NEW YORK — Confronted with unprecedented change in buyer conduct and expectations and the rising problem of e-commerce, retailers throughout channels are testing new codecs and fine-tuning present retailer fashions.
The innovation is being pushed by a lot of various factors, together with the hope of luring rising buyer segments, the will to penetrate new geographic markets, and the necessity to develop buyer visitors and same-store gross sales. What all the initiatives share is the objective of offering a compelling buyer expertise.
Each of the main drug retailer chains, CVS Pharmacy and Walgreens, have developed or piloted new prototypes inside the final two years. CVS debuted its newest design final April, an strategy that mixes an expanded assortment and higher emphasis on more healthy meals and health-related merchandise with enlarged and enhanced magnificence departments.
The CVS design employs a streamlined format with “discovery zones” that provide holistic options for rising areas resembling sleep/temper, immunity and related well being. Informational signage helps clients discover options and new choices extra simply.
The health-focused format initially included 100 ft of latest merchandise in well being and wonder aids and more healthy meals, together with an expanded array of nutritional vitamins, dietary supplements and vitamin merchandise.
“We did a lot of research to understand how to best serve our customers as we began to reimagine our store experience and we found that people are thinking about their health differently and taking a more proactive approach to staying well,” defined Judy Sansone, senior vice chairman of entrance retailer enterprise and chief service provider. “With that in mind, we crafted a new shopping journey, all in the name of better health.”
CVS acknowledges that the catalyst for reimagining its retailer expertise was the 2014 determination to cease promoting tobacco merchandise. Pulling these merchandise created a chance to increase choices in such areas as more healthy meals and wonder and to attract clients’ consideration to them with an up to date design and format.
Like its chief rival, CVS has additionally upgraded its magnificence care departments with an eye fixed towards a differentiated expertise by means of new choices, together with fashionable new manufacturers and an unique Korean Magnificence part, new fixtures and the creation of discovery zones.
Whereas a lot of the modifications within the new design are within the front-end departments, the evolution of CVS’ retailer format is finally geared to the creation of group well being hubs that may present high-quality, lower-cost well being care in native settings. Sooner or later, CVS Pharmacy places will embrace area for medical providers, imaginative and prescient and listening to facilities and medical gear — along with the pharmacy and front-end choices now out there. CVS’ flagship retailer in New York Metropolis’s Occasions Sq. might present a glimpse of the longer term for the complete retailer community.
By means of the pending acquisition of Aetna Inc., CVS executives say they’ll have the ability to decrease general well being care prices by channeling extra sufferers to the next-stage CVS Pharmacy retailers and thereby scale back the variety of emergency room visits and hospital admissions. Supplemented by means of well being knowledge and superior analytics, the CVS of the longer term guarantees to decrease well being care prices by decreasing the variety of emergency room visits and hospital readmissions and by enhancing affected person adherence to treatment regimens.
Ever because the 2016 acquisition of Alliance Boots GmbH and the creation of Walgreens Boots Alliance (WBA), the brand new management of Walgreens has targeted on overhauling the chain, and the Walgreens drug retailer particularly. An early focus of change was the sweetness division, which — like that of CVS — has grow to be some extent of differentiation, partially via unique manufacturers introduced in from Boots the Chemist, the main drug chain within the United Kingdom.
However the firm has additionally developed a brand new idea, which it calls Magnificence Differentiation, that options not solely new manufacturers but in addition a better degree of service with unbiased magnificence consultants and new graphics, fixtures and lighting. Up to now, the shops incorporating Magnificence Differentiation departments are outperforming the remainder of the chain, in accordance with administration.
Since this spring, Walgreens has been piloting a brand new format, new providers and new approaches to assortment, pricing and promotions at 17 shops within the Gainesville, Fla., market. Just like the CVS effort, the objective of the Gainesville pilot is to create a brand new expertise for patrons and sufferers.
One facet of the Gainesville program consists of quite a lot of partnerships, together with collaboration with Dash to create Dash Categorical shops inside a variety of the Walgreens pilot places. As well as, Walgreens has expanded an present pilot with LabCorp to a number of of its Florida shops, together with 4 in Gainesville. Situated close to the pharmacy, the service facilities, cobranded LabCorp at Walgreens, allow clients to offer specimens for lab testing in a safe and cozy setting. In line with WBA co-chief working officer Alex Gourlay, the test facilities are performing properly.
“At these stores in Gainesville we are introducing a compelling retail experience that combines lower everyday prices, the products customers ask for most often and modern convenience,” Gourlay stated in April. “We plan to continue to expand the Gainesville pilot in the coming months with new service innovations while piloting additional offers and service combinations at locations in Chicago and in other markets.”
One other pilot that would considerably modify the Walgreens retailer configuration is a trial of full main care in-store clinics in partnership with Humana, Inc. These sections complement the walk-in clinics already in operation in Walgreens shops, and particularly goal Medicare sufferers.
“If we and Humana decide to expand this trial and roll out these clinics to a wider estate, it would bring us the additional benefit of broadening the access of primary care through our stores to a wider population of customers,” Gourlay advised analysts in June. “Humana’s customer base is heavily skewed towards Medicare patients, a group we serve extensively. These patients are less likely to access the other types of clinics that we have in our network, which are primarily cash pay.”
If rolled out all through the Walgreens community, the evolution of the Walgreens drug retailer would start to resemble the well being hub idea of CVS Pharmacy.
The primary nationwide drug chain to plunge into new format improvement, in fact, was Ceremony Assist Corp., which piloted and commenced rolling out its Wellness retailer format a number of years in the past. Because it has retrofitted the brand new design and format by means of remodels, Ceremony Help has discovered that its Wellness shops outperform the chain as an entire.
A concentrate on well being and expanded well being providers is thus a serious function of the format improvement packages at all the three largest drug retailer chains. However it has additionally been adopted by a variety of grocery chains which are looking for to draw health-conscious buyers.
Most lately, Hy-Vee Inc. opened its first HealthMarket retailer in West Des Moines, Iowa. The chain describes it as an idea retailer designed to be a one-stop store for shoppers who’re in search of a more healthy, extra pure way of life.
At simply 15,700 sq. ft, the HealthMarket is way smaller than Hy-Vee’s primary prototype grocery store, nevertheless it accommodates a powerful suite of health-related providers, together with a pharmacy, a walk-in clinic, in-store nutritionists and a listening to assist division operated by Lucid Listening to. The shop’s product assortment features a sports activities vitamin division and a variety of probiotic and homeopathic gadgets along with natural fruit and veggies, recent ready meals and meal options.
As well as, clients can stroll immediately from the shop right into a health studio operated by Orangeconcept Health, a supplier of group private coaching and health with whom Hy-Vee is partnering. Furthermore, to complement the 11,000-SKU assortment of the shop, clients can decide up groceries ordered from Hy-Vee’s e-commerce website, Aisles On-line, at a pickup vacation spot subsequent door.
Hy-Vee plans to test two extra HealthMarkets and should ultimately open a number of extra relying on buyer response. “A lot of customers today can live out of this store,” noticed Randy Edeker, Hy-Vee’s chairman and chief government officer.
Whereas Hy-Vee went to the drafting board to develop its first HealthMarket, Publix Tremendous Markets Inc. lately dusted off an idea it created a number of years in the past with the health-conscious shopper in thoughts. The corporate debuted its first GreenWise Market, a specialty pure and natural meals retailer, in Palm Seashore Gardens, Fla., in 2007, adopted by openings in Boca Raton and Tampa, Fla. Additional rollouts stalled for some time. However now, a minimum of 4 further shops are deliberate, with the primary slated to open in Tallahassee in October. Further openings are set for Publix’s hometown of Lakeland, Fla.; Boca Raton, Fla.; and Mount Nice, S.C., and Atlanta-area media retailers are predicting that a GreenWise Market will open in Cobb County as properly.
“Over the past several years, we have gained valuable insights from our existing GreenWise locations,” stated Kevin Murphy, Publix senior vice chairman of retail operations. “By combining these learnings with customer feedback and market trends, we are better positioned to deliver on our vision of being the best at serving the evolving lifestyles of today’s consumer.”
On a special, extra indulgent observe, Albertsons Cos. is taking an unabashedly foodie-focused strategy with its new Market Road Idaho format, which guarantees “exclusive culinary delights and unique dishes” that encourage clients to “hone their inner chef” by way of in-store culinary occasions and courses in addition to the inspiration of an in-store restaurant-style meals courtroom and a catering service.
“Market Street Idaho was created by a team of passionate, innovative food lovers with the goal of igniting Idaho’s passion for great food and elevated experiences,” defined Susan Morris, government vice chairman and chief operations officer for Albertsons. “Boise’s deep roots in great local food stem from our farming and ranching industry to our refugee and Basque communities. We think the time is right to bring new culinary experiences many hunger for but haven’t gotten yet locally through our Market Street Idaho stores.”
To a point, the event of other codecs by grocery store operators is a defensive response to a acknowledged long-term development: the decline of the normal grocery store. In accordance with “2017: The Future of Food Retailing,” a research by the consulting agency Willard Bishop, the variety of conventional supermarkets will decline by almost 25% between 2016 and 2021, whereas the gross sales share of the format will lower three.5%. The shop rely for recent format grocery, which the report defines as emphasizing perishables and providing center-store assortments that includes ethnic, pure and natural and different distinctive classes, is projected to soar 48%. Restricted-assortment grocers resembling Aldi and Lidl are predicted to broaden their retailer footprint by 21%.
The revival of many city facilities in recent times has additionally led some big-box retailers to develop codecs geared particularly to the particular wants of metropolis residents and to the constraints of city actual property.
Goal Corp., for instance, is devoting most of its funding in about 30 new shops this yr to smaller fashions in city and densely populated suburban neighborhoods and school campuses.
“We continue to expand the physical reach of our brand, rolling out new small formats in neighborhoods we didn’t serve in the past,” chairman and CEO Brian Cornell advised analysts in Might. ‘These shops function a beacon for our model, reaching visitors who’ve a excessive affinity for Goal. And importantly, they proceed to ship excellent gross sales productiveness and compelling monetary efficiency.”
Meijer Inc., a pioneer of the supercenter idea, lately debuted its personal smaller format, measuring about 37,000 sq. ft, in its hometown of Grand Rapids, Mich. 5 extra are slated to open by 2021.