By  on December 15, 2006

LOS ANGELES — CVS's prowess at digesting competitors' stores is being put to the test in Southern California, where the company is wrapping up a revamp of the Sav-on drugstores jettisoned by Albertson's earlier this year.

The revamp marks a return for CVS, the country's largest drugstore retailer by store count, to the region, which is home to about half of the 701 Sav-on and Osco stores it nabbed in January for $2.9 billion in cash. Prior to the acquisition, only 21 CVS stores remained here after the Woonsocket, R.I.-based chain sold off units to Sav-on in the early Nineties.

The integration of Sav-on exposes West Coast drugstore customers to CVS's particular take on beauty departments. The store format being rolled out is the national standard with the latest improvements, including pastel graphics and lower shelving, to help accommodate females who make up a majority of CVS shoppers. Stores have been expanded to fit the typically roomier Sav-on size of 18,000 square feet to 20,000 square feet, compared to CVS's 13,000-square-foot average.

Unlike at Sav-on, where the placement of beauty departments varied widely, beauty is mainly at the front of the store and is one of the first departments a customer sees when stepping through the door, said Ron Day, a former Sav-on executive who is now a CVS area vice president. At Sav-on, he said, "I don't think the beauty experience was emphasized as much. It was more of a traditional drugstore. They had some of the normal makeup lines, but nothing to the depth of some of the proprietary lines or private label we have."

About half of the CVS stores in Southern California feature beauty advisers — there are up to three in a store — who man the beauty departments, conduct minutes-long skin analyses and instruct customers on products that best suit their skin types. Sav-on stores did not have employees devoted to beauty departments.

Barbara Sciurba, a CVS regional category specialist in beauty, is busy hiring 100 beauty advisers for 62 stores in Southern California. She will oversee the advisers as they go through training: four days of classes on lines featured in CVS's Healthy Skincare Centers, up-front displays of skin care-targeted items by Vichy, La Roche-Posay, Eau Thermale Avene and CVS exclusives Lumene and Skin Effects by Dr. Jeffrey Dover. The advisers do not receive commissions based on the sales of specific brands."In a discount store, there's no service. In a department store, I feel it is a little intimidating to have someone behind the counter, and a lot of their commissions are based on that line," said Sciurba. "I want someone that's going to sell me what I need, not what they're asked to push."

The larger store footprint in the converted CVS units provides additional space to stock the full range of products in the proprietary lines, swell other existing offerings or bring in new brands. Walking through a CVS store located in Marina del Rey, Calif., Day noted the beauty department was twice the size of like sections in Boston, where he recently visited. Despite regional discrepancies, buying for all the chain's beauty departments is handled in CVS's Woonsocket headquarters.

"There was a lot of hard work done in Rhode Island to prepare for what sorts of lines you'd put in Southern California that we can expand quickly or that we don't have in other places," said Day.

Mineral makeup brands, natural and organic products, items aimed at Hispanic customers and European lines are among the big CVS shelf-space winners in Southern California. Physicians Formula has a four-foot spread in the Marina del Rey store but rarely exceeded one foot in Sav-on, according to Sciurba. CVS also has extensive presentations of Juice Organics, Avalon Organics and Jason Natural Personal Care Products, brands that had limited or no availability at Sav-on.

"When you acquire a chain, the natural inclination would be to mirror the current base of stores," said Michael Indursky, chief marketing and strategic officer at Burt's Bees, another natural line CVS carries. "What CVS said is, ‘How can I take the differences in the stores and use those differences to my advantage?'"

CVS measures the regional variations statistically. "Each store is merchandized somewhat differently depending on the demographic. If in a market 10 percent of our customers are Hispanic, we treat that differently," said Eileen Howard Dunn, vice president of corporate communications for CVS. "Everybody has a base case from an inventory perspective — it is just some of the nuances that depend on the demographic."CVS was schooled in Hispanic shopping patterns after the 2004 purchase of Eckerd stores concentrated in Florida and Texas. In predominantly Hispanic areas, CVS puts up Spanish signage and injects the merchandise mix with personal care products — such as Maja soap — targeting Hispanics. In Southern California, CVS's aggressive advertising campaign includes commercials running on Spanish-language as well as English-language TV, radio spots, billboards and ads in local newspapers and circulars.

The nod to Hispanics and the expanded beauty product assortment are part of a strategy to hang on to customers loyal to the absorbed chain, while reaching out to those who have favored department stores, grocery markets or discounters for personal care. "The CVS's of the world are looking to attract the Whole Foods customer: someone who is higher-education, higher-income and is willing to pay a premium for quality products," said Morris Shriftman, senior vice president of marketing and product development for Avalon Natural Products, of why CVS is adding natural and organic lines.

CVS has put its merchandising decisions up to intense scrutiny. Before putting its stamp on Sav-on stores, CVS vetted the concept throughout the summer at a 22,000-square-foot former Sav-on in Saugus, Calif., a small, but rapidly growing upper-middle-class community in Los Angeles County. There, CVS conducted focus groups to gauge shoppers' reactions to its changes.

"We wanted to see how many lines we could put in that store and test those lines and see what customer acceptance would be," said Day.

The outcome: Day reported focus group participants largely gave CVS high marks and, most importantly, the Saugus store experienced a sales bump. (Day declined to disclose the exact sales increase.) Across CVS's nearly 6,200 stores, revenues climbed 23.3 percent to $3.6 billion for the four-week period ended Nov. 25.

What's left for CVS to do? The remodel continues, but now the Midwest is a focus, where Osco stores are experiencing their own CVS makeover.

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