Focus on Smaller Store Formats

In an announcement to FOX Business, CVS confirmed plans to open at least a dozen smaller locations within the next year. These stores are designed to be less than 5,000 square feet in size, featuring full-service pharmacy operations coupled with a limited selection of over-the-counter products tailored to meet the specific needs of local communities.

Industry Response and Challenges

The shift to smaller stores illustrates a broader trend in retail as companies seek to optimize operations amid fierce competition, particularly from online marketplaces. CVS spokesperson remarked, “By taking a customized approach to our footprint that is focused on the specific needs of the communities we serve, we’re continuing to strategically realign our pharmacy footprint to better support patients and ensure the right geographic coverage.”

Traditional Locations Still Viable

Despite the emphasis on smaller pharmacies, CVS will continue to launch traditional stores that include a full pharmacy and front retail space. Plans for the year also involve the opening of nearly 30 such traditional CVS Pharmacy locations, some of which will be situated within Target stores.

Broader Industry Trends

According to emarketer senior analyst Rajiv Leventhal, the blend of retail and pharmacy has become increasingly challenging for major players like CVS and Walgreens, as consumers lean more on online shopping for everyday items. This has been reflected in the rising number of closures by CVS and other pharmacy chains like Rite Aid and Walgreens, which have recently taken steps to resize their operations.

From 2022 to 2024, CVS closed a total of 900 stores while simultaneously opening 100 new locations, with additional closures expected in 2025.

Market Movements and Predictions

The industry landscape has changed significantly, further evidenced by Rite Aid’s recent bankruptcy and Walgreens’ announcement to close approximately 1,200 stores over the next few years. Walgreens recently agreed to a deal that would take the company private for roughly $10 billion, highlighting its financial restructuring amidst market challenges.

Leventhal anticipates that the trend of store closures will likely accelerate, as CVS and Walgreens adapt by concentrating on pharmacy services in their remaining locations, adjusting to consumer demands for better pricing, speed, and convenience.

Conclusion

With their focus on smaller pharmacies, CVS aims to stabilize its operations by relying less on in-store traffic while strengthening the role of pharmacists in healthcare decisions. This strategic pivot recognizes the enduring necessity for medication access while navigating the evolving retail landscape.