CVS to Close 900 Stores Amid Business Model Changes
The Pandemic’s Impact on Consumer Habits
CVS Health (CVS) is doubling down on its digital efforts. It has also announced plans to close roughly 900 stores over the next three years as part of the drugstore chain operator’s efforts to offer more online services in response to changes in consumer habits.
Consumers changed the way they shop at drugstores during the pandemic. Consumers are increasingly filling prescriptions online and through mobile apps and using curbside pickup or delivery to purchase drugstore items. There is also higher demand for telemedicine as people seek answers from healthcare professionals. By closing some of its stores, CVS can focus on transforming existing ones into healthcare hubs which will offer services including diagnostic testing and vaccines.
CVS to Shutter 9% of Its US Stores
CVS will begin closing stores next spring, shuttering roughly 300 per year. Overall, the drugstore chain is closing roughly 9% of its 10,000 stores in the US. CVS has yet to name which stores will be closed or how many employees will be impacted.
The drugstore company is betting that creating healthcare destinations inside its retail locations will boost foot traffic and increase sales. As it stands, CVS operates 1,100 MinuteClinics within its stores, which give customers access to urgent care. CVS operates what are called HealthHubs at select locations. These sell more medical products and offer services such as mental health assessments and health screenings. CVS wants to have 1,000 HealthHubs in stores by the end of 2021.
MinuteClinics, HealthHubs, and Traditional Drugstores
CVS ultimately wants to operate three different types of stores: MinuteClinics, HealthHubs, and its traditional drugstore. The company also plans to integrate its stores with health insurance company Aetna, which it acquired in 2018.
This decision to overhaul the CVS business model comes at a time when the drugstore and healthcare landscape is becoming more competitive. Big names like (AMZN) and Walmart (WMT) have recently entered the market. Instead of doubling down on selling shampoo and filling prescriptions, CVS is working to create healthcare destinations.
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