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How CVS and Walgreens Deal with Competition
Much of the news concerning Walgreens and CVS retail pharmacies involves closures and more closures, as well as the fact that Walgreens will go private following its acquisition by Sycamore Partners.
What the news hasn’t said, however, is that these national chains aren’t doomed. According to a report from Placer.ai:
- CVS saw overall visits increase by +0.6% and average visit per location increase by 2.9% in Q4 2024.
- Walgreens did see foot traffic lag, while average visits per location increased during 2024.
The Placer.ai report added that the above trends have remained the same into 2025.
“National drugstore chains continue to offer consumers a valuable combination of convenience and specialization,” Placer.ai Head of Analytical Research R.J. Hottovy told Connect CRE. “Many of the specialized products and healthcare services they provide are difficult for grocers to replicate and challenging for independent retailers to scale.”
One notable change CVS has made is a stronger focus on health, wellness and beauty products. “They also moved away from traditional front-of-store categories like greeting cards and grocery items,” Hottovy said. “This strategy seems to be enhancing the customer experience and contributing to improved foot traffic trends. We expect Walgreens to adopt a similar approach in the future.”
The Placer.ai report also explained that CVS and Walgreens are the major players in the pharmacy space, “controlling the lion’s share of offline pharmacy visits.” While the chains continue reducing their footprints, their overall market presence is expanding.
But intense competition remains an issue.
“A number of grocery, superstore, club and online retailers have stepped up their game with respect to pharmacy, which has increased the competitive pressures facing national drug stores,” Hottovy pointed out. “Many of these chains have been more aggressive with price rollbacks and other promotions, which is another competitive headwind that national drugstores are currently facing.”
It remains to be seen whether CVS’ and Walgreens’ retrenchment efforts will assist their operations in the changing and challenging retail pharmacy environment. Still, “store footprint optimization and a renewed focus on health, wellness and beauty products should help CVS and Walgreens strengthen their position and help them better compete in this evolving landscape,” Hottovy observed.
- ◦Lease
- ◦Economy
