Why is CVS closing 900 stores? when and where?
CVS Health one of the largest pharmacy chains in the US is changing its retail footprint around the nation which will involve closing 900 locations.
Beginning in the spring of 2022 CVS will start a process of changing its store formats to “drive higher engagement with consumers.” The process will see around 900 stores closing over the next three years as the pharmacy chain adjusts to “changes in population, consumer buying patterns and future health needs.”
The closures will represent roughly nine percent of the company’s total retail locations. The restructuring which is dubbed “omnichannel health strategy” will see the development of three different store models which will serve as community health destinations.
CVS Health will reduce store density
In the drug store chain’s press release CVS said it performed a strategic review of its retail business. Due to shifting populations and demands the company wants to “ensure it has the right kinds of stores in the right locations for consumers.” Part of that mission will require reducing store density around the country, where is some places the pharmacy chain has two stores in relatively close proximity, within a matter of blocks.
CVS plans to begin the reorganization in the spring of 2022 with the first of 300 stores closing next year. The process will continue with a further 300 closures more or less in each of the following two years. Exactly which stores will be closing their doors hasn’t been stated yet.
New formats to engage costumers
CVS will tailor its remaining 9,000 retail stores to fit three areas of their business as part of a broader realignment of its services. “Our retail stores are fundamental to our strategy and who we are as a company," President and CEO of CVS Health Karen Lynch said in a statement.
The company will update the traditional CVS pharmacy experience where customers can have prescriptions filled and pick up convenience items, in addition to receiving health and wellness services. Other locations will focus on offering primary care services and the drug store chain will be developing an enhanced version of its HealthHUB locations.
"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," Lynch said.
CVS needs to clean up its image to draw in the public
The need for a remodeling and culling of locations comes as some stores are “shabby” and there are “too many overlapping locations" according to Neil Saunders, managing director of GlobalData. In a letter to investors he said the pharmacy chain has “neglected stores for far too long and has pushed some of them into the downward spiral of irrelevance.”
He added that “too many stores are stuck in the past with bad lighting, depressing interiors, messy merchandising, and a weak assortment of products.” Facing competition from natural rivals and newer ones CVS stores are not “destinations or places where people go out of anything other than necessity,” Saunders said.