CVS to close 900 stores over three-year period

Photo: Courtesy CVS Health

The nation's largest pharmacy chain CVS plans to close 900 stores nationwide in the next three years as it restructures itself to offer more health services in the remaining locations.

CVS Health will create three new distinct store formats aimed at driving higher engagement with consumers and to serve as community health destinations.

These include traditional CVS Pharmacy stores, which will provide prescription services and health, wellness and personal care, sites specializing in primary care service offerings, and enhanced versions of HealthHUB locations, which offer screenings, monitoring, counseling and treatment options, as well as products for common health and wellness needs.

The company currently operates nearly 10,000 stores across the U.S. It is unclear which stores will close, although the process will begin next year, a CVS spokesperson told The Wall Street Journal.

The store closures are expected to be reported in CVS financials as between $1 and $1.2 billion.

In the announcement, CVS named Prem Shah to the newly created post of chief pharmacy officer. Shah will oversee the omnichannel pharmacy strategy.

WHY THIS MATTERS

Back in June 2019, CVS announced plans to open another 1,500 HealthHUB sites across a two-year period.

Lisette Huyskamp, chief marketing officer at Productsup, said that, while some people may look at CVS's store closures as a sign that in-store shopping is slowing, it should be seen as a strategic move to revitalize its in-store experiences.

"By condensing store density, the retailer is able to focus on enriching the shopping experience in its existing locations to adapt to the changing needs of consumers," she added. "Reevaluating in-store and online offerings is something every retailer should be doing."

From Huyskamp's perspective, in-person services are still preferred for certain services, such as immediate health and wellness needs, so keeping a physical presence is essential.

"However, that physical shopping experience needs to be worth consumers' time," she continued. "If products are out-of-stock or don't match the information consumers found online, brand loyalty becomes fractured."

There are other experiences that consumers prefer to take care of online, such as refilling prescriptions or getting a quick medical question answered through a virtual appointment, she said.

"To be successful in today's complex retail landscape, it's not just about making every service and product available in every channel," she said. "It's about following the consumer and having the right presence at every touchpoint."

That means every retailer needs to have a product-to-consumer (P2C) strategy to better manage their product information value chains and survive in the omnichannel world.

THE LARGER TREND

CVS faces competition from other pharmacy retailers, such as Walgreens Boots Alliance, which is adding similar health centers.

All represent competition to traditional health providers.

CVS Health serves an estimated 38 million people through health insurance products and related services, including a Medicare Advantage offering and a stand-alone Medicare Part D prescription drug plan.

ON THE RECORD

"Our retail stores are fundamental to our strategy and who we are as a company," Karen Lynch, president and CEO of CVS Health, said by statement. "We remain focused on the competitive advantage provided by our presence in thousands of communities across the country, which complements our rapidly expanding digital presence."

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