CVS Prioritizes Data, Technology
CVS Health outlined priorities largely centered around technology during its latest quarterly earnings call.
The Rhode Island-based company, which earned $84 billion in retail revenue and nearly $195 billion overall in fiscal 2018 (ended Dec. 31, 2018), is focusing on integrating enhanced data and technology to better target shoppers as well as leveraging its nearly $70 million merger with health care provider Aetna to transform stores into health care destinations.
As outlined by CVS Health president and chief executive officer Larry Merlo during the Aug. 7 call, one of CVS Health's top priorities is to enhance its consumer-centric technology infrastructure to support many of the new programs and services it is implementing through its transformation efforts. In Merlo's words, this includes integrating data and enhancing analytics capabilities, developing an intelligent engagement platform and seamlessly connecting digital and physical capabilities to improve the shopper experience.
“[I]t's still very early in our transformational journey, but I think you can see we're working quickly in the development of new products and services that will transform the consumer health experience, and you're seeing tangible signs of those efforts,” Merlo said.
Another priority is to deliver transformational products and services, including initiatives born from the Aetna merger, such as Attain, which is a direct-to-member well-being experience that combines a consumer's health history with her Apple Watch. It’s built around activity-driven incentives and rewards (such as gift cards to major retailers including Best Buy, Amazon and CVS) with personalized health recommendations.
Users can share their Attain program data and health history with Apple, enabling the technology company and Aetna to over time continue to improve the experience through analytics and machine learning. The watch application was introduced in January, but just went live in early May.
“Uniting CVS Health with Aetna provides us direct access to an unparalleled breadth of data,” Merlo said in its June 4 investor’s day call. “We are creating a new data ecosystem to protect this data as well as leverage it across our organization to provide a holistic view of the patient, garner insights into the next best action to improve their health and determine how to best communicate with the patient. Our aim here is simple: to turn data into insights and insights into action.”
Additionally, CVS is making enhancements to its ExtraCare loyalty program system architecture. The retailer is now live with machine learning tools that are driving more targeted personalization that they expect to further improve the reach and relevance of shopper engagement efforts.
For example, CVS often sends personalized emails to individual ExtraCare members when they may be running low on a particular product that they have purchased in the past, like face wash or toothpaste. It also often tacks on previously purchased items to emails along with a digital coupon or offer that’s typically personalized to the member and their shopper behavior.
In terms of overall strategy, it's also worth noting that the drugstore chain typically opens roughly 300 stores each year but this year will open only 100 stores, and in 2020, about 50, CVS pharmacy president Kevin Hourican said during the call. He noted that in the future, CVS’ new openings will focus on markets like the Pacific Northwest where the company is under-stored, and in high-growth areas like New York City and Texas. Meanwhile, rival Walgreens recently announced it would be closing 200 stores. Despite growth slowing somewhat at CVS, it still is going in a positive direction and shouldn’t be considered that ominous a sign given the growing focus on e-commerce.
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