Challenger to Watch: CVS

For taking its mission to a new level

What’s this, an $80Bn market cap company on the challengers-to-watch list? Surely, we’re taking the piss! Hear me out.

CVS first got our attention back in 2014 when it kicked tobacco out of its stores, a decision that cost $2 billion. If your mission is to help people on their path to better health, this decision makes perfect sense. But Wall Street seldom understands this kind of logic and that must have weighed heavily on the Board.

The company received deserved kudos in the media and data suggests the ban may have helped to reduce the number of smokers in the US, moving CVS a little further toward its audacious goal of a smoke-free America.

Last year the company moved candy and soda to the back of the store and healthier choices into higher trafficked areas. It has removed trans fats from its own line of food products, stopped selling sunscreen with an SPF lower than 15 (because these products don’t provide enough protection), will not fill an opioid prescription for longer than a week (to combat the abuse epidemic), and worked to bring an epi-pen to market for a sixth of the price of the alleged price gouging competitor.

This week CVS announced it will use the power of its platform to help change how women see themselves and their own beauty.

Taking a stand for women’s health, the company announced it will stop materially altering the people in its own ads and marketing materials, and will work with the beauty brands in its stores to make sure that if CVS alter its images (commonly known as “photoshop”) the creative must be watermarked so everyone is aware that images have been digitally modified.

CVS might be the best proof yet that being a challenger is not about size, but about mindset.

This series of bold, provocative moves, staying one step ahead of the customer (and competitors) and in service to a larger purpose, is classic challenger behavior. CVS might be the best proof yet that being a challenger is not about size, but about mindset.

But if you still need convincing of CVS' challenger bonafides, how about the presence of the biggest fish of all, $600 billion Amazon. Word has it that Bezos wants a big piece of the prescription drug business, much of which would fit nicely into his Subscribe & Save service, and make a significant dent in CVS foot traffic and the shopping that accompanies it.

The proposed $69 billion merger with health insurer Aetna promises to “lock-in” some of that traffic with visits to CVS’ urgent-care-like Minute Clinics. As the Kardia band moves diagnosis from the doctor’s office to the patient’s wrist, CVS wants to “create a new front door to healthcare in the US” delivering treatment at retail, at a level not even an Amazon drone can deliver.

Whether CVS can succeed in this epic battle will require still more bold moves in its devotion to purpose and earns it a place on this year’s list.

 

Challenging ideas, something out of nothing, lover of progress. Mark Barden is a partner at eatbigfish and based in San Francisco.