CVS Plans to Boost Private Label Penetration to 20 Percent

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October 12, 2010

CVS Caremark expects to increase its private label penetration from the current 17 percent to 20 percent over the next two to three years as the company focuses on driving front-end store sales.

"Private-label brands continue to grow and evolve. In this economy, consumers have shown that they are much more willing to try private-label products," Mike Bloom, executive vice president of merchandising and supply chain, said at a recent analyst meeting in New York.

By the end of the year, CVS will have 5,100 private label SKUs in its 7,000 stores, up 900 items over the prior year. In February of next year, CVS plans to introduce a new private label line called Just The Basics, a low-price economy tier, with 100 items. "Now, while many retailers are stuck in the brand-follower mode of the 1980s, we have evolved to a leadership role," Bloom told analysts.

The company is revamping its private label strategy and execution with heavy consumer input. “The first thing we did is we conducted customer focus groups where we identified the need for an opening price point value brand,” Bloom told analysts. “We then defined that the brand would consist of everyday essential products that would help get her through her day.”

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