CVS, Walgreens, and Rite Aid are facing challenges from online shopping and discount retailers
- National drugstore chains are closing hundreds of stores due to competition from online shopping and discount retailers.
- About 3,000 fewer drugstores were open at the start of this year compared to 2019.
- Online shopping and discount retailers like Walmart have increased competition for drugstore chains.
- Financial pressures and thefts are also forcing drugstore chains to close locations.
- Other retailers downsized their fleets earlier, but drugstore chains are now feeling the effects.
- Pharmacy chains have tried diversifying and opening primary-care clinics to boost revenues.
- CVS, Walgreens, and Rite Aid have reported significant losses due to shoplifting and organized retail theft.
- While some drugstore locations are closing, most stand-alone buildings are being quickly filled with new tenants.
National drugstore chains such as CVS, Walgreens, and Rite Aid are closing hundreds of stores as they face increasing competition from online shopping and discount retailers. According to analytics company RetailStat, there are about 3,000 fewer drugstores open at the start of this year compared to 2019. Online shopping has been growing in popularity, offering customers a more convenient way to purchase household items. Discount retailers like Walmart, grocers like Aldi, and dollar stores have also increased competition by selling similar items at lower prices. The rise of beauty stores like Sephora has further drawn customers away from drugstore aisles.nnFinancial pressures and rampant thefts are also contributing to the closure of drugstore locations. The prescription side of the business is facing challenges, and thefts have become a significant issue. As a result, drugstore chains are struggling financially, and their creditworthiness has taken a hit. This has slowed down the market for building and buying drugstores.nnDrugstore chains are latecomers to the retail property’s reset. Other retailers began downsizing their fleets about a decade ago due to overexpansion and the rise of e-commerce. However, many retailers have integrated online shopping into their physical stores and are now expanding again. The rate of available retail space has dropped to its lowest level in years.nnDrugstores had advantages that allowed them to delay shrinking their footprints. The need for prescriptions drew customers to their stores, and while there, customers often made additional purchases. In the early 2000s, CVS and Walgreens were rapidly opening and acquiring stores across the U.S. Pharmacies also started selling more groceries and specialty items. However, store growth slowed in the 2010s as drugstores’ retail business lost market share.nnThe pandemic briefly boosted sales of over-the-counter items like Covid-19 test kits, but drugstore retail sales have since normalized. Customers are now gravitating towards value shopping, leading to declining profitability for drugstore chains. The National Association of Chain Drug Stores blames pharmacy-benefit managers for reimbursing pharmacies below cost, resulting in financial losses on prescriptions.nnTo boost revenues, pharmacy chains have tried diversifying their offerings. CVS has acquired the pharmacy-benefit manager Caremark and the health-insurer Aetna. Walgreens has merged with Alliance Boots and is expanding its online shopping options. Rite Aid filed for bankruptcy and is closing locations as part of its restructuring. Some pharmacy chains have also opened primary-care clinics, but profitability has been a challenge.nnWhile drugstore chains are closing some locations, most stand-alone buildings are quickly being filled with new tenants. However, the closure of drugstore locations has led to decreased satisfaction among customers. Shoplifting and organized retail theft have also contributed to significant losses for CVS, Walgreens, and other chains.nnOverall, drugstore chains are facing challenges from online shopping, discount retailers, financial pressures, and thefts. As a result, they are closing stores and reevaluating their strategies to stay competitive in the changing retail landscape.·
Factuality Level: 7
Factuality Justification: The article provides a detailed analysis of the challenges faced by national drugstore chains due to competition from online shopping, discount stores, and other retailers. It includes data on store closures, financial pressures, and strategies employed by pharmacy chains to boost revenues. The information presented is relevant and supported by examples and quotes from industry experts.·
Noise Level: 3
Noise Justification: The article provides a detailed analysis of the challenges faced by national drugstore chains due to competition from online shopping and discount stores. It includes information on store closures, financial pressures, creditworthiness, and strategies employed by pharmacy chains to boost revenues. The article also discusses customer satisfaction ratings, losses due to theft, and the trend of opening primary-care clinics. Overall, the article stays on topic, supports its claims with examples, and offers insights into the changing retail landscape.·
Public Companies: CVS Health (CVS), Walgreens Boots Alliance (WBA), Rite Aid (RAD)
Key People: Henry Fonvielle (President of Rappaport), Mike Blackburn (Analyst at RetailStat), Christie Boutte (Senior Vice President of Reimbursement, Innovation, and Advocacy at the National Association of Chain Drug Stores), Brandon Svec (National Director of U.S. Retail Analytics for CoStar Group)
Financial Relevance: Yes
Financial Markets Impacted: Pharmacy chains (CVS Health, Walgreens, Rite Aid)
Financial Rating Justification: The article discusses the financial pressures and challenges faced by pharmacy chains due to competition from online shopping, discount stores, and other retailers, leading to store closures and impacting their creditworthiness. This has implications for the companies’ financial performance and stock prices.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: There is no mention of any extreme event in the article. The focus is on the decline of national drugstore chains due to competition from online shopping and discount stores.·
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