In my mind, what’s most impressive about CVS’s decision to no longer carry tobacco products in any of their 7,600 stores as of October 1 (beyond the obvious benefit of helping to save lives) is the bold demonstration of a brand actually living its purpose.
Short-Term Financial Hit, Long-Term Brand Building
Removing these products from store shelves will cost CVS about $2 billion a year or about 3% of overall sales. It’s also possible that competitors like Walgreens and Rite-Aid could gain market share by attracting CVS’s tobacco-purchasing customers.
Regardless, the company is making the right decision given its long-term strategic focus. According to President and CEO Larry Merlo: “Ending the sale of cigarettes and tobacco products is simply the right thing to do, as it’s inconsistent with our purpose – helping people on their path to better health. As the delivery of health care evolves with an emphasis on better health outcomes, reducing chronic disease and controlling costs, CVS Caremark is playing an expanded role through our 26,000 pharmacists and nurse practitioners. By removing tobacco from our shelves, we will better serve our patients, clients and health care providers while positioning CVS Caremark for future growth as a health care company.”
Why Purpose Wins
The most successful brands and businesses are aligned around a higher purpose that makes clear the organization’s inspirational reason for being – think Zappos, Whole Foods, Chipotle and Nordstrom. CVS’s purpose, once again, is to help people on their path to better health.
Consider these three study findings that reinforce the power of purpose:
1. 92% of millennials believe business success should be measured by something other than profits (Deloitte)
2. “Ideals-driven” businesses are more profitable than those that just think about the bottom line (Jim Stengel & Millward Brown Optimor)
3. Purpose is a definitive purchase trigger as consumers will praise and punish companies based on their active support of a good cause (Edelman GOODPURPOSE Study)
Actions Speak Louder Than Words
Articulating a purpose is one thing. Consistently delivering on it is another. Which is what’s so impressive about CVS’s decision. But it’s the right thing to do for an organization helping people on their path to better health. A path that more Americans are engaged around than ever before, as we’re asking that all health-related brands, be they products or services (or retailers), help us on the road to promote overall well-being.
It will be interesting to see how many others follow CVS’s lead. And how soon. Will Walgreens, which positions itself as being At The Corner of Happy and Healthy, be next. Though it has taken its own proactive step to reduce smoking addiction through its free, Internet-based smoking cessation program in partnership with GlaxoSmithkline Consumer Healthcare called Sponsorship to Quit. Or will it be Walmart, who promises us that we can Save money. Live better.
The Opportunity For Healthcare Providers
CVS is transforming itself from a simple drugstore to an integrated health-care provider – positioning itself, and its customers, for healthy growth. But they’re just one of the many brands and retailers taking advantage of the enormous opportunity to help Americans close the gap between their healthy intentions and behaviors.
Who better than healthcare systems and hospitals to assist consumers on their journey to better health? To helping their communities to not only feel better, but to live better. Beyond push marketing approaches to tapping into the power of their healthcare system or hospital brands to meaningfully engage, motivate and actively support their healthy living. Creating uniquely branded experiences, resources and tools guided by purpose.
What do you think about CVS’s decision?