We help people live longer, healthier, happier lives.

Transcription

1 RF Payment at

2 Overview About Speed of Checkout American Express RF Phoenix Beta Test RF Deployment Decision RF Enabled Payment Terminal Rollout Strategy Contactless Benefits RF Activity 2

3 We help people live longer, healthier, happier lives. 3

4 4

5 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 Market Sources: Chain Drug Review (10/11/2004), NACDS, company reports 5

6 #1 in U.S. Store Count Store Count Rank Drug Outlet Stores 1 CVS/pharmacy 5,454 2 Walgreens 4,953 3 Wal*Mart 3,551 4 Rite Aid 3,345 5 Albertson s 2,234 Note: Source: 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. Company SEC filings, Drug Store News (5/2/2005), and CVS/pharmacy estimates. 6

7 Leadership in Top U.S. Drugstore Markets Market CVS/pharmacy Rank Market Rank 1 New York #1 2 Los Angeles New 3 Chicago New 4 Philadelphia #1 5 Detroit #1 6 Miami-Ft. Lauderdale #2 7 Boston #1 8 Dallas-Ft. Worth #2 9 San Francisco-Oakland None 10 Washington, D.C. #1 Source: Chain Drug Review, October 11,

8 Pharmacy is the Heart & Soul of Our Business 70% of CVS/pharmacy revenues 14% U.S. retail share Fill 1 of every 5 scripts in our markets 8

9 Speed of Checkout at Various Retailers 80 Seconds ~28 ~28 ~28 ~28 ~28 ~28 ~28 Loyalty card / circular coupons (1) Scan and bag (2) Payment (3) 9

10 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 Average Card Transaction (w/o Signature) Average RF Transaction 33.7 seconds 26.7 seconds 12.5 seconds sec vs. cash -7.0 sec vs. cash sec vs. card 10

11 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 Transactions ExpressPay Amex Card Total Jan Feb Mar Apr May Jun Jul 11

12 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 Transaction $ Cash ExpressPay AMEX 12

13 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 13

14 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 14

15 Contactless Benefits CVS/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 15

16 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 # of Transactions RF Chain Rollout Complete RF cards initially launched in NYC and Atlanta June July August # of Transactions 16

17 RF Payment at 17