CVS to close 900 pharmacy stores as it shifts to online deliveries

The pharmacy chain plans to close about 9 percent of its US retail estate, but has not said how many people will lose their jobs

(AP/Gene J Puskar)

The US pharmacy chain CVS plans to close around 900 stores over the next three years as it shifts its focus to online drug delivery.

CVS Health, the pharmacy’s parent company, said on Thursday that it would shut down about 300 stores every year for the next three years, starting in spring 2022.

Meanwhile it will “rapidly expand” its online services and open more primary care clinics and “HealthHubs” offering simple services such as therapy screenings and fitness classes.

Yet the closures, representing about 9 percent of CVS’s 10,000 US stores, could exacerbate America’s “pharmacy deserts”, areas of the country where getting to a drugstore requires a significant journey.

Research has found that in some major US cities one in three neighbourhoods is a pharmacy deserts, with black and Latino districts far more likely to qualify.

The company did not say how many people would lose their jobs. Shares rose by as much as 2.9 percent from their price at the end of Wednesday.

CVS said: “The company has been evaluating changes in population, consumer buying patterns and future health needs to ensure it has the right kinds of stores in the right locations for consumers and for the business.

“As part of this initiative, CVS Health will reduce store density in certain locations and close approximately 300 stores a year for the next three years.

“The company is committed to offering impacted colleagues roles in other locations or different opportunities as part of its overall workforce strategy.”

The company’s head of retail and pharmacy Neela Montgomery will depart at the end of 2021, while longtime CVS executive Prem Shah will become its first ever “chief pharmacy officer”.

Pharmacy chains have suffered turbulence during the pandemic, as more people opted to order over the counter drugs and prescribed medication online or bought them alongside their groceries while visiting giant stores such as Walmart and Target,

Neil Saunders, managing director of retail at the business intelligence firm GlobalData, said CVS had “neglected stores for far too long and has pushed some of them into the downward spiral of irrelevance”.

He told CNBC: “The retail side of CVS’s business is shabby,, Too many stores are stuck in the past with bad lighting, depressing interiors, messy merchandising, and a weak assortment of products. They are not destinations or places where people go out of anything other than necessity.

“Their future relies on proper investments being made in both retail and health-care services. And it is no good simply investing in health services if the environment in which they are presented is poor: consumers have choice and will simply take their business elsewhere.”