National drugstore chain CVS has announced plans to close 900 stores across the country by 2024 as part of a comprehensive retail overhaul. This move comes as more consumers turn to online shopping and rampant increases in crime have affected footfall in physical stores.
The company’s retail footprint strategy, launched in 2021, will result in 300 store closures each year, with a total of 900 expected by 2024. CVS claims the decisions are based on factors such as local market dynamics, population shifts, and community store density.
Speaking about this decision, CVS CEO Karen Lynch stated, “Our retail stores are fundamental to our strategy and who we are as a company. We remain focused on the competitive advantage provided by our presence in thousands of communities across the country, which complements our rapidly expanding digital presence.”
In response to the changing shopping trends brought about by the pandemic, CVS is looking to turn more of its stores into healthcare destinations, offering services such as vaccination shots and medical testing. Despite investigations finding issues with interpreting services for individuals who are deaf or hard of hearing during medical appointments, CVS remains committed to expanding its HealthHub business.
In addition to the closure of physical stores, the company also plans to transition its remaining locations into healthcare destinations. The Department of Justice recently reached a settlement agreement with CVS, requiring them to provide effective communication services to individuals who are deaf or hard of hearing at all of their more than 11,000 locations.
This decision to close stores was first announced in November 2021, with stock prices increasing by 2.81% in response. The company expects to close 300 stores this year and another 300 in 2024 as part of the realignment process. This evaluation is based on changes in population, consumer buying patterns, and projected health needs.
The closure of these stores is also driven by the rampant increase in retail theft, which has forced stores to lock up basic products like toothpaste and deodorant. According to CapitalOne Research, retail theft in 2022 has cost stores an estimated $86.6 billion, with projections indicating this number may rise to over $115 billion by 2025. Studies show that stores catch shoplifters only 2% of the time, with the average shoplifter being arrested once out of every 100 incidents.
Other major pharmacies, including Rite Aid and Walgreens, are also making similar moves to close their doors. Rite Aid recently announced the closure of two more stores, following the closure of 25 stores earlier this year. The company is also reportedly preparing for a Chapter 11 bankruptcy filing after projecting losses of $650-680 million next year.
Walgreens has also closed a store in Berkeley, California, and plans to close at least 150 additional stores as part of their cost-saving strategy while renovating their remaining locations. Despite the challenging landscape for brick-and-mortar retailers, CVS remains committed to serving the communities in which they operate and finding new ways to adapt to changing trends and needs.
