CVS Health is embarking on a significant change to its retail strategy, planning to open over a dozen smaller format CVS Pharmacy locations across the United States over the next year. This initiative follows scrutiny within the retail pharmacy sector and aims to address growing healthcare accessibility issues.
According to the Wall Street Journal, these new CVS locations will feature average store sizes of less than 5,000 square feet. Unlike traditional pharmacies, these stores will lack the extensive array of consumer products—such as greeting cards and groceries—that customers might expect. Instead, they are envisioned primarily as full-service pharmacies with limited over-the-counter goods, directly aimed at meeting the specific healthcare needs of the communities they serve.
"The new pharmacies will be introduced in select neighborhoods to help bridge gaps in care and make it easier for patients to access medications, immunizations, and other pharmacist-provided healthcare services," stated a CVS Health spokeswoman, as reported by Drug Store News.
This move by CVS is not just about offering health services; it reflects the company's broader strategy as it adapts to changing market dynamics. Regrettably, CVS has been compelled to step back and reevaluate its footprint due to investor pressure and declines in sales within the general merchandise category. Over the past few years, the company has closed 900 stores between 2022 and 2024 and plans to shut down another 270 stores this year alone, endeavors expected to streamline operations.
CVS is not alone; its main competitor, Walgreens Boots Alliance, is also feeling the pressure. The firm has announced the closure of 1,200 out of its 8,500 stores, aiming to consolidate its operations following the challenges of the recent years, including its recent $10 billion sale to investment firm Sycamore Partners.
While closing existing locations is undoubtedly difficult, CVS maintains its commitment to ensuring accessibility. "Eighty-five percent of Americans still live within 10 miles of our retail pharmacies," the spokeswoman added.
The decision to implement smaller format locations is part of CVS’s goal to make healthcare more accessible and to respond proactively to the shifting behavior of consumers toward online shopping. Both CVS and Walgreens have acknowledged the need to adapt; with many Americans now preferring the convenience of online shopping, traditional drugstores face intensified competition from e-commerce giants like Amazon.
Despite the challenge of increased online shopping, CVS has made strides toward realignment to guarantee their stores are strategically placed to serve communities effectively. The company has also continued to introduce other innovative concepts, including pharmacies integrated with senior care centers run by Oak Street Health, which CVS acquired for $10 billion two years ago.
These ventures not only seek to reinforce CVS's core offerings but also align with their commitment to addressing broader healthcare concerns through localized services. "By taking a customized approach to our footprint... we’re continuing to strategically realign our pharmacy footprint to... support patients and... geographic coverage," the spokeswoman noted. CVS continues to open traditional CVS Pharmacy locations, promising nearly 30 new stores—including those within Target retail spaces—within the coming year.
Overall, this plan not only seeks to navigate through the turbulent waters of the pharmacy retail sector but also aspires to embrace the potential for growth through targeted community engagement and care. The smaller format pharmacies should be able to provide efficient service to those who need it most, paving the way for CVS Health to redefine its role within the ever-evolving healthcare market.