CVS Health to close 10% of its stores, to fast-track its digital retail strategy

USA – CVS Health, one of the largest pharmacy chains in the US has announced that it will close approximately 900 stores over the next three years as it adjusts to customers who are purchasing more online.

In a news release, the company stated that it will focus more of its efforts on digital growth and transforming its stores into destinations that offer a variety of health-care services, ranging from flu shots to diagnostic tests.

The store closures will begin in the spring of 2022. The company stated that it intends to close approximately 300 retail outlets per year.

This accounts for nearly a tenth of its outlets. However, the company refused to reveal the specific locations of the stores that will close.

Its remaining stores, which sell a variety of consumer goods and snacks, will be expanded to provide more in-person health services.

Throughout the pandemic, Americans have grown accustomed to getting advice, testing, and vaccinations at their local pharmacy.

Accordingly, CVS and other pharmacy chains, in particular, have played a key role in the rollout of Covid-19 vaccines in the United States.

Three kinds of stores

CVS stated that it intends to use three different store formats: one format will be sites dedicated to offering primary care services to its clients, while it will also unveil an enhanced version of its HealthHUB locations with products and services designed for everyday health and wellness needs. 

Further, the retailer’s traditional pharmacy stores that provide prescription services and health, wellness, personal care and other convenient retail offerings will continue to operate as usual.

The company says that its stores will also be integrated further into its health insurance business, Aetna, which it purchased in 2018, where some of its benefit plans encourage Aetna members to seek care at CVS locations, such as its MinuteClinics, which have no or low copays.

Caremark, a prescription benefit management subsidiary, is also owned by the company.

CVS has been working to convert more of its stores into health-care destinations, which could increase foot traffic and generate more claims for its insurance business. It already has approximately 1,100 MinuteClinics, which provide urgent care for common illnesses such as strep throat and flu shots.

A store format known as a HealthHub has been expanded. These locations sell a broader range of medical products, provide more services ranging from therapy appointments for mental health to screenings for chronic conditions, and have other wellness features such as yoga rooms.

The company intends to open 1,000 HealthHub locations by the end of the year. In a highly competitive environment, CVS has outperformed its drugstore competitors on Wall Street, attracting investors with its health-care acquisitions and focus.

Because of the competitive landscape, CVS and its competitors, Walgreens Boots Alliance and Rite Aid, have had to rethink how they can differentiate themselves and remain relevant.

CVS Health digital health migration comes as rival Walgreens Boots Alliance announced in October that it would invest US$5.2 billion into VillageMD to escalate the rollout of hundreds of doctor-staffed clinics at its drugsstores under a new “Walgreens Health” business.

Walmart on the other hand has rolled out “Walmart Health” centers that feature an array of primary medical services, dental care, and behavioral health services as part of a new model.

By and large, the entire drugstore industry has been impacted by disruption, as retail giants such as Amazon, Walmart, and Dollar General have branched out into health care and chased market share.

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