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CVS changes health care game at retail

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In a year crammed with major news stories, cataclysmic personnel shifts and stunning new strategies and directions, the No. 1 retailing story of 2014 increasingly appears to be the CVS decision, announced early this year, to stop selling tobacco products in its 7,700 drug stores.

What continues to stamp this decision and its aftermath as so dramatic is a simple fact: It has irrevocably changed the health care game at retail. Whatever happens to CVS Health as a result of its campaign to replace cigarettes with a health care message, those retailers who continue to rely on tobacco to produce sales and profits will find it more difficult to convince their customers that health care rightly belongs under the same roof as ­cigarettes.

To its credit, CVS has just launched a campaign, designed to coincide with the date the drug chain has designated as the moment cigarettes will have disappeared from CVS shelves, to promote the drug chain’s commitment to keeping its customers healthy. The campaign is low-keyed, emphasizing the drug chain’s efforts to encourage its customers to seek a health-oriented retailer when considering their health care shopping options.

Against this campaign, “traditional” health care retailers have little to offer but to reiterate that a retailer’s job is to allow its customers the freedom to choose which products they want to purchase. The intent here is not to take sides on an issue that is rapidly assuming a major place in the health care universe going forward.

However, it’s difficult to take issue with the CVS decision if that decision is viewed in strictly health care terms. Clearly, the drug chain will lose business by eliminating cigarettes from its merchandise assortment. Just as clearly, this revenue will not be entirely offset by the increased sales of health care merchandise that newly energized customers will bring to the drug chain.

As an aside, it must be noted that MinuteClinic, the drug chain’s immediate medical care unit, which is quickly opening facilities within CVS drug stores, will surely gain customers and revenue by the company’s anti-cigarette decision, though nowhere near the revenue the drug chain will lose.

But the revenue debate begs the issue. This is not an economic decision, nor should it be construed in that context. Rather, this is a merchandising decision. The people at CVS are betting that the positive fallout from reemphasizing health care will more than offset the financial loss the retailer is already absorbing as customers shopping for the cigarettes they formerly bought at CVS now look elsewhere. In a health care-oriented society, that’s a good bet.

The real issue here, of course, does not revolve around smoking. It revolves around health care. Never before have Americans become so absorbed in health care. It has become our national obsession, our primary focus, our fear and hope. That health care is a positive option, that it has the capacity to improve and lengthen lives, to enhance life itself, to correct deficiencies and strengthen the possibilities of longevity, is no longer an issue. We are at the beginning of a new national effort to prolong and improve the lives of Americans. And CVS is at the forefront of that effort.

Again, this is not to support the CVS decision. It has, and will continue to have, its detractors, its naysayers, its scoffers. Rather, it is to laud a decision that cannot have been easily reached, that cannot have been reached without roiling the organization, without pitting CVS executives against each other, without leaving some bad feelings behind it. As CVS/pharmacy president Helena Foulkes recently stated at a public forum in Boston, the possibility of deleting cigarettes had been debated at the drug chain “for years.”

But the fact that such a decision was ultimately reached, regardless of the obvious and considerable downside, must be applauded. Moreover, at this date it appears that CVS is more than willing to expend the energy and the money and the care to make that decision work, to convince customers and potential customers that when it comes to health care, CVS is the logical choice.

In today’s business-oriented society, that’s saying a lot.


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