CVS Competitive Advantage (9 Distinct Factors)
With nearly 10,000 stores and more than 200,000 employees in the United States, CVS has become one of the country’s leading pharmacy and retail chains, popular for its very affordable prices.
Given how quickly CVS has grown and become a household name, you might be wondering – what makes CVS thrive? Here’s what I found out about CVS’ competitive advantage!
CVS Competitive Advantage
1. Winning plan
CVS CEO Larry Merlo describes his “Winning Plan,” outlining eight key areas that CVS will focus on to drive business growth.
These include a “goal” and “commitment” to customers to help people achieve optimal health, and incentivizing the “people” who work for CVS through bonuses and incentives.
The focus on the “products” that CVS sells keeps customers coming back as they prioritize basic products from local stores to help consumers.
“Location” and “price” are two further motivators outlined by Merlo, as CVS wants to keep its retail offerings both accessible and affordable.
The last two areas are “Promotion” and “Performance,” which means that CVS is constantly monitoring its statistics and building a culture of results to enhance its brand.
Collectively, intense focus on these eight steps has allowed CVS to build on a solid foundation to continue growing.
2. Iconic brands
A recognizable brand with its iconic red logo, CVS has become one of the largest pharmacies in the United States, selling a wide range of products, including essential medicines.
The company has cultivated its brand so that customers know exactly what to expect in stores, and they’ll find a fair price on anything they want to buy.
This emphasis on the brand has made CVS one of the leading retailers of pharmaceutical products.
3. Good location
CVS is the largest pharmacy chain in the United States, with approximately 10,000 stores across the United States, making CVS one of the most accessible stores for customers looking to buy pharmaceuticals.
In addition to this, the CVS building itself is also sized to accommodate large quantities of cargo, ranging from 8,000 to 12,000 square feet.
This enables customers to find everything they need within the CVS store without having to visit competitors.
4. Wide variety of products
CVS thrived as a retailer thanks to its ability to offer simultaneous services in-store.
In addition to prescription drugs, the retailer is able to provide customers with other services such as over-the-counter drugs, greeting cards, photo services, and beauty and cosmetic products.
During the holiday season, CVS further enhances its product line to include holiday-specific items that are in high demand on those days.
All of this means that customers can get multiple products in one place.
5. Care about customers
CVS markets itself as a health-conscious brand dedicated to ensuring the well-being of its customers.
Recently, CVS decided not to sell tobacco and cigarette products, even though this resulted in a $2 billion annual loss.
A focus on the well-being and health of its customers has improved CVS’ relationships with customers, employees and its partners in the wellness industry.
Ultimately, this decision (along with several others) established its reputation as a company that cares about its customers and their health.
6. Address health issues
In addition to carefully choosing which products to offer customers, CVS is also committed to addressing and solving other issues in healthcare by staying on top of potential healthcare threats.
For example, CVS works to address issues such as kidney care, loneliness and mental illness, and works to reduce poverty and health disparities through research and action.
These moves have further strengthened its loyal customer base, who are proud to buy from a company that creates so much positive value for society.
7. Health Innovation
As part of its innovative healthcare system, CVS also announced a healthcare process called HealthHUB.
HealthHUB includes health kiosks that offer services such as durable medical equipment and products for health concerns such as diabetes.
CVS has piloted the technology in a number of locations, including Houston, Atlanta and Philadelphia, aimed at improving care for patients with chronic conditions.
Following the success of the HealthHUB pilot program, CVS aims to expand and convert an additional 1,500 locations by the end of 2021.
In this way, continuous expansion and innovation allow CVS to continue to support its existing customers while providing care facilities that appeal to new consumers.
8. Cooperative enterprises
CVS owes its continued success to the strategic business thinking that allowed it to merge and take over rival and beneficiary companies.
The retail giant has acquired and partnered with several companies in order to continue to provide excellent service to customers.
For example, CVS acquired Eckerd Stores and Health Services in 2004 and MinuteClinics in 2006 to provide health care services in its stores.
Also, CVS bought health insurer Aetna, which boosted profits from growth in Medicare Advantage plans and allowed it to launch plans like HealthHUB.
9. Beat the competition
CVS has a further competitive advantage as it continues to expand while other rival companies have had to close stores.
Rival retailers Rite Aid and Walgreens Boots Alliance, for example, had to close several stores after missing profits.
Meanwhile, CVS plans to steadily expand by about 100 stores a year, admittedly fewer than in previous years, but still very aggressive.
To learn more about CVS, you can check out our related posts on Is CVS a Franchise, CVS Mission Statement, and Why CVS and Walgreens Are Always Together.
in conclusion
CVS’ business plans and strategies are advised by its “Plan to Win,” which enables CVS to build a solid foundation from which to continue growing the chain.
It follows that CVS’s large number of stores in the United States, wide variety of in-store merchandise and strong brand image allow CVS to attract and retain a large and growing customer base.
Additionally, other factors such as constant innovation, participation in socially beneficial initiatives, and acquisitions of useful companies keep CVS ahead of its competitors.
