CVS Pharmacy has spent the last eight years readying its doors for prestige beauty brands, the chain’s executive vice president of merchandising and supply chain, Mike Bloom, told attendees of the Summit.
“We actually believe that we’ve earned the right to have a seat at this prestige beauty table,” said Bloom.
He introduced the audience to the retailer’s upscale beauty concept called Beauty 360, which is located adjacent to about 20 CVS stores and stocks premium price brands, ranging from Cargo cosmetics to Warren-Tricomi hair care.
“The Beauty 360 concept was actually over 10 years in the making,” said Bloom. “We didn’t just make this decision overnight. It was a logical next step for CVS.” Addressing the prestige beauty executives in the room, he said, “Many of you here know we’ve been knocking on your doors for several years. We put a lot of time, a lot of energy and a lot of resources into getting it right. We listened to our customers, we listened to industry experts, many of you in this room, and we continue to listen today.”
He continued, “We know that we need to continue to learn from you to perfect this model and we continue to do so. After a decade of insights, it was time. It was time that we launched Beauty 360 here in the U.S.”
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Bloom clarified that CVS views Beauty 360 as an additional channel of distribution, not a replacement for existing prestige beauty channels. He noted that the company has found that 40 percent of Beauty 360 customers are new to CVS and have not purchased beauty products at the chain before shopping Beauty 360.
CVS, Bloom emphasized, has a lot to offer upscale beauty brands.
Some five million customers a day stream through CVS’ chain of more than 7,000 stores, which translates to 35 million a week, said Bloom. What’s more, 80 percent of the chain’s customers are female and together they generate $4.5 billion in beauty sales at CVS, or 900 million beauty products a year.
“With our clear focus on health and beauty, our ability to reach millions and millions of customers each and every day and our unparalleled real estate position makes Beauty 360 a natural extension to current distribution because it offers a controlled environment that protects your brand as well as offering superior customer service,” said Bloom. “We believe this is at minimum a $2 billion opportunity for this industry. We believe there are somewhere in the neighborhood of 750 to 1,000 stores that are right for Beauty 360 throughout all the key markets in the U.S.”
Bloom, a 30-year retail veteran, said CVS has been working to improve the beauty shopping experience across its doors since 2002, when it began to introduce a “customer-centric” layout. Now in 4,000 doors, the layout includes wider aisles, lower shelving units and better category adjacencies. The following year, CVS began outfitting its stores with beauty advisers. That same year, in select stores, CVS added the Healthy Skin Care concept, a display of premium-price dermatological skin care brands, designed as “an intersection between health and beauty.” The center is now found in more than 700 doors.
CVS also has added beauty advisers to 850 stores. “Because of our targeted approach in selecting these stores — and we’ve got 7,000 stores to choose from — our sales in the beauty category in stores with beauty advisers are double those than in stores that don’t have them,” said Bloom.