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TRANSCRIPT
RF Paymentat
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Overview• About• Speed of Checkout• American Express RF Phoenix Beta Test• RF Deployment Decision• RF Enabled Payment Terminal Rollout Strategy• Contactless Benefits• RF Activity
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We help people live longer, healthier, happier lives.
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CVS/pharmacy is an Industry Leader
#1 in Store Count#1 in Sales per Retail SF#2 in Sales
#1 or #2 in 73% of the Top 100 markets in which we operate
Fill 14% of the U.S. Retail Drug MarketSources: Chain Drug Review (10/11/2004), NACDS, company reports
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#1 in U.S. Store CountRank Drug Outlet Stores
Store Count
1 CVS/pharmacy 5,454
2 Walgreens 4,953
3 Wal*Mart 3,551
4 Rite Aid 3,345
5 Albertson’s 2,234Note: Figures are as of August 2005 for CVS/pharmacy, Walgreens, and Rite Aid. July 2005 for Rite Aid; and January 2005 for
Wal*Mart and Albertson’s. Figures for Wal*Mart and Albertson’s are only available annually.
Source: Company SEC filings, Drug Store News (5/2/2005), and CVS/pharmacy estimates.
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Leadership in Top U.S. Drugstore Markets
Rank Market RankMarket CVS/pharmacy
1 New York #12 Los Angeles New3 Chicago New4 Philadelphia #15 Detroit #16 Miami-Ft. Lauderdale #27 Boston #18 Dallas-Ft. Worth #29 San Francisco-Oakland None
10 Washington, D.C. #1Source: Chain Drug Review, October 11, 2004
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Pharmacy is the Heart &Soul of Our Business
• 70% of CVS/pharmacyrevenues
• 14% U.S. retail share
• Fill 1 of every 5 scripts in our markets
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Speed of Checkout at Various Retailers
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27 21 18 15
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2
~28~28~28~28~28 ~28 ~28
18 18
0
10
20
30
40
50
60
70
80
Seconds
Payment(3)
Scan and bag(2)
Loyalty card /circular coupons(1)
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Speed of Checkout• Credit/Debit cards transactions
represent 24% of all transactions at CVS/pharmacy
• Credit/Debit card transactions traditionally take longer to process at the register
• RF significantly decreases transaction time relative to cash and cards
• Legacy equipment hindered our ability to provide improved services
– RF contactless capability– Electronic Signature Capture– Improved processing times– Video display capabilities
Average Cash Transaction 33.7 seconds
-7.0 sec vs. cashAverage Card
Transaction (w/o Signature)
26.7 seconds
-14.2 sec vs. card
-21.2 sec vs. cash
Average RF Transaction
12.5 seconds
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American Express-Phoenix RF Test• CVS/pharmacy Beta tested ExpressPay in the Phoenix Market (19
stores) in 2004• CVS/pharmacy partnered with AMEX on in-store P.O.P, along
with a targeted market advertising blitz in the first half of 2004 designed to generate RF foot traffic and awareness
Avg # of Transactions per Store
Jan Feb Mar Apr May Jun Jul
Tran
sact
ions ExpressPay
Amex Card
Total
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American Express-Phoenix RF Test• The Phoenix pilot shows that consumers make larger purchases at CVS with
ExpressPay versus Cash• AMEX Market Basket increased measurably during the marketing blitz• RF functionality continued as part of an extended test until the chain
installation of the RF enabled payment terminals in 2005
CVS Average Transaction Size in Phoenix
Cash ExpressPay AMEX
Tran
sact
ion
$
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Chain Deployment Decision• CVS/pharmacy’s decision to deploy RF
enabled Payment Terminals to all stores was based on various factors– Phoenix Test Market analysis and results– It would position CVS/pharmacy as the first
chain drug and national retailer to accept contactless methods of payment in all locations• Drives “early adopter” foot traffic to CVS/pharmacy locations
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RF Payment Terminal Rollout Strategy• CVS/pharmacy upgraded/replaced over 40,000 RF enabled, signature
capture Payment Terminals in 5,400 + stores• Stores were upgraded with RF Payment Terminals as part of a staggered
rollout from February though July– Rollout was coordinated by CVS/pharmacy Rollout Operations
Center and Store Operations. The payment terminals were installed by various low voltage vendors
– Total time to install Payment Terminal was approximately 1-2 hours per store, and required minimal effort on the part of the store crew
• All stores received “What is RF” information, along with associated CVS/pharmacy job aids, at time of installation
• All payment terminals are branded with AMEX, MasterCard and Visa RF logos
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Contactless BenefitsCVS/pharmacy Benefits• Speed of checkout
– In test markets, card payment processing time was reduced by 14.2 seconds
• Increased Market Basket spending
• Increased protection from charge backs
Customer Benefits• Speed of Checkout
– No signature required• No additional fees for RF• No searching for cash or check at
point of sale• Built-in fraud protection
– Customers are not liable for any fraudulent charges
• Marketing programs specifically targeting RF cardholders
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RF Activity• Approximately 6MM RF contactless cards issued to date
– Additional 3-4MM cards to be issued in 4th Quarter• Approximately 15-20MM RF contactless cards to be distributed by late
2007
RF Activity
June July August
# of
Tra
nsac
tions
# of Transactions
RF Chain Rollout Complete
RF cards initially launched in NYC and Atlanta
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RF Paymentat