CONSTRUCTION COMING: CVS is bringing a trio of 13,225-square-foot pharmacies to Memphis next year, including one it is building at U.S. 64 and Houston Levee Road in Cordova. The company bought property at 5055 Stage Road in Raleigh for its second store and will lease space at Winchester and Kirby roads for its third. -- PHOTO COURTESY OF CVS

CVS is already bringing one pharmacy to U.S. 64 and Houston Levee Road in Cordova, and the company last week secured the land where it will build its second Memphis store.

Woonsocket, R.I.-based CVS, the retail division of CVS Caremark, paid $1.4 million for the 7,344-square-foot retail store at 5055 Stage Road, on the southwest corner of Stage and Covington Pike in Raleigh. The building, which formerly housed a Hollywood Video store, sits on 1.1 acres near the Memphis-Bartlett border.

Operating under the name CVS 75768 TN LLC – a reference to the store number and state – the company recently bought the property in a special warranty deed from Robert T. Kelly Jr., Patrick J. Kelly, Vail E. St. Vrain, Monica D. Kelly and Matthew C. Kelly.

CVS also bought a third of an acre of the adjacent property, a 9.13-acre parcel that is home to a Burlington Coat Factory. Under the same entity, CVS 75768 TN LLC, the company paid $500,000 to buy that sliver of parcel from Burlington Coat Factory Realty of Memphis Inc. Both sales closed Oct. 13.

CVS spokesman Mike DeAngelis said the Cordova store is slated to open in January 2010, and the Raleigh store should open in the second half of next year. He said the company has additional projects in the pipeline, but the only other one he could discuss was a planned store at the corner of Winchester and Kirby roads, where CVS will lease space instead of building a new location.

“We’ve got a fair amount of stores in the state of Tennessee – Knoxville, Nashville, Chattanooga,” DeAngelis said. “Memphis was a missing piece of the puzzle for us. We also do have a fair amount of stores over the border in Mississippi. We’re continuing to look for opportunities to enter new markets and open new stores.”

Better shop around

DeAngelis added that another reason for the company’s arrival in this market is because the demand for prescription services “continues to increase as the population ages, and we need to open stores and be convenient for those customers.”

He said being on the right corners, especially in a new city, is very important if the company hopes to succeed in attaining market share. Choice locations give pharmacies the right mix of “visibility and accessibility.”

“A corner of an intersection is our preferred location for our freestanding stores because they’re convenient, accessible and visible,” he said, adding that drive-through windows are standard for new CVS stores.

Scott Barton, senior vice president of retail brokerage services for CB Richard Ellis Memphis, said the addition of CVS to a market dominated by Walgreens should make for healthy competition if it can pinpoint the right properties.

“CVS is a proven operator elsewhere,” Barton said. “While Walgreens has a tremendous head start here, there are still good corners left.”

Barton said most pharmacies have strict parameters for where they’ll develop and build freestanding stores. They must have a corner with nearby traffic lights and room for parking and, perhaps most important, a drive-through window.

That said, CVS might need to pay “a little bit” more for the right corners because it’s coming into the market later than the city’s established pharmacies. Barton pointed out that CVS might build directly across the street from a Walgreens, as it is doing with its Stage Road property. Walgreens is on the northeast corner, while CVS will be on the southwest corner.

“A good corner is a good corner,” Barton said. “If there’s still a corner left on an intersection, the fact that Walgreens is there does not mean that the intersection is off-limits.”

Cornered market

CVS last year received approval from the Memphis and Shelby County Land Use Control Board to build a 13,225-square-foot store – the typical size of CVS properties – at the southwest corner of U.S. 64 and Houston Levee Road.

CVS in April bought that property for $750,000 under the name CVS 75767 TN LLC. It will be the first store the pharmacy completes in West Tennessee. CVS has four stores in DeSoto County, with two in Southaven, one in Horn Lake and one in Walls, Miss. It is building more in the county as well, adding to its Mississippi presence.

The parent company of CVS is CVS Caremark, which formed in 2007 when CVS Corp. and Caremark Rx Inc. merged. The company has more than 7,000 stores in 41 states. It boasts 125 stores and more than 4,000 employees in Tennessee.

Its biggest markets in the state are Nashville and Knoxville, where CVS also operates customer care call centers for its Caremark division.

When asked about dealing with a competitive market, in which Walgreens seem to outnumber local churches, DeAngelis said CVS’s commitment to convenience and customer service is paramount if the company hopes to thrive.

“Our stores are not as large as some of our competitors’, and that plays into the convenience factor,” he said. “You can get into a CVS, get what you need quickly, pick up your prescription and get out of there in a convenient time.”

DeAngelis said more details about CVS’s local ambitions would be coming in January when the company opens its first Memphis store.