Pharmacies have turned into the picture of inconvenience, and Walgreens and CVS locations are no exception. Between aisles of locked-up merchandise and long lines at the pharmacy counter…
More people have decided that this spot on their errand runs just isn’t worth it.
How have pharmacies become such annoying stops… But more importantly…
Why are so many locations closing their doors for good?
Why Are CVS And Walgreens Locations Closing En Masse?
Since before the pandemic, pharmacies have been struggling in their business operations. Between the retail and pharmaceutical ends of the business floundering…
COMPANIES ARE RESPONDING TO THE PRESSURE BY CUTTING COSTS AND CLOSING STORES.
Walgreens announced it would close 1,200 locations, referencing the unprofitability of 25% of its portfolio. Conversely, CVS has been closing stores for a few years and is planning to cut about 3,000 jobs.
The reasons for these giant moves are more complicated than you’d expect. These cuts are a response to a changing retail and pharmacy landscape…
A retail apocalypse closely followed Covid…
Which led to the closures of thousands of brick-and-mortar businesses.
This wave of closures led to shoppers increasingly ordering their necessities online all at once…
Any remaining stores, however, were severely understaffed. And due to the rise of organized retail crime…
More and more businesses began locking their merchandise behind protected displays.
WITH ALL THIS GOING ON, IT MAKES SENSE THAT CVS AND WALGREENS LOCATIONS ARE OVERWHELMED.
For major pharmacy chains, both parts of their businesses are suffering equally. On the retail side, more people are skipping the trip around the corner and ordering all their necessities online. From home goods to snacks and even getting their prescriptions delivered…
For shoppers this is much more convenient than a trip to the pharmacy.
It doesn’t help that CVS and Walgreens locations have a limited selection, higher prices, and most of their stock locked up. All of these factors drive consumers to shop at other spots.
Business Of The Pharmacy
Unfortunately for them, the pharmacy side of things isn’t faring any better.
Walgreens and CVS locations now have to compete with pharmacies big-box stores like Walmart and Target. And other grocery store chains are getting into the pharmaceutical business as well.
A huge problem for these pharmacies is the pressure thanks to pharmacy benefit managers. Essentially, pharmacy benefit managers make sure that pharmacies get paid by insurance companies for the drugs and medication that the pharmacies hand to the consumer.
Handing out prescriptions is how these chains make the most money. But when PBMs lower the rates at which pharmacies are paid for handing out prescriptions, these chains lose money on an essential service.
CVS AND WALGREENS LOCATIONS ARE OUT OF LUCK WHEN IT COMES TO FIGHTING BACK WITH PBMS. PBMS CAN JUST DECIDE TO NOT GIVE CUSTOMERS THEIR DRUG BENEFITS AT THESE CHAINS.
The Future Of The Pharmacies
To cope with these losses, CVS and Walgreens locations have been cutting staff. But right now, even that’s a bad move. If there are fewer workers…
That leads to worse customer service, which leads to less sales…
Which will lead back to bad numbers, and eventually more job cuts.
While closing more Walgreens and CVS locations might seem like a good move, there is no quick fix for this issue.
Even if these pharmacies get their numbers back up, Amazon, Walmart, and Target aren’t going anywhere.
Now it all comes down to whether or not CVS and Walgreens locations can take the drastic action needed to save their businesses.
Be Great,
GCTV Staff
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