Retail Pulse: CVS, UPS Test Drone Potential; Birchbox Grows Walgreens Partnership

Brick-and-mortar retailers are teaming with logistics firms to test drones for delivery — and making progress on their experimental flights. UPS subsidiary UPS Flight Forward Inc. and CVS Health Corporation subsidiary CVS Pharmacy, Inc., for instance, recently announced the successful delivery of a prescription from a CVS pharmacy directly to a consumer’s home.

Another delivery of a medical prescription arrived at a nearby retirement community for a second customer. UPS said both flights used an M2 drone system by UPS partner and drone systems developer Matternet. And it noted that the deliveries “mark another milestone in a recently announced collaboration between UPS and CVS to develop a variety of drone delivery use cases, including business-to-consumer operating models.”

CVS Pharmacy President Kevin Hourican said in an announcement, “This drone delivery, the first of its kind in the industry, demonstrates what’s possible for our customers who can’t easily make it into our stores.” Hourican continued, “CVS is exploring many types of delivery options for urban, suburban and rural markets. We see big potential in drone delivery in rural communities where life-saving medications are needed and consumers at times cannot conveniently access one of our stores.”

The flights originated from a CVS location in North Carolina and flew to the homes of customers autonomously. (A remote operator monitored them and could step in if needed.) The drones hovered approximately 20 feet above the properties and slowly lowered the packages by a cable and a winch. And “one of the packages was delivered to a CVS customer whose limited mobility makes it difficult to travel to a store to pick up a prescription” per the announcement.

CVS is not the only pharmacy chain to experiment with drone deliveries: Walgreens and Alphabet-owned drone company Wing have teamed on a pilot program to deliver products customers. The drone delivery service was to be available to eligible residents in Christiansburg, Va. per news in September. The city was chosen as the test market because Wing already had a relationship with Virginia Tech, which is in nearby Blacksburg, to test the delivery drones in the U.S. Department of Transportation’s Integration Pilot Program, starting in 2016.

From Walgreens to CVS, pharmacy retailers are collaborating with logistics firms to bring merchandise to their customers — as drones move the needle toward the future of delivery.

In Other Brick-and-Mortar News

Birchbox will grow its brick-and-mortar partnership with Walgreens by installing Birchbox holiday fixtures in 500 Walgreens stores. This is in addition to the Birchbox boutique-like locations that are now in 11 Walgreens stores. The holiday fixtures will be in retail locations of the pharmacy chain in 44 states.

The holiday fixtures will be in the pharmacy chain’s retail locations in 44 states starting this Friday and through the end of December. The holiday Birchbox features will be in a “grab-and-go holiday gifts” format.

Items will include Birchbox subscription gift cards, beauty essentials in travel sizes, limited-edition Birchbox Grooming and Birchbox Beauty boxes, and an Advent calendar collaboration between Birchbox and Walgreens. The 500 holiday locations are temporary for now. Birchbox Chief Operating Officer Pooja Agarwal said per reports that the firm didn’t have any news on if they will remain in the holiday locations, but they “definitely see potential.”

And the Barneys New York flagship Madison Avenue location will stay open for at least another year in a smaller form as the buyer of the luxury retail brand negotiates with the retailer’s landlord. The store’s famous eatery, Fred’s, will also stay open. Authentic Brands bid about $271 million for Barneys New York, saying that it would make the store into a pop-up shop.

Ashkenazy Acquisition Corp. President Daniel Levy said, according to the outlet, “We have come to terms with Authentic Brands Group, Barneys’ new owner, to keep the Madison Avenue store open in a smaller footprint for the next 12 months while we continue to explore a longer-term solution.”

On another note, Hennes & Mauritz (H&M) and IKEA and are putting money into technology startups as a way to help them sidestep retail disruption. H&M, the second-largest clothing store, and IKEA, the largest furniture retailer worldwide, have been making venture capital investments into a variety of technology companies.

Ingka Group, IKEA retailer and investment arm, has invested $221 million in 21 firms, with the inclusion of mattress recycling company RetourMatras and robotic furniture maker Ori Living. H&M has invested more than 500 million Swedish kronas ($52 million) in 16 firms, including FinTech Klarna and the dye company Colorifix.

To keep tabs on the latest retail trends, check next week’s Retail Pulse.