Following Target’s announcement of a strategic relationship with CVS Health, Chairman and CEO Brian Cornell sat down to chat with A Bullseye View.
A partnership like this between two retailers is pretty unique. What prompted the decision?
At Target, we’re committed to taking bold, decisive actions that further our strategic priorities, drive the business and deliver for our guests. This exciting partnership represents a significant shift in our business model, and will have notable benefits for both companies as well as for consumers. In the future, Target guests will have access to CVS Health’s leading pharmacy care programs and medical clinic services as we strengthen our focus on delivering wellness products and services across the store. The relationship with CVS Health will also help bring new TargetExpress locations to more communities.
Why isn’t Target investing its own resources in the in-store healthcare experience? Aren’t pharmacies and clinics an important part of delivering wellness for your guests?
Our current pharmacy and clinic businesses successfully drive traffic to our stores and receive favorable guest service scores. And we know guests appreciate the convenient access to healthcare services while making their Target run.
That said, we also know wellness extends beyond healthcare and we believe this deal presents Target with an exciting opportunity.
Tapping an expert partner to operate pharmacies and clinics in our stores preserves its traffic-driving benefits and offers our guests access to proven, best-in-class services. Meanwhile, it gives Target greater bandwidth to focus on our strengths in product design, merchandising and marketing to grow Wellness as a signature category. More and more, our guests want to lead healthy and active lifestyles, and they are thinking about wellness as part of everything they do. Moving forward, Target will focus on further strengthening our wellness offerings, giving guests more ways to eat well, be active and find natural and clean-label options – areas we know they are passionate about.
Are there differences in the way both companies approach healthcare?
Target and CVS Health have different, complementary strengths and share a common goal of supporting consumers in their quest to lead healthy lives. Target offers guests convenience, value and inspiration as they achieve wellness in their lives, with options across food, apparel, health and beauty, household products, electronics, sporting goods and more. Moving forward, CVS Health will supplement those efforts by operating the pharmacies and clinics in our stores. Together, Target and CVS Health will offer guests enhanced products and experiences that span the full spectrum of health and wellbeing.
How will the co-development of stores work? And can you elaborate on these “new market offerings” you will explore with CVS Health?
CVS Health has a strong store development pipeline that includes great locations in communities ideally suited for small, flexible format stores. Target and CVS Health plan to carefully evaluate and select from sites in CVS Health’s current consideration set to jointly build five to 10 TargetExpress stores with a CVS/pharmacy inside. This will take place over a two year period following the deal close. We have also agreed to explore a variety of future opportunities to collaborate with our guests’ needs in mind.
When will guests start to see changes?
This agreement has been approved by CVS Health management and by Target’s board of directors, and now requires regulatory approval. This process will take some time. Until then, it’s business as usual. Both Target and CVS Health are committed to ensuring a smooth transition following the deal close, and look forward to sharing more with our guests when we can.