Walgreens is set to close approximately 1,200 locations as the drugstore chain grapples with industry-wide challenges, including reduced prescription reimbursements, rising operational costs, and increased competition from online retailers. The closures come as Walgreens and its rivals, like CVS and Rite Aid, attempt to redefine their role in a market where U.S. consumers are no longer turning to drugstores for convenience.
Drugstores, once prominent fixtures in towns and cities nationwide, are retreating. Walgreens, CVS, and Rite Aid have been impacted by multiple factors, including a fading boost from their role in COVID-19 vaccinations. These challenges have led to shrinking store footprints, with CVS wrapping up a plan to shutter 900 locations and Rite Aid navigating bankruptcy with just 1,300 stores remaining.
Walgreens, which operates around 8,500 stores in the U.S., announced that it will start by closing 500 locations during the current fiscal year. CEO Tim Wentworth emphasized that the remaining 6,000 stores are profitable and form a solid base for the company’s future. “This solid base supports our conviction in a retail pharmacy-led model that is relevant to our consumers,” Wentworth said.
While the company is exploring smaller, more cost-effective stores, there are growing concerns about how these closures could impact access to healthcare and prescriptions, especially in underserved communities.
Experts like Neil Saunders, managing director at GlobalData, believe drugstore chains need to reassess their value proposition. “They’ve really got to rethink how they do business and, most importantly, what value they bring to the customer,” Saunders explained.
As Walgreens shifts focus, the company is also reconsidering what products it sells, with plans to introduce more Walgreens-branded items. However, a significant shift is already evident in its decision to move away from expanding primary care clinics within stores, a strategy its competitor CVS is doubling down on.
Despite these efforts, drugstores face a critical juncture. As Saunders points out, “Drugstores have increasingly become destinations for nothing,” emphasizing the need for them to regain their place in the retail market by offering unique services or experiences that will drive customer loyalty and foot traffic.
