CVS Tobacco Ban Wins Market Share, One Octogenarian at a Time
Larry Merlo gets a gold star from retired pre-school teacher Reva Sipser.
The president and CEO of CVS Health banned sales of cigarettes at the chain’s more than 7,900 stores in 2014, proclaiming, “Tobacco products have no place in a setting where health care is delivered.”
The move sacrificed billions in cigarette-related retail revenue. But the positive reaction of Reva Sipser, age 88, suggests CVS Health’s reputation boost may be worth far more in the faster growing health and pharmacy segment.
“When I saw that CVS was no longer selling cigarettes, I decided to switch to them because they were doing the right thing,” said Sipser, who writes a blog and delivers “meals on heels” at St. Johns Meadows, the retirement community where she and some 300 others live in Rochester, NY.
Sipser used to get her prescriptions filled at Walgreens, the closest pharmacy to St. Johns. But she’s willing to travel a quarter mile further to CVS – adding 9 minutes when the spry retiree decides to make the trek on foot.
She has also shared her opinion about Merlo’s bold anti-tobacco stance with the community.
“Eating in the dining room, someone said how nice it was that nobody smokes here. That person didn’t know about CVS,” said Sipser, adding that she harbored no ill will toward Walgreens when she used to shop there.
While the action of one octogenarian cannot possibly move the needle for a company with market capitalization of $109 billion, it provides much needed anecdotal evidence that it pays to be a good corporate citizen.
One slide in the annual CVS investor day presentation, held Dec. 16, revealed the company measures its reputation using the Net Promoter Score methodology. The score of 62% is more than double an April 2013 score for most players in the retail pharmacy sector, reported at that time by Satmetrix.
CVS reported in September that its tobacco ban coincided with a measureable drop in smoking in markets where its stores dominate, along with an increase in sales of nicotine patches and requests for free “Last Pack” toolkits. The release is here.
(Disclosure: Reva Sipser is my mother, and I’m proud of her consumer activism.)