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.Not too long after Tim Wentworth became CEO of Walgreens, he revealed a stunning figure: Roughly a quarter of the pharmacy chain’s stores do not make money.over three years. That’s two weeks after rival CVS announced layoffs of 2,900 corporate staff.
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. The chains have failed to add new incentives for shoppers, beyond printing photos or dropping off shopping returns, says Anshuman Jaiswal, a longtime consultant to retailers and pharmacies. And neither chain has built a meaningful online presence designed to give customers what they need.“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.
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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