Data Shows CVS Closing 900 Stores Will Bode Well for Customers
Sometimes less is more. CVS recently shared its plans to close 900 stores over the next three years as part of its brand strategy to make healthcare more affordable, accessible and convenient for consumers.
Though the move means there will be 10 percent fewer CVS stores, this change makes way for “new store formats” better suited to customer needs — including primary care services and everyday health and wellness needs.
CVS has long been a champion of great customer experiences. Let’s take a closer look at the brand, and how this “downsize” is actually an upgrade for consumers.
The Critical Role of the Pharmacy Brand
The COVID-19 pandemic firmly planted healthcare at the center of world news, politics and daily life. And while doctors and health officials certainly play a role in our understanding of healthcare, it’s neighborhood pharmacies that offer the most frequent touchpoint of care in many people’s lives.
With the heightened focus on healthcare over the last couple years, customers have higher expectations of their pharmacies than ever before. Pharmacies that succeed in meeting these expectations will earn more customers by creating true value.
Based on prescription drug sales, CVS and Walgreens stand as the two largest pharmacy giants in the United States. And through recent research at Gongos, it has been identified that consumers desire that each store helps them achieve these top three human-centered goals: makes my life simpler, gives me options, and offers easy access to the information I need/want.
When it comes to tuning their business model to meet customers’ needs, however, CVS stands above its competition — and this 900-store closure is another move by the pharmacy chain to refocus on customer needs.
CVS’ Track Record of Customer Success
CVS has long prioritized the customer experience. Based on research, CVS loyalists are quick to note that the CVS CarePass and ExtraCare programs motivate them to shop at the pharmacy chain and help them save. The stores’ familiar, consistent layouts and friendly employees also build brand affinity. And certainly not least of all, ubiquitous coupons ensure customers save by shopping at CVS.
These efforts have helped CVS outperform Walgreens on a host of so-called customer-oriented goals, or what we call Customer Performance Indicators (CPIs): makes me feel good, motivates me, and saves me money.
A Future-Focused Brand
Successful as the brand has been at pleasing customers, CVS isn’t resting on its laurels. As a future-focused brand, CVS is adapting to changing customer expectations in the wake of COVID-19. For example, closing 900 of its stores to create a new type of pharmacy model that better serves consumers.
This isn’t the first time CVS has adapted to change; the brand spent years innovating in the digital space. Its Digital Innovation Lab focuses specifically on creating new, digital tools to make the customer experience even more convenient.
CVS’ website/mobile app also falls in the top five brands across more than three dozen websites/mobile apps evaluated when it comes to delivering on CPIs, according to Gongos’ study. It achieves one of the 20 strongest Future Customer Value scores across more than 150 total brands we evaluated — which is the second highest across websites and mobile apps.
At first blush, closing a huge swath of stores can seem like a catastrophe. But the reality, in this case, is that CVS is making a strategic move to hone its focus on delivering a top customer experience — something it has done throughout its history. According to our research, nearly 500 customers of CVS found that the brand has always placed a heavy focus on customers when stacked against other major pharmacy giants. We expect this latest strategic decision to pay off for them in spades.
Steve Crewdson is the senior research lead at Gongos, a consultative agency that places customers at the heart of business strategy.
Related story: CVS to Close 900 Stores Over the Next 3 Years
With over 20 years in the insights and CX industries, Steve works with corporations to identify the root causes of both business challenges and successes. Drawing from a healthy combination of client and supplier-side experiences, he helps bring clarity to complex questions so business leaders can grow customer centricity within their organizations while never losing sight of financial, operational, and contextual priorities.