5 Signs CVS Is Getting Healthier

Leading drugstore retailer CVS, on Tuesday, announced it is expanding its healthy foods initiative to more than 2,900 stores nationwide.

Over the course of the next year, the retailer will convert 100 stores a week to include a curated selection of national and better-for-you brands. The objective: Make healthy eating on-the-go more convenient, accessible and affordable.

[View CVS press release here.]

CVS Expands Healthy Foods Beyond 500-Store Pilot

CVS continues to position itself as a health & wellness destination. In 2014, CVS made the bold move to exit the cigarette & tobacco business. Naysayers questioned the move. Many thought it could backfire and result in several million dollars in lost revenue. Instead, CVS made a statement, a bold statement consistent with the retailer’s mission: Helping people on their path to better health. By dropping the cigarette category, the company fortified its healthy and good-for-you market positioning, and continued on a growth course.

Last year, CVS started testing healthier food options in 500 stores. The test was deemed an apparent success. Since now, CVS is rolling out a new healthy food and beverage assortment to 2,900 stores – or roughly 30% of its 9,600-unit total store base.

5 Signs of CVS Healthy Foods Expansion

• More new and innovative good-for-you brands. Healthy brands – including Amy’s Kitchen, Annie’s Homegrown, Chobani, Vita CoCo, Bai, Krave Jerky and Rhythm Superfoods – are hitting CVS store shelves. Watch for CVS to strike more deals to offer exciting and innovative brands that help personify “healthy” in its stores.

• Expansion of private label Gold Emblem abound. CVS continues to expand its Gold Emblem abound line. The private label extension “abound” features products free from artificial preservatives, flavors and colors.

• Fit Choices shelf tagging program to ease shopper journey. CVS’ new Fit Choices shelf tags are being deployed in stores to make it easier for shoppers to find healthy items and identify foods that fit special diet and/or nutritional preferences. Available tags include: Gluten Free, Sugar Free, Organic, Non-GMO Project Verified, Heart Healthy and Good Source of Protein.

• “Healthier” front-end checkout/impulse area. Starting this summer, CVS will convert its front-end checkout area. The space, historically the domain of candy and gum, will now feature better-for-you snacks like KIND bars and Larabars. About 25% of the space will be affected.

• Introduction of “healthy eating trend zones.” This initiative is all about going after today’s hot dietary trends, including paleo, raw and vegan. According to the company’s press release, a paleo display is first up this summer. EPIC 100% grass-fed bison bars and Gold Emblem abound organic black chia seeds will be featured. Future displays will highlight raw foods like Go Raw bars, Emmy’s Organics and Two Moms in the Raw; a vegan showcase of Larabar and Kashi Teff Thin Crackers; and more.

Key Takeaways

• The expansion of a healthy food lineup is a good move for CVS, fortifying its market position as a health & wellness destination. Several trends play right into CVS’ hands: convenience, grab & go snacking, healthy/better-for-you and special diets (e.g., paleo, vegan, gluten free).

• The move, however, pits CVS against some “new” healthy foods retail competition: healthy/natural grocers (e.g., Whole Foods, Sprouts); the new breed of neighborhood “fresh” stores (e.g., Fresh Thyme, Lucky’s Market); as well as conventional retailers doing more and more in the healthy/organic space (e.g., Kroger, Target). CVS must be on its game to differentiate in terms of offer, pricing, promotions, etc. The convenience factor – i.e., lots of stores on high-traffic street corners; quick in-and-out; and the retailer’s ExtraCare loyalty advantage – definitely benefits CVS.

• CVS’ healthy foods initiative provides an opportunity for niche and small-batch suppliers of healthy and good-for-you products to gain more retail distribution. On the flip side, some traditional consumer goods manufacturers – for example, candy & gum vendors (think Hershey, Nestle, Mars/Wrigley, etc.) – will feel the pain. Traditional brands are likely to experience a loss of shelf space and market share at CVS.