Case Study: CVS

CVS Corporation and Caremark Rx Inc. merged in 2007 to form CVS Caremark, the largest pharmacy healthcare provider in the United State. The company has more than $99 billion in annual revenue and attracts more the four millions customers visit a CVS pharmacy store every day.

In 2010, they began converting a growing number of outlets to its urban store concept. As their research had shown that CVS customers in large cities were using the store more as a general, all-purpose store than just for pharmacy products, they decided to sport the new look, widen the variety of products, including non health care products and revamp floor plan.

By converting stores in urban areas their purposes are to drive the store traffic and grow customer base and its sale. Besides, they introduced new self-checkout machine, which has been implemented at various retailers like grocery stores and Home Depot. But, grocery stores and Home Depot have kept their cashiers. Consumers can choose either to go to a cashier or to use the self-checkout machine.

According to the company, the logic behind self-checkout machine was the facilitation of quick and convenient shopping, benefitting shoppers and store staff. Many people doubted whether electronic checkout supplanted the need for good customer service. While some people believe that the most important key is reducing checkout time since registers do not depend on the number of clerks available to operate the registers, others think it take more unreasonable time of scanning their items. Instead of waiting till their turn as before, now some of them have to line up to wait for the prior customer.

Although the company suppose that the machine instruct people to do the checkout step by step, make them easy to follow, not everybody can do that. Old people can be the typical example. Secondly, some consumer, especially in pharmacies, who appreciate the privacy and anonymity when purchasing, do not know that they must do some extra steps. Pharmacies are different from other products. They required approval before the purchasing process can be validated. Therefore, an employee of the store must assist the process and input a validation code.

Additionally, self checking out can meet some error like false alert (i.e., “unexpected item in bagging area” notification). This mistake happened so often that it makes customers frustrated. Overall, having a look on the advantages and disadvantages of the electronic machine, in my opinion, it cannot replace the demand of having good customer service. After implementing that self-checkout machine, unfortunately for CVS, concerns are raised about the ability of the company to implement the self-checkout component of its urban concepts.

Two major issues arose from customers’ perspective. Firstly, they showed concerns on laying off workers during a recession. As mentioned earlier, the only benefit of self-checkout is reducing staffing requirement. Some local CVS customers said they miss the interaction with cashiers, and sympathized with employees who have lost hours. “It takes away opportunities for them to work’’, one customer said. Responding to the concern, CVS said that there would not be an impact on headcount, but, right after that, they were vague then talking about workers’ hours.

Thus, while employees might not get laid off, they were likely to have fewer work hours per week. Secondly, according to numerous consumer reviews, the machines at CVS were not working properly or conveniently. If then, it raised another concern of having assistant in time to help the shoppers when there are just few assistants available.

For example, a customer said “I HATE this CVS. Everything is locked up and it’s all but impossible to get someone to help you. You have to end up getting in line to get someone to open up what you need and they open up one and go right back to the register which means repeat the process all over again”. A newspaper has pointed another problem when using self-checkout machine that it is too easy to steal.

“Self-checkouts are supposed to save retailers in labor costs, because they do not need a cashier and, theoretically, the customer can do the checking out him or herself. But some retailers are finding that they may be costing more than they save, as incidents of customer theft grow”. Then, people doubted on whether the retailer really save money. To sum up, CVS has an advantage of distribution, which is convenient to the consumers. Besides, they are eager to the new technology, desired to bring it to their business.

Particularly, they has used self-checkout machine instead of assistant staffs. However, that step is also their disadvantage. In my opinion, CVS should have some improvements to respond to the public’s concerns as well as make their trading safer. They could follow the urban concepts of other stores: keeping assistants while providing self-checkout machines. Customers now can choose which way more convenient for them to registers.

Besides, in order not to lay off workers, they could place them in other positions. For examples, they do need staff to assist customers in doing the electronic machine, especially the old or disable people.

Besides, with the special pharmacy consumers, they should have a different group of assistants or pharmacists or have a separate place to keep it private. Moreover, they have to recruit guardians to assure that no one can steal things from their stores, attach hidden cameras to record the customers’ purchase or enhance the alert system when they leave the store.