CVS Private Labels May Outshine Big-Name Brands

Assortment of abound snack products.

As the retail landscape continues to respond to changing demographics and shopper behavior, many companies are redefining their sales strategies with product differentiation. CVS, in particular, is doing this well, reporting higher profitability among its store brands than with some of its brand name products. In addition to providing 20-30% customer savings, CVS store brands are being positioned as national brand equivalents with a focus on what today’s shoppers want to purchase.

Cia Tucci, Vice President of Store Brands and Quality Assurance for the 9,600-store chain, explains, “What she [the shopper] is telling us is that [national] brands matter less.” Foodie culture and consumer desire for healthy living products is likely fueling the drive away from legacy consumer products and toward independent brands, like CVS’s sweet sriracha roasted chickpeas, Makeup Academy pro color correcting crayon, and Manuka honey adhesive pads. Tucci adds that it is not only a price-value equation in play but also an ingredient or quality of product element that adds to consumers’ purchasing decisions.

For this reason, CVS has invested research and development into primarily health, beauty, and food store brands — an investment that accounts for 20% of its product assortment. Rather than outsourcing like competitors, CVS has kept these functions in-house to assure quality and set industry standards for product testing, factory auditing, regulatory compliance, and product safety. With other stores like Sam’s Club, Target, and Kroger offering their own premium store brands, a trend may be brewing across the retail industry. Read more here.

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