CVS closes 900 stores, converts others from retail to services, while e-commerce competitors gobble up pharmacy revenue

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The meltdown of bricks and mortar continues.

By Wolf Richter for WOLF STREET.

CVS – the largest pharmacy chain in the US after a series of acquisitions – announced it would close 900 stores over the next three years and switch many of the remaining stores to selling health services instead of what they sell now, like the Das profitable prescription drug business is migrating to competitors on the Internet.

CVS is following in the footsteps of Walgreens, which has closed nearly 600 stores in the US over the past two years and made its way into healthcare by acquiring a majority stake in VillageMD for $ 5.2 billion.

Walgreens closed the stores to cut costs in order to stop the slump in profits. The 600 stores it has closed include some of its 60+ San Francisco stores (there is one every few blocks) where dominant healthcare provider Kaiser Permanente’s relocation to online pharmacy sales has beaten Walgreens, which ridiculously shoplifting for the public Closing these stores blamed it in San Francisco, creating the perfect clickbait for the brain-dead global media to choke up this nonsense again without further research or thought, thereby covering up the real reasons for Walgreens store closings in San Francisco.

Fortunately, CVS decided not to go down this route to explain its store closings – but stuck with reality: As part of its “strategic review of its retail business” it has identified “changes in the population, consumer buying behavior and future health needs,” , it says in his press release. So she decided to switch to selling services and away from selling goods.

It will be a lot less of a retailer and a lot more of a service provider. Let the internet do the retailing.

CVS said it would:

  • Reduce store density and close 900 stores at the rate of 300 stores per year over the next three years.
  • Convert some of the remaining stores “to provide primary care services,” moving those stores from retailers selling goods to health care providers.
  • Convert some of the remaining stores into “expanded versions of HealthHUB locations” that offer health-related services, such as:
  • Keep some “traditional CVS pharmacy stores” that sell prescription drugs in addition to health services and the things you find on the shelves and shelves of a CVS store.

The store closings will cost approximately $ 1.0 billion to $ 1.2 billion in impairment losses in the fourth quarter, CVS said. And while it was at it, it cut its EPS by about 11% for full year 2021.

Like Walgreens, CVS is being hit hard by the shift of the profitable prescription drug business to the internet and the phone. This is done directly by various major healthcare providers like Kaiser Permanente, Amazon, Costco, and everyone and their dog, including CVS and Walgreens.

Prescription drugs are light and good quality, and transportation costs aren’t that big a factor, and the pharmacies are already on-site and their inventory is already local, and they might as well sell them online and have them delivered the next day, and not have to look around take care of retail.

CVS did not say how many of the 10,000 or so stores will remain classic CVS ​​retail prescription drug tills and how many stores will be relocated to service providers.

The writing has been on the wall for years: The move of the pharmacy business to the Internet is the greatest sure-fire success in human history, and once customers have figured out how easy it is to order this stuff online or by phone, in consultation with Her doctor, instead of standing in line at the pharmacy, there is no turning back.

And so the stationary core meltdown continues. Store closings are back on the table at Macy’s this January and many other retailers alike, despite the most flamboyant and historic surge in retail sales to stimulating consumers as money printing comes home.

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