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Big Questions Answered helps us understand important CVS Health initiatives by taking a closer look at new products, powerful innovations and the big changes the company is making to achieve its strategic imperatives and build a world of health around every consumer. The company's senior leaders answer big questions from host Matt McGuire.
As economic uncertainty impacts the retail landscape in the U.S., forward-thinking retailers are finding ways to navigate these waters — and CVS Pharmacy is one of them. With its 9,000 locations across the U.S., CVS Pharmacy is focused on delivering value, selection and exceptional service to its customers.
On today’s episode of Big Questions Answered, we’ll explore how our CVS Front Store is addressing today’s retail challenges, the innovations taking place in the CVS Store Brands portfolio and ideas for your seasonal shopping.
Welcome to Big Questions Answered, a podcast that helps us understand the important initiatives at CVS Health. I’m Matt McGuire from the Enterprise Communications team. I’ll be your host as we dive into the latest developments, breakthroughs and innovations that are helping us achieve our ambition to become America’s most trusted health care company. Thanks for joining me today as we get our big questions answered.
I'm here with Musab Balbale, the Senior Vice President and Chief Merchant at CVS Health. He's responsible for merchandising, the retail digital experience and store formats. Musab has more than 20 years of consumer and retail experience, and he joined CVS Health in 2022.
Musab, thanks for stopping by.
Musab Balbale
Thanks, Matt. It's great to be here.
Matt McGuire
So, Musab, before we get to the fun question about seasonal shopping, I wanted to start with a few on the serious side. So, can you tell me, what are some of the bigger challenges the CVS Front Store is facing today?
Musab Balbale
Matt, retail is always a dynamic industry, and it is really fun to be in this role at this moment in time. I think we're facing three really big moments in time that are really interesting to deal with. The first is, we're in an economically uncertain period. And we see that in the news, we see that in how consumers are behaving and managing through how customers are choosing to spend their dollars and when they choose to spend their dollars is hard for, I think, many retailers and it's one certainly that we're encountering as well.
I think the second trend or challenge that's happening right now is we've been in almost 20 years of a really dynamic channel ecosystem as e-commerce has come into play and as consumers have shifted where they shop and how they shop. And what's really interesting in the e-commerce space is that as of late, we're starting to see increasing pressure on the everyday household items. It used to be you went online and bought televisions and clothes and sort of high consideration purchase items. What we're seeing now is that everything from milk to eggs to deodorant is starting to come on online and consumers are engaging in transactions for those everyday essentials as well. And what we're also, I think, really anticipating is the advent of how AI and AI platforms start to influence the consumer shopping behavior, and we've certainly seen a lot in the presses as that happens.
I think the third really biggest big challenge at the moment is that business models are changing. So it used to be relatively easy to be a retailer. You bought something at a price A, you marked it up and you sold it at price B to a customer, and in between was your margin. And what we're starting to see is business models through retail media and other line items are starting to change how retailers really make money and how value gets passed on to the customer. And, so, amidst all of that, I think is a really dynamic time and a really interesting time to be in the retail business.
Matt McGuire
So, Musab, we're aware of these challenges. I'm curious, how are we addressing them and then reimagining our stores?
Musab Balbale
Yeah, Matt, retail fundamentally is about three things. It's about providing value to the customers, providing great selection and providing great service. And on all three of those dimensions, we're trying to make our consumer value proposition or the reason why customers come into our stores even stronger.
On value, we are a high-low retailer, and we know we have an opportunity to both simplify our value proposition to customers to make it easier for them to deal with our promotional mechanisms and also make more of the everyday price value a lot more apparent to customers. And, so, we're really invested in driving forward that value proposition for customers.
The second is selection, and. we sell things that people want to buy. And, so, making sure that the shelves show up in a way that has the items, has the brands and is arranged in a way that makes it really easy for people to find those items and brands is really important. And over the last couple of years, we've created even more focus on making sure we're bringing in exciting brands that are really relevant for the consumer and really easy for customers to find.
And the final piece is service. And one of our really differentiating opportunities is to make the customer-colleague interaction even more powerful. And, so, Jared Tancrelle and the store operations teams here at CVS are really trying to find ways that we simplify colleague workloads so that the colleague can spend more time with customers.
On the all three of them, but really kind of the first two elements of that on our price value and our selection, if you imagine our retail landscape with nearly 9,000 stores selling anywhere between 30 and 40,000 items in a store, at the center of what are very diverse communities. I don't mean that just from a demographic perspective, but I also mean that in terms of the density of the landscape, the competitive environment around that. There's a lot of iterations to work through. And one of our focuses has been how we really position our store at the center of the community, be sharper on the prices for those items that matter most to that community, bring in the items that matter most for that community, bring them in the sizes that matter most for that community. And so we are using AI and a lot of machine learning tools behind the scenes to make that complexity a lot more manageable for our teams.
Matt McGuire
Yeah, wow. Well, you've got a lot going on. So, how do you and your team determine the products we carry in our CVS stores?
Musab Balbale
Yeah, it's a really great question, and it's one we spent a lot of time on. And what I'd say is we really have four different types of businesses at CVS. We certainly have our health care business, which is such a big part of who we are as a brand and in our health care business. The team is at the forefront of identifying products and brands that are really solving customer needs in a unique way, and it's an assortment strategy where we really want to lead the rest of the market and making sure that the products and brands that we think solve or address customer problems can be first found at CVS.
The second space in which we play is beauty, and we are known for beauty, for sure. But we're not the place where beauty should launch. And what you're seeing our teams do is really go out into the market and find products where we can be a fast follower in the larger beauty landscape. And what that allows us to do is bring in products that customers are already aware of, that they want to replenish and make sure our customers see them on our shelves while still sort of signaling a sense that we're on trend and we're on point.
In seasonal, kind of this third category, and I think this is the most fun, especially this time of year, our teams are working almost a year in advance to identify trends and bring in great Halloween products, great last-minute Christmas gifts. And what I think what you'll find in our stores now is a much higher quality of both product but also a much higher curation of what's really relevant at that moment.
And then then finally is like the everyday items, right? Paper towels and Diet Coke and Doritos. And we're here to offer what you what you generally purchase for your pantry and, so, there was we're in a lot of ways following the market. The only exception to that might be in healthy snacking, where I think, like, our team has taken a strong leadership position in the market. But our teams are really clear at what at the what the role their particular categories play in the retail portfolio and then they really drive to make sure they find the right set of items at the right point in the consumer adoption curve to match that role.
Matt McGuire
Yeah. You know, speaking of that healthy snacking, I know there's been a lot of innovation at the CVS store brands portfolio, everything from over-the-counter health and wellness products to our consumables line. And, I'm curious, how are we approaching this?
Musab Balbale
Matt, I am so excited by the work that Mike Wier and team have done on our store brands portfolio. We started last year with Well Market, our consumables portfolio. And what Well Market aspired to do was, first, begin with great tasting, better-for-you snacking products. And the team developed some really, I think, exciting flavor profiles across the entire assortment, whether that be from like our maple pecans to our hazelnut granola clusters to even something as simple as our buttery popcorn, which recently won the Good Housekeeping Award. The products taste really great, and that great taste is amplified by what is really bright and bold and optimistic packaging that brings the quality of the products to light for the customer.
The team then went on to take a similar approach in the over the counter and supplement categories, and we relaunched our CVS brand. This is a marquee brand for us. It reflects who we want to be as an enterprise. And inside the products, while it's a little bit harder to understand the quality relative to maple pecans, the team has put so much effort in making sure that customers can really trust what they're ingesting in a pill format. And that quality is then reflecting in this the really simple and again optimistic packaging that the brand now represents.
So, the labels are really clean, they're bright, they're easy to understand, especially when you're looking for a product that might fit a particular functional need that you have. And they really brighten up the store similar to the way Well Market did.
And what I'm really excited about is that this winter we're launching Joyward, which is our brand that really brings the holiday season to life. As you know, we are oftentimes a last-minute destination for really great gifts across the store. And we talked about the quality of the gifts that we've been working on. Joyward, both through its name as well as the packaging, brings this optimism and holiday celebration to life.
And, so, what you see is this common theme that we're trying to make the quality investments we're putting in the products really apparent on the shelves. We're trying to bring a sense of joy and optimism through our stores. And we're trying to brighten the stores through some really great package design that that the team is leading.
So I am, I am excited for the continued evolution of our store brands portfolio. It is next to our national brands, an important part of what we offer customers, and it will just continue to get better.
Matt McGuire
Yeah, for sure. Between Well Market, relaunching our CVS brand and now Joyward, this is a pretty impressive run. And so, Musab, to close things out, you’ve gotta tell me, as I’m entering a CVS store this holiday season, what is the gift to get and what is the gift to give?
Musab Balbale
So, great questions. So I let's start with the gift to give, because I think it's the most fun part of part of the holidays. If you've got young daughters in your life, Matt, like our advent calendars tend to be flying off the shelves, and we've got two different versions of those advent calendars. But to provide really incredible value to customers on products in the beauty space that they really love. So, brands like e.l.f. and Bubble, MONDAY hair care all come together in a really, really great package.
For young boys, we've got a really great slime package that I think is really exciting. And Pokémon of course continues to be hot, and we've expanded our Pokémon assortment. And then for the gift to get, you know, what I am really excited about and what I hope my kids buy me is we've got this Pet Treat Launcher, which is, I think, just a fun way to engage, you know, the 70-pound goldendoodle we have in our house. It allows me to essentially sit in the couch and walk the dog at the same time.
Matt McGuire
That sounds like a pretty fun gift to get. And those are some excellent tips overall. Musab, I appreciate you stopping by the podcast today. This has been a fascinating conversation.
Musab Balbale
It's great to talk to you, Matt. Thank you.
Matt McGuire
And a big thanks to you for tuning in to this episode. Until next time, I'm Matt McGuire. I look forward to joining you again to get more big questions answered.