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CVS Waves Goodbye to Hundreds of Stores: Here’s the Lowdown

In the wake of the pandemic, the U.S. drugstore scene is undergoing significant transformation. While we’ve witnessed a surge in online shopping and a slow resurgence of brick-and-mortar retailers, the drugstore sector is heading toward inevitable consolidation and reevaluation.

Take, for instance, Rite Aid. Grappling with a staggering $3.3 billion in debt, there are whispers about the possibility of the chain taking the Chapter 11 bankruptcy route. The whispers aren’t just about financial restructuring – they’re also hinting at closing a staggering 400 to 500 out of their 2,100 stores, transferring them to eager creditors or potential buyers.

Walgreens, another prominent player, recently said goodbye to its pandemic-era CEO, Rosalind Brewer. Now, with eyes on the evolving marketplace, they’re on the hunt for someone with an in-depth understanding of the healthcare scene, as indicated by their Executive Chairman Stefano Pessina. But challenges abound. A rising tide of retail crime, especially shoplifting, has drained profits, forcing many drugstores to either shut their doors or devise new security measures.

Yet, in the midst of this upheaval, CVS has emerged as a beacon of resilience. As America’s largest drugstore, CVS revealed plans in September for a new venture, Cordavis. This ambitious enterprise aims to make medications more affordable for customers by creating biosimilar drugs and having direct price negotiations with pharmaceutical giants. The potential of this move is vast, especially considering CVS’s immense scale and influence, making it a formidable competitor to major drug manufacturers.

But there’s another side to the CVS story. Apart from its expansion efforts, CVS has also decided to tighten its belt. Stemming from a 2021 policy decision, CVS plans to shut down hundreds of its stores. But why? It’s a calculated move. CVS is carefully analyzing shifts in population, consumer behavior, and looming healthcare needs to ensure they have the right outlets in the most optimal locations. Their strategy involves reducing the number of stores in certain areas, aiming for an approximate closure of 300 stores annually for the next three years.

Several cities, from Berkeley to Tallahassee, have already witnessed the closure of CVS outlets. Their closure criteria? A mix of pharmacy accessibility, local market conditions, population dynamics, store density in the community, and other geographic factors that align with community needs.

By the end of 2024, we might see as many as 900 CVS stores going off the grid.

This trend isn’t exclusive to CVS. During a recent Q3 earnings call, Walgreens too indicated plans to close around 450 of its outlets across the U.S. and U.K. in a bid to streamline its operations.

For investors and customers, these changes in the drugstore landscape are worth noting. As the sector undergoes consolidation and change, it could offer new opportunities and challenges for those keenly watching the market.