American drugstore chains like Walgreens and CVS Health are modifying their business models to accommodate changing customer needs and meet expectations. These changes include minimizing store sizes and integrating healthcare services into their offerings.
Walgreens, for instance, is shrinking its retail area to pay more focus to healthcare, while CVS Health is steering their ‘HealthHUB’ stores towards having more than 20% of their floor area dedicated to healthcare services. Drugstores are transforming from merely being medication dispensaries to comprehensive healthcare centers.
Smaller store designs are being trialed, cutting traditional store sizes by about a quarter. These designs aim to streamline access to healthcare and foster enduring customer relationships. Walgreens is supplementing its designs with digital displays and self-service checkouts for improved user convenience. CVS, on the other hand, is incorporating an array of health services within their new clinics which include chronic disease management, prevention programs, and health screenings.
The downsizing of stores is a reaction to the struggle within the industry, where competitors have been closing down and others filing for bankruptcy.
Drugstores’ shift towards integrated health services
In response, larger chains are placing more investment into digital and home delivery options. Retailers like Walmart and Target are also feeling the pressure, and the urgency to find sustainable solutions that keep customers satisfied without compromising profitability.
While store closures are widespread, there are still over 30,000 drugstores operating nationwide. The field is however threatened by online retailers such as Amazon as they grapple with rising operational costs, increased theft, and dwindling prescription reimbursements. In response, some chains are diversifying their services, with a few going digital. The businesses have also been exploring ways to manage costs efficiently and increase security measures within their premises.
Walgreens, as part of its evolving strategy, adopts a new format featuring digital kiosks for customers and a pick-up desk. Simultaneously, CVS Health is integrating primary care clinics into some of its stores. The industry aims to simplify customer interactions and maintain patronage, even as competition intensifies.
