The ABCs of CVS Merchandising

CVS/pharmacy has gotten "very specific" with its guidelines for vendor-supplied P-O-P materials, according to chief creative director Wendy Drumm. And that means you'll be seeing fewer of them.In 2005, the company conducted "probably the most in-depth research study we've ever done about our store" to determine the effectiveness of existing P-O-P tactics, said Drumm. Based on customer surveys, the study found that the typical store contained too many messages and far too many signs communicating them. This signage clutter had become "counterproductive to shoppability," she said."The main thing from a brand point of view -- besides our stores looking cluttered -- is that the signs actually hide packages, hide messages, and decrease the impact of value signs," Drumm said. Communicating a clear, consistent value message and simplifying the shopping process is vital to the chain, because about half of shoppers currently make an impulse purchase "and we can improve on that," she suggested.Thus, the company began implementing a new signage program in December 2005 that presents a consistent value message ("WOW! Expect lower prices") on endcaps, power wings and other secondary displays. The amount of shelf signage has been greatly reduced "to make it easier for customers to find our great values." One manifestation of that is a new program called "GO" (for "Great Offer") that provides round, eight-inch shelf signs to products advertised on the front and back pages of the chain's weekly circular. The chain's goal is to keep shelves so clear that shoppers "can look down a 40-foot aisle" and immediately spot the "GO" items, Drumm said. "We're trying to train our customers to look for these signs."Similarly, CVS wants to present its product vendors with clearer guidelines about the in-store opportunities available to them. To that end, the chain developed a three-tiered classification system in which the level of in-store support available for a new product is determined by its ability to meet certain criteria: An "A item" is a breakthrough product offering innovation that can significantly grow sales and profit for an entire category. Brand marketers must support the product with extensive media advertising ($75 million or more) and also be willing to give CVS "an opportunity to be first to market," Drumm explained. "If you are an A item, we give you everything we've got," which includes endcap and floorstand placement, front-page circular features, and signage options in windows, lobbies, near pharmacies, at checkout and in the parking lot. The Gillette Fusion razor received "A list" treatment earlier this year and "CVS is the world's No. 1 retailer for the Fusion razor," said Drumm. "This program works." "B items" are "things that our customers expect to find at CVS first" such as health and beauty products or drugs switching from prescription to over-the-counter distribution, Drumm said. They need to be heavily promoted before being introduced into the CVS planogram, should be able "to deliver an immediate impact on sales and margin" for the category, and must offer a consumer breakthrough that "makes you go, 'Wow. I get it. This is cool," she explained. "Very often, we do require exclusivity." Products assigned B status can receive endcap placement and at-shelf communications. CVS also treats many of its proprietary brands as B items, Drumm said."C items" can be described as products that, while offering shoppers something new, won't deliver a significant overall impact to the category. "If you're manufacturing hair color, and you bring out something to touch up roots that might be new and innovative, we appreciate that. But it's not going to get any particular signage," other than a "new item" designation on the standard shelf price sign. "We have lots and lots of wonderful C items -- which is [one reason] why we've had a lot of sign clutter."The chain is staying "very strict" with these guidelines, said Drumm. "The goods news," she said, is that "brands that are really investing, that are really business drivers," will get strong support at CVS.Among other noteworthy comments:The chain's mission is based on "ease" for shoppers, store operators and vendors. The brand promise is "Expect something extra."Research has found that CVS customers are exposed to 120 million total "impressions" of in-store marketing messages per month.On the importance of in-store marketing: "We have a brand called Lumene, which is a Finnish beauty brand that nobody has ever heard of. So we bring this skincare line into the U.S., into the store, with no advertising. ... And with the right sign and the right display, we now have a very successful business proposition with this brand. And customers have said that the No. 1 reason they tried Lumene was because of the display and the signs."Drumm said she agrees with a vendor who said the key objective for product displays is to "stop, hold, and close. ... The whole idea is to get the shopper engaged, and packaging is very important in that. Branding is key."On vendor input: "A lot of times, our manufacturers and brands do not have influence or involvement in the placement of displays, or even currently confidence in how well they'll be executed. And we believe that can be fixed." The chain wants to do a better job explaining "up front about what messages we want to deliver, so that CVS and the brands have agreement on what we're trying to achieve." It wants to work with brands to determine placement beforehand so displays "can be designed for that placement."On shelf danglers and wobblers: "They don't work. They really don't. And they don't get executed well in our store."On shelf signage: "Before [we had] lots and lots of little signs. Again, too many messages" that confused customers and hindered the price message the chain was trying to convey. Research found that customers often thought CVS was more expensive than Walgreens "and that's not the case."Despite the reduction in shelf signage overall, CVS will continue participating in News America Marketing's SmartSource syndicated program. Asked why, Drumm said "It's $12 million we're getting to do that. We're selling the space."CVS also sells advertising space on pharmacy counters to four companies at a time. On creating displays for CVS: "I wish CVS were far enough ahead with manufacturers to customize.""Involve CVS from the point of concept" and use the chain's own "gestalt" when designing. "You'll get better execution, and therefore better sell-through." A display that adopted the chain's summer color palette "probably got a little better placement in terms of execution for our summer set."Product departments have been assigned distinct navigational colors (Health is bright green, beauty is teal, food and beverage is purple), "so use the appropriate color. We have our very own CVS red, so if you're going to use red, we prefer you use that. We also ask that you use our typefaces."On messaging: "You should put as much thinking and time and strategy into this as you would a TV commercial." There should be one key message. "Is it education, is it urgency? Is it easy for me to understand the value proposition?"On improving execution: "Our store managers are the ones setting up these displays and they have varying levels of expertise. Be very, very clear while you're working with our visual merchandising group that you have the specs right. Ideally, ship it in one package. Please put the instructions in the box. The fewer moving parts, the better. "On vendor objectives: "We know that you have your brand and your logo and so on. We understand there's going to be a little give and take here and there, and that's fine. As long as we start out early enough, we'll know where that give and take works for both of us."On shopper targeting: "We're beginning to 'seniorize' everything we do, from type to color to displays. The priority right now is to make the store senior-friendly." On the drug channel: "We're different than food. We're different than mass. Our aisles are smaller. People do not buy off pallets; they buy from the shelf. So our solutions might be different than other solutions." She also noted that the 700 Osco/Sav-On drugstores CVS is acquiring are as large as 25,000 to 30,000 square feet and "may need different solutions than the rest of the chain."CVS has created an online style guide to educate vendors about its policies. "We're finding that the style guide site is a great way to start consolidating our look and feel and working with brands on that." Vendors interested in getting access should speak with their category buyers or the visual merchandising group.

The ABCs of CVS Merchandising

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