Over the last few years, many pharmaceutical retail chains have struggled to survive amid growing competition from e-tailers. These companies have lost clients due to the ever-evolving consumer, who tends to lean more toward online retailers for their medical and everyday needs.
In 2023, Rite Aid filed for Chapter 11 because it was drowning in debt, facing tumultuous revenue declines, and trying to pay off multiple opioid settlements. A year later, it emerged from bankruptcy after being acquired by a new owner and becoming a private company.
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Going private seems to be a trend among popular pharmaceutical retail chains.
Related: Popular drugstore chain quietly nears deal to go private
Recently, it was revealed that Walgreens (WBA) , one of CVS’s biggest rivals, has agreed to be acquired by Sycamore Partners for around $10 billion. This deal would take the pharmaceutical chain off the public market and make it private amid ongoing struggles similar to Rite Aid.
People shopping at a CVS pharmacy.
Jeff Greenberg/Getty Images
CVS falls victim to the pharmacy declineÂ
For decades, CVSÂ (CVS) Â was the go-to convenience store where customers could buy over-the-counter medicine, obtain prescriptions, purchase food staples and snacks, get cosmetics and skincare essentials, and even find last-minute gifts and souvenirs, all in one location.
However, like its rivals, CVS has also fallen victim to the trend of dwindling traditional pharmacies. It has been facing some tough times over the last few years, with front-store sales declining, shoplifting rising, and multiple opioid lawsuits.
Related: Popular troubled essential retail chain exits Chapter 11 bankruptcy
In 2021, CVS announced it would close approximately 800 stores over the next three years, with an additional 270 locations this year due to changing consumer behaviors.
Not only have multiple closures been executed, but thousands of the drugstore chain’s employees have been laid off. Last year, CVS announced plans to cut nearly 3,000 jobs to reduce costs by $2 billion and increase technology investments.Â
CVS announces the opening of a dozen smaller locations nationwide
After closing thousands of locations, CVS announced it will open 12 new smaller-format stores across the U.S. over the next year. These locations will focus solely on pharmaceutical products such as medicine and first aid care to better meet the community’s specific needs.Â
This new concept will eliminate CVS’s front-store business, as the company has struggled with that sector over the last few quarters.
According to CVS’s full-year fiscal 2024 earnings report, comparable front-store sales decreased by 2.1% compared to the same period last year, and total front-store revenues were down by 4.2%.
The new locations will also be smaller, averaging less than 5,000 square feet, less than half the size of a regular CVS store. Smaller-format stores have become incredibly popular in retail because they provide higher profits for less investment.
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“The new pharmacies will be introduced in select neighborhoods to help bridge gaps in care and make it easier for patients to access medications, immunizations, and other pharmacist-provided health care services,” said CVS.
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