By Nathalie Voit
U.S. drugstore giant CVS said it would close around 900 stores in the next three years in a press statement released Nov. 18 on its website. The pharmacy chain is looking to pivot away from retail and expand health services in remaining locations.
The move will affect about 900 retail stores or nearly 10% of the company’s total footprint. Store closures are set to take place at a rate of about 300 per year.
“The company has been evaluating changes in population, consumer buying patterns, and future health needs to ensure it has the right kinds of stores in the right locations for consumers and the business. As part of this initiative, CVS Health will reduce store density in certain locations and close approximately 300 stores a year for the next three years,” Karen Lynch, President and CEO of CVS Health, said in the statement.
The closures are poised to begin in the spring of 2022. As part of its updated business strategy, employees at the affected stores will be relocated to other locations.
“The company is committed to offering impacted colleagues roles in other locations or different opportunities as part of its overall workforce strategy,” Lynch said Thursday.
The announcement comes amid increased digital competition from top-name contenders like Amazon, which recently expanded its presence in the health care sector with the launch of Amazon Pharmacy, an online retail marketplace for prescription services. The rise of online shopping during the pandemic also exacerbated problems regarding the company’s traditional marketing strategy.
“Hybrid models really took off during the pandemic, including rapid delivery services, curbside pickup, and buy online/pick up in-store,” said senior analyst at Bankrate.com Ted Rossman. “Those approaches could be particularly advantageous for CVS.”
The company will partition the remaining stores into three distinct models: traditional CVS pharmacy stores, sites focused on providing primary care services, and “health hubs” offering a broader range of amenities like diagnostic testing, mental health screenings, and chronic disease prevention and management services.
“We continue to modernize our operating systems and enhance the integration of pharmacy models, simplifying consumer interactions and driving further engagement with our customers,” Lynch explained on Nov. 3 during the company’s Q3 2021 earnings call.
“Our retail stores are fundamental to our strategy and who we are as a company,” Lynch said in the 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.