Walgreens, one of the largest drugstore chains in the U.S., has announced plans to close around 1,200 locations as part of a strategic shift in response to changing consumer behavior. The company, along with its rivals CVS Health and Rite Aid, is struggling to define its role in an era where shoppers no longer prioritize convenience from traditional drugstores.
Factors such as shrinking prescription reimbursement, rising costs, and increased competition from online retailers have contributed to the decline of traditional drugstores. The boost they received from leading the COVID-19 vaccination effort has also waned.
As these companies scale back operations, concerns have been raised about access to healthcare and prescriptions in many communities. Industry experts believe that smaller versions of these chains have a future in U.S. retail but acknowledge the need for major changes in their business models and value propositions to the customer.
Walgreens plans to prioritize closing underperforming stores where the property is owned by the company or where leases are expiring. The company’s CEO, Tim Wentworth, emphasized the importance of focusing on profitable stores to build a foundation for future growth.
Additionally, Walgreens is exploring the introduction of smaller, more cost-effective stores and experimenting with offering more Walgreens-branded products. The company is also reevaluating its healthcare operations and may sell all or part of its VillageMD clinic business.
Industry analysts have criticized Walgreens for neglecting its store appearances and customer service in recent years, resulting in declining store visits and market share. The company’s challenge is to differentiate itself from other retailers and become a destination for consumers seeking value and unique offerings.
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