What’s going on at CVS? Are these dramatic moves that were announced recently by the Woonsocket, R.I.-based drug chain the preface to a new beginning or an admission that all is not running as smoothly as the chain drug industry and one of its premier retailers had hoped?
That’s the question most on industry minds as the year 2021 winds down. And any industry participant or observer who claims to have the answer is talking through his or her hat.
So this column will not even attempt to alleviate or mitigate the confusion because, simply put, we just don’t know. But what we do know is this: CVS is not some fly-by-night retail organization. Rather, it is a company built by talented, creative people that has been designed to adjust to changing times and an ever-changing retail marketplace. The result is that CVS today is perhaps America’s premier health care retailer — indeed, perhaps its only premium health care retailer.
So, as Sherlock Holmes was fond of saying, let’s not theorize in advance of the data. With that admonition, here, once again, is that data:
• CVS plans to shutter some 900 of its drug stores over the next three years. As a standalone move, that would be unprecedented. Announced as part of a restructuring, it is mind-boggling. And it raises the inevitable question: Why? Are the stores guilty of operating in the wrong locations? Are they the wrong size? The wrong configuration? Are they sending the wrong message to customers? No one answer suffices to answer the question. Multiple answers are too obvious to survive scrutiny.
• Over this same three-year period, CVS will design and roll out three distinctly defined store formats “designed to increase interaction with customers.” The obvious question becomes this one: What have the current formats been designed to do? The corollary question also begs to be asked: How will these new formats depart from existing footprints — and from each other?
• The executives in charge of these dramatic changes will change as well. Neela Montgomery, executive vice president of retail and pharmacy, who joined the company just a year ago (she previously worked at Crate & Barrel), will shortly leave the company (Where have you gone, Larry Merlo? And you, Tom Ryan?). To fill that void, Prem Shah was named to the new post as chief pharmacy officer. Moreover, on January 1 she will become copresident, with Michelle Peluso, of CVS Health’s retail business.
Confused yet? So are we.
The initial takeaway comes in the form of yet another question: Who are these people? The chain drug industry has been built, brick by brick and store by store, by a group of mass retailing executives who stand alone in retailing history for their brilliance, perspicacity, creativity and ability to answer the question, first asked by Procter & Gamble, about what comes after what comes next.
This new group? Though it’s still way too early to tell, one must already be inquiring as to just who they are and, more critically, what qualifies them to run a major retail company, one of the largest and most powerful in America.
CVS’ statement, issued along with the changes, hasn’t clarified the situation. Here’s what it said: The goal is to balance the types of stores needed in different locations, including ones that offer primary care services.
In other words, let’s customize the stores to the communities they serve. There’s a brand-new concept.
However, in the absence of any further information, for the present this column and this newspaper will defer to the one fact of which we are certain: For a long time now CVS has been one of this nation’s most powerful and successful mass retailers. We see no reason to expect that to change, now or at any time in the immediate future.