Go big or go home!
Cigarettes are notably absent on the shelves of 7,600 CVS/pharmacy stores today — a month earlier than expected. In their stead comes a new name (CVS Health), a new tagline (“Health is Everything”) and a new raison d’être: changing the future health of Americans for the better. (And of course a new social media campaign, #OneGoodReason.)
And yes, smoking is still a problem: 18 percent of American adults do it, and 480,000 deaths a year may be directly attributed to the nasty habit.
For Larry Merlo, president and CEO, the sale of tobacco products became inconsistent with the purpose of the company, which now boasts 900 walk-in clinics and a large pharmacy benefit management company, known as CVS/Caremark.
“Changing the name catches up with what we have been doing,” Merlo told Forbes.
It also changes the bottom line.
When the move was first announced, Merlo said that it would cost the company about $2 billion in annual sales, or about 3 percent of company revenues. He was eventually able to see beyond that, describing the decision as “one of those intangibles” that helps the company win the new business that will make up for lost tobacco sales.
Indeed, the company has already tallied “$5.4 billion in new business for 2015” (though that can’t be directly tied to the decision to stop selling tobacco) along with countless goodwill (which can be tied to the new smoke-free plan). By removing the cigarettes from that awkward space behind the register, CVS Health also removes the critique that their pharmacies profit by treating the health consequences caused from their products sold up front.
Of course, one could point out that the chain continues to sell many other products that do not belong anywhere near the word “health”, but progress is progress.
“I am proud that our firm is involved with client CVS Health,” writes Richard Edelman in an update to his blog post entitled “A Courageous Decision“.
“To Mr. Merlo, I say bravo to a CEO willing to recognize a basic inconsistency and having the confidence to fix it. You will be rewarded by your customers and communities alike.”
Great companies take on the important challenges facing society… And now CVS Caremark, pushing beyond its traditional retail pharmacy business, is becoming a champion of wellness instead of just a retailer selling what people may want to buy upfront and dispensing health advice and treatment in the back.
This is exactly the kind of leadership I was advocating in my essay two weeks ago from the World Economic Forum on the need for CEOs to become chief engagement officers. If government cannot or will not create the environment for change, then business executives must ascend the bully pulpit, to educate and lead by example. Smoking in the U.S. remains one of our virulent killers, with 18 percent of adults still smoking (down from 42 percent in 1965) and 480,000 deaths a year attributable to the habit….
Mr. Merlo, by his brave action, has actually shaken the hands of millions who will live longer and better lives. I hope other retailers will join in this effort. Thank you for your inspirational decision.