Walgreens and CVS may be the two largest pharmacy chains in the U.S., but this doesn't mean they've been immune to the retail apocalypse that's been hitting brick-and-mortar stores since the pandemic. Retail theft, online shopping, and steep competition from discount sellers have all played a part.
Since the spring of 2022, CVS has shuttered a whopping 900 locations, and in January, the company announced that it would also be scaling back its pharmacy footprint in Target stores. This past October, Walgreens shared that it would be closing 1,200 of its 8,600 U.S. locations, 500 of which are set to cease operations this year. However, this week, both pharmacies made major additional announcements that could affect how you shop and retrieve your prescriptions.
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A private equity firm is buying Walgreens.
After nearly 100 years as a publicly traded company, Walgreens Boots Alliance announced this week that it was being sold to private equity firm Sycamore Partners in a $10 billion deal.
The move is an attempt to improve the pharmacy chain's financial position, which has weakened considerably over the past decade due to "lower prescription reimbursements and heightened retail competition," notes Healthcare Dive.
To this point, Walgreens' first-quarter results released in January showed a $245 million operating loss, compared to $39 million the year prior. And The New York Times points out that Walgreens' share price dropped 50 percent in the last year.
"While we are making progress against our ambitious turnaround strategy, meaningful value creation will take time, focus and change that is better managed as a private company," said Walgreens CEO Tim Wentworth in a statement. "Sycamore will provide us with the expertise and experience of a partner with a strong track record of successful retail turnarounds."
But what does all this mean for customers? That remains to be totally seen, though going private means the company can make decisions without worrying about public markets.
It doesn't seem that the acquisition will change Walgreens' plans to close locations. And as the Times notes, Sycamore "could sell off parts of Walgreens or work with partners as part of the acquisition."
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CVS is opening pharmacy-only stores.
CVS Health is responding to financial difficulties with a plan to open smaller, pharmacy-only stores. According to the Wall Street Journal, the roughly 5,000-square-foot locations (about half the size of a typical CVS) will have traditional pharmacy counters and "health-related products such as over-the-counter cough and pain medications or first-aid care." All other items, including groceries, beauty supplies, and greeting cards, will be absent.
CVS likely made this decision because last year, 80 percent of sales came from the pharmacy department, the WSJ notes.
To start, CVS will open 12 of these smaller pharmacies over the next year. Though they have not released location specifics, CVS spokesperson Amy Thibault told the WSJ, "This work is really focused on introducing or adding pharmacy access in communities that are lacking."
The newspaper gives the example that CVS would likely open such a store in a neighborhood where residents are already getting their household items at Walmart or a dollar store but may not have somewhere to fill prescriptions and receive vaccinations.
