New York
CNN
—
CVS is looking to grow itself by shrinking.
The pharmacy chain is opening around a dozen stores this year that are about the half the size of its traditional layout and have only a pharmacy — ditching the front-end of the store that traditionally has sold snacks, greeting cards and other consumer staples.
The smaller stores are one aspect of CVS’ turnaround plans, which have also included more than 1,000 store closures and thousands of layoffs, as the chain looks to adjust in an industry currently undergoing an upheaval.
Drug store chains have become ubiquitous and overexpanded. They’ve also become synonymous with convenience stores, giving people the option to pick-up their medication and perhaps grab something else, too. However, they’ve struggled to keep up with Amazon, Target and other retailers and have also had issues with theft, which has chipped away their profitability.
A smaller format store will have a full-service pharmacy as well as some some over-the-counter products, a CVS spokesperson said, adding that they “will be designed to meet the community’s specific pharmacy needs.”
“By taking a customized approach to our footprint that is focused on the specific needs of the communities we serve, we’re continuing to strategically realign our pharmacy footprint to better support patient and ensure the right geographic coverage,” a CVS spokesperson told CNN.
Focusing solely on the pharmacy signals to Neil Saunders, managing director and analyst at GlobalData Retail, that CVS has “done very little to defend revenue” of the front-end of its stores.
“It will certainly be cheaper to operate smaller stores focusing on essentials, but it’s not a complete solution for CVS as many more digital players are entering the prescription space and there’s growing competition from chains like Walmart,” he told CNN.
Changes are not only affecting CVS. Last week, Walgreens Boots Alliance announced a deal ending its century as a publicly traded company and sold itself a private equity firm in a $24 billion deal. Rite Aid, another rival, also exited bankruptcy last year and has shuttered hundreds of stores.
