Walgreens
Walgreens CEO Tim Wentworth revealed that 25% of stores are unprofitable, prompting plans to close 1,200 locations. CVS also announced 2,900 layoffs. “We are in the early stages of a turnaround that will take time,” Wentworth said.
In this gallery, we explore the challenges these retailers are facing in 2024.
Forced to move their prescriptions
Health care services analyst Brian Tanquilut said, “Historically, there was a view that there was a lot of customer loyalty to their specific retail pharmacy … and that patients, or consumers, would be all up in arms if they were forced to move their prescriptions.”
Whatever my insurance is willing to pay
Tanquilut added, “What that did was to prove that patient loyalty is not to the retail pharmacy, but it actually is whatever my insurance is willing to pay.”
Declining sales and customer dissatisfaction
Walgreens and CVS expanded rapidly, but changing consumer habits and competition from Amazon and Walmart have led to declining sales and customer dissatisfaction.
Wallets are still squeezed
Senior e-commerce expert Greg Zakowicz said, “Though consumer sentiment is more positive, wallets are still squeezed, making shoppers more intentional with their purchases.”
Black Friday
Zakowicz added, “Because of this, we may actually see more self-purchasing and big buys happen around Black Friday as consumers intentionally look for the best bang for the buck with big buy purchases like furniture and TVs and on products they can predicatively stock up on, such as clothing.”
Stores are understaffed
Some Walgreens and CVS stores are understaffed, with products locked to prevent theft. This ultimately leads to a decline in sales.
Profitability has dropped
Prescription sales profitability has dropped due to insurer relationships. Walgreens lost a pricing dispute, showing loyalty is to insurance networks, not pharmacies.
Healthcare hubs
CVS and Walgreens both attempted to become healthcare hubs by expanding clinics. Both companies have backtracked on other efforts and have refocused on retail.
Reimbursement discussions
Wentworth said, “I’m very confident that over a two- to three-year period we will have reset the framework for reimbursement discussions.”