Will CVS build on its COVID-19 test momentum?

Discussion
Photo: CVS Health
Aug 13, 2020
Matthew Stern

While the novel coronavirus pandemic has been rough on retail as a whole, retailers in specific segments have found opportunities. One of those retailers is CVS, whose COVID-19 testing has brought an influx of new, first-time customers to the pharmacy chain.

CVS reported having administered two million COVID-19 tests by the end of July, with 40 percent being performed on first-time customers, according to Fortune. Many of the tests were scheduled through CVS’s COVID-19 website or app. The chain also launched a B2B COVID-19 testing service for which it has 40 clients with hopes to expand that client base to 1,000.

Success in becoming a go-to testing spot comes against the backdrop of otherwise slow retail sales; while CVS stayed open for the duration of last quarter’s lockdown, the chain still experienced a 4.6 percent decline in sales of non-prescription products.

This month CVS has taken further steps to make itself a COVID-19 testing hub. The pharmacy chain announced a partnership with Salesforce to utilize its Return Ready COVID-19 program on its Work.com safe workplace management platform, according to ZDNet.

CVS’s boost in traffic comes at a time when competition is serious in the retail pharmacy space.

Amazon.com’s 2018 move into prescription drug delivery with the acquisition of PillPack set off a flurry of improvements from leaders in the space hoping to stay ahead of the new competition. Walgreens launched a partnership with FedEx to offer next-day delivery nationwide by December of that year.  CVS, which was already offering next-day and two-day prescription delivery at the time of Amazon’s PillPack acquisition, shrunk the window even further, announcing the availability of same-day delivery from 6,000 locations via the Target-owned Shipt in April of last year.

The circumstances of the pandemic have not been entirely kind to the retail pharmacy space. Walgreens reported a $1.7 billion loss over the most recent quarter as customers opted to shop at traditional grocery stores rather than its drug stores for essential supplies.

DISCUSSION QUESTIONS: How can CVS hang on to first-time customers that came in for a COVID-19 test? Do you expect the chain to come out of the pandemic in a stronger or weaker competitive position?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"What a loyalty program may not have done for CVS in the past, COVID-19 testing may do for the retailer now."
"With concerted effort and a long-game mindset, CVS has the opportunity to cultivate a stronger, more loyal customer base on the other side of this pandemic."
"CVS should emerge from the pandemic in a stronger competitive position because got on all those tested customers’ radar."

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7 Comments on "Will CVS build on its COVID-19 test momentum?"


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Bob Amster
BrainTrust

A loyalty program is typically launched in order for the retailers to capture customer contact information with which to target the customer with offers, prerequisites and unwanted advertising and promotions. In this regard, what a loyalty program may not have done for CVS in the past, COVID-19 testing may do for the retailer now.

Lee Peterson
BrainTrust

This was a move that, given how we’re struggling to navigate the pandemic, could be beneficial for quite some time. I also like Walgreens’ move to have primary care on the premises, given the difficulty of health care access. CVS could slide right into that with their new Health Hubs as well for a double whammy. Moves like this are not only good for business, but for the brand as well.

Ben Ball
BrainTrust

For first-time customers who came to CVS only because of the COVID-19 testing, they won’t. Unless the customers discovered some other reason that CVS is a more attractive option for them (i.e. closer, newer/cleaner, better selection or pricing, etc.) they will return to previous patterns. For pharmacy this is exacerbated by insurance partnerships that dictate providers such as BCBS and Walgreens.

Dick Seesel
BrainTrust

The seven CVS sites here in the Milwaukee area have drive-through testing and (unfortunately) promise results in three to seven days. The seven-day window makes the test results essentially useless, compared to the local sites operated by the National Guard with faster turnaround.

I can’t speak to CVS operations in other cities (where I have read about even longer delays) but I can’t see this sort of process drawing new customers over the long run. The only surprise to me — at least here — is that Walgreens is operating only one test site although it has many more locations and a much higher pharmacy market share.

Jasmine Glasheen
BrainTrust

It’s interesting. On a trip to Walgreens last week, I marveled at the surplus of hand sanitizer and cleaning wipe options. Convenience stores like CVS are learning the importance of stocking of-the-moment products. Right now, that’s going to be less generic apparel beauty supplies and more of the essentials that take precedence during Covid.

Steve Montgomery
BrainTrust

A loyalty program has two roles. The first is to attract new customers and the second is to retain them. CVS’s COVID-19 testing did something that its loyalty program wasn’t doing: it got a large percent of new potential customers to come to their stores. It remains to be seen if the current program can get them to sign and retain them. CVS should emerge from the pandemic in a stronger competitive position because got on all those tested customers’ radar.

Rachelle King
BrainTrust

CVS has a solid history of building relationships with customers. Their knowledge and experience gleaned from years of growing their Extra Care Loyalty Program gives them the right knowledge base on how to forge meaningful relationships with these new customers. With concerted effort and a long-game mindset, CVS has the opportunity to cultivate a stronger, more loyal customer base on the other side of this pandemic.

wpDiscuz
Braintrust
"What a loyalty program may not have done for CVS in the past, COVID-19 testing may do for the retailer now."
"With concerted effort and a long-game mindset, CVS has the opportunity to cultivate a stronger, more loyal customer base on the other side of this pandemic."
"CVS should emerge from the pandemic in a stronger competitive position because got on all those tested customers’ radar."

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