America’s biggest pharmacy chains are closing hundreds of stores, laying off thousands of workers and rethinking their role in our lives.
Walgreens said Tuesday it would close 1,200 stores. Rival drugstore chain CVS recently laid off thousands of staff in a bid to cut costs.
The simplest part of the problem is scale. CVS and Walgreens grew massive nationwide footprints of more than 9,000 and 8,000 stores, respectively. They gobbled up mom-and-pop shops and signed long-term leases for prime locations on street corners.A chain with padlocks secures freezer doors at a San Francisco Walgreens store in July 2023. The store locked its freezers with chains and padlocks to thwart shoplifters that had been stealing frozen pizzas and ice cream.
“If you go to CVS.com or Walgreens.com, if you are placing an order for cough syrup, why don't I sell chicken broth as a product recommendation immediately?” Jaiswal says. “It's about reimagining the business model.”Given the retail struggles, pharmacies could perhaps simply ditch the convenience store and focus on selling medicine — except CVS and Walgreens say it’s harder and harder to make a profit from this part of their business.
Walgreens tested this theory about a decade ago when it got into a public fight with Express Scripts, a pharmacy benefit manager that worked with major health insurers.. For a time, it got kicked out of insurance networks used by millions of people, who simply went elsewhere to get their medicine at the lower in-network prices.
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