The ethos that guides the industry leaders

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CVS Health and Walgreens are commonly referred to as the leaders in the drug store business. The designation usually is meant to convey the scale of their operations compared to that of their competitors in the trade class (sales at Rite Aid Corp., the third-largest drug chain, are less than a quarter of those of each of the top two players). The appellation “leader” is, however, fitting in a deeper, more meaningful sense, as recent developments at Walgreens and CVS show.

For all the talk of differentiation among chain drug retailers, their stores exhibit a high degree of similarity, often to the point where consumers feel that, aside from the name over the door, there are few ways to distinguish which chain they’re patronizing. The two industry leaders are out to change that.

Walgreens has just opened 17 revamped stores in Greater Gainesville, Fla., that bring together the fruits of parent company Walgreens Boots Alliance’s efforts to reformulate the value and convenience proposition the drug chain presents to customers. Crafted in response to changing consumer behavior and the need to redefine the Walgreens offer for a marketplace transformed by digital technology, the pilot program centers on new approaches to pricing, promotions, product selection and the shopping experience, all of which are designed to strengthen the company’s bonds with the people who shop Walgreens, both in-store and online.

A key element of the initiative is Walgreens Plus, a subscription service under which shoppers, in return for a $20 fee, will receive such benefits as 20% savings on nearly everything in the store (that’s on top of lower everyday prices for some 5,000 products); 60% price reductions on cash prescriptions for generic drugs; and free same-day delivery of medications via

The Gainesville stores have been simplified to make them easier to shop and — in a bid to free employees to spend more of their time assisting customers — maintain. In the process, the idea of drug store convenience has been recast with the addition, in a new collaboration, of Sprint Express wireless phone kiosks; an expanded version of the Fed­Ex services already available across the drug chain; and the debut of four LabCorp diagnostic testing facilities.

The Gainesville project, which includes a shift toward more digital marketing and communication with customers, will evolve over time, with other innovative products and services brought into the fold. If the overall concept resonates with consumers, it could remake the Walgreens brand and the modern definition of drug store convenience.

For its part, CVS is deploying the full range of its assets to enable consumers to better cope with the rising price of prescription medications and high out-of-pocket costs, a commitment that will help CVS Pharmacy counter the widespread notion that all chain drug stores are pretty much the same. At store level, the comprehensive program, which also includes components aimed at prescribers and third-party payers, is powered by the CVS Pharmacy Rx Savings Finder. The technology enables a pharmacist to quickly review a patient’s prescription drug regimen, medication history and insurance coverage with the objective of identifying the lowest-cost alterative under the patient’s benefits plan. The service is now available to members of the pharmacy benefits programs administered by CVS Caremark; plans call for it to be rolled out to other patients as the year ­progresses.

The issue of prescription drug prices is a widespread concern. A recent poll commissioned by CVS Health found that 83% of people in this country are worried about the impact of prescription costs and high-deductible health plans on them personally. By equipping frontline pharmacists to guide patients to the most cost-effective solution to their prescription needs, the company is setting itself apart in the marketplace even as it extends the role and value of the pharmacy profession.

While industry observers certainly have ample reason to be impressed by the sheer size of Walgreens’ and CVS’ retail businesses, they should pause to consider the dedication to continual innovation that stands behind their ­preeminence.



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