In February, CVS CEO Larry Merlo claimed his company would become a “health care destination” marked by the launch of new Health Hubs. Health Hubs dedicate 20% of the overall store space to health services and aim to focus on high-cost chronic conditions like diabetes. CVS planned to launch a pilot of the program in a few sites in Houston, Texas before determining an overarching strategy.
And the results are in.
Last week, CVS announced that it would expand the plan to 1,500 other locations by the end of 2020 driving strong responses from the market.
We used location analytics to examine the Houston pilot locations to examine what the Health Hubs really bring to the table.
(Slightly) More Visits
By analyzing two of the Health Hub pilot locations in Houston, we confirmed positive post-launch effects. Studying the period from February 1st to May 31st, 2019, and comparing it with the same period in 2018, the two stores enjoyed a 3.4% increase in overall traffic year-over-year. Yet, such limited improvement was unlikely to drive the excitement necessary to immediately launch a rapid national expansion.
Longer Dwell Time
An area that did see a dramatic change was the amount of time the average customer spent in a location. Nationwide, CVS locations saw 66% of visitors spend between 15-29 minutes in a store and 25.8% spend between 30 minutes to one hour. At the two pilot locations, the percentage of visitors who spent less than 30 minutes dropped to 50% and 51% respectively, because of massive increases in visitors who were in the store for between 30-59 minutes.The two sites saw jumps of visitors spending between 30-59 minutes of 28.6% and 15.1% respectively. As a result, the pilot stores saw average visit durations that were seven and 10 minutes more than the national standard.
Better Spread of Visitors
The value of the pilot is also apparent in the spread of hourly visits when comparing the two pilot sites to the national average. The ability to schedule appointments enabled the properties to push traffic during off-periods. By doing so, the CVS locations were not only receiving more visits but seeing many of these visits during periods that were normally less likely to produce purchases. This effect cannot be understated as it helped the properties improve their revenue potential by simultaneously deepening their services, extending the amount of time spent in stores, and spreading those visits throughout the day.
Conclusions - Can it Scale?
With the announcement of their national rollout, clearly the trial of Health Hubs in CVS locations gave the company the confidence it needed for wider engagement. From an initial examination of the location data, that confidence gives the company an ability to drive more traffic and to drive it throughout a wider period of time.
The increases in revenue and traffic enable other purchase opportunities when interest would have been lower. Should the pilot success spread to other locations, there is a unique potential for the CVS brand to broaden its focus without hurting the core offering they have become known for.