and his colleagues would have fallen short of their goal had they failed to consider the value of personal interaction between beauty shoppers and store associates.
“Great service is the ultimate expression of a memorable, elevated, beauty experience,” he asserts. “Today, we have dedicated beauty consultants in a large number of our beauty stores, and we are currently rolling out a set of program enhancements to deliver even greater service to our customers.
“The new program puts renewed emphasis on customer service, taking many tasks off the plate of our beauty consultants so that they can focus their full attention on the customer. These beauty and product experts undergo specialized training on skin care, hair care, cosmetics and fragrance to help customers find the right products and regimens to meet their individual beauty needs, whether it be antiaging treatments or foundation matching.
“It is also worth noting that our beauty consultants are not incented in any way by any individual brand. We think it is important that they remain unbiased, so that customers can shop our store knowing the advice from our consultants will only be aimed at providing them with the solution that best fits their needs.”
In addition to the extensive training they receive, CVS beauty consultants benefit from access to advanced technology.
“We are leveraging digital tools to enhance our beauty consultants’ ability to help customers,” says Perez-Tenessa. “Our learning portal features frequently updated e-learning modules that they can use to stay up-to-speed on the latest trends and innovations in beauty. We are also rolling out tablet technology and apps for beauty consultants to use in their interactions with customers.”
Technology has extended CVS/pharmacy’s reach beyond the four walls of the drug store. Through Facebook and Twitter, the company is able to engage with consumers directly.
“We’re using our Beauty Club social media channels to inspire shoppers with what’s new and trending in beauty,” explains Perez-Tenessa. “We drive awareness of in-store offerings and weekly deals from suppliers as well as monthly beauty themes that are designed to encourage exploration and discovery from shoppers in-store.”
The Beauty Club is an offshoot of CVS/pharmacy’s ExtraCare loyalty program. The club, which is free to join, gives members $5 ExtraBucks rewards for every $50 spent on beauty care merchandise as well as exclusive emails with coupons, tips and product information, in addition to other benefits.
“We pride ourselves on having the best loyalty programs in the market, and we leverage them extensively to continuously improve our proposition for our customers,” says Perez-Tenessa. “We leveraged our ExtraCare and Beauty Club customer base to test dozens of concepts extensively, first digitally then in-store, to make sure the concepts that we would eventually roll out were the ones that customers would respond to most favorably.
“In the end, I believe it is our creativity, innovation and passion for beauty, combined with our ability to conduct the most in-depth customer loyalty analytics, that gives us the edge in creating customer propositions that are unmet in the market.”
Having listened to shoppers and subjected their ideas for taking the beauty business to the next level to rigorous examination, CVS executives got behind the Elevate Beauty project in a big way.
“In planning this transformation, one of the questions we asked ourselves was whether we wanted to roll this out in a few dozen stores or at scale,” notes Perez-Tenessa. “Because our customer feedback had been so overwhelmingly consistent across the country, we decided to roll out at an unprecedented broad scale, in over 2,000 stores at once, so that we could bring a better beauty experience to the majority of women shopping CVS/pharmacy, not just a few.”
Reaction to Elevate Beauty has proven the wisdom of that decision. Thus far the results at the stores that feature elements of the new approach have been robust.
“From a growth standpoint, we are seeing stores with our full elevation sets significantly outpace the rest of the network,” says Perez-Tenessa. “And our healthy and natural beauty sets are consistently delivering over double the growth of the rest of the categories they are embedded in.
“But it is the personal feedback from customers that we find most rewarding. Every time we hear a customer say ‘I am so delighted, I don’t see a reason to go to prestige or specialty stores anymore’ is a moment of pride for the team. Solving her needs, changing her perception of the channel and delighting her are what mean the most to us.”