The company is beginning to pull back from a heavily criticized part of the market.
Mega retailer Walmart will stop selling tobacco products in some stores, new reports said Monday, as the company begins to pull back from a heavily criticized part of the market.
Walmart will now stop sales in California, New Mexico and Florida, a source told the Wall Street Journal, in a rollout that may go further or stop entirely.
While competitors, particularly those in the healthcare space, have gradually been phasing out selling tobacco, Walmart (WMT) – Get Walmart Inc. Report and other general retailers have continued to sell it, saying customer demand was the current driver.
A company spokesperson confirmed the change to the Wall Street Journal, saying ending the sale of the products would help save space at some stores.
“We are always looking at ways to meet our customers’ needs while still operating an efficient business,” the spokesperson told the Journal.
The company told U.S. News that removing tobacco was a “business decision” made “as a result of our ongoing focus on the tobacco category.”
Walmart
Walmart Wrestled With The Question For Years
Walmart has long existed in a space between selling health care products and having a pharmacy, while also selling things like tobacco and guns.
But the retailer has managed to tread the line carefully in its almost 5,000 stores across red and blue states alike.
The direct contradiction between a store trying to promote wellness and selling one of the world’s deadliest addictions proved to be too much for pharmacy chain CVS (CVS) – Get CVS Health Corporation Report, which was one of the first stores to stop selling tobacco entirely in 2014.
Since then, various retail operations like Costco (COST) – Get Costco Wholesale Corporation Report have experimented with selling it in some places and not others, and have closely watched how it affected their bottom line.
“The shift comes after years of internal debate at Walmart about cigarettes, which U.S. health officials say are linked to 480,000 deaths in the country each year and which are complex for big-box retailers to sell because of regulations,” the Journal reports.
“Top Walmart executives decided to start moving out of the category in some locations before the Covid-19 pandemic, some of the people said, a decision now playing out in stores.”
An End to Tobacco Revenue?
How much revenue Walmart might lose from not selling tobacco is still up in the air.
But for context, CVS has repeatedly said it has lost out in over $2 billion in annual revenue since it stopped selling tobacco, but that it stands by the decision as the morally correct move for a brand centered on customer wellness.
Walmart, which is the largest retailer by revenue, likely has more than that to lose each year — but what it loses in monetary terms, it may gain in consumer sentiment.
