CVS operating Schnucks (Grocer) Pharmacies

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CVS operating Schnucks (Grocer) Pharmacies

Post by SamSpade »

CVS is taking over the pharmacy department, similar to what they did at Target a few years ago.
In a few cases, they felt the grocery was too close to another CVS Pharmacy so they are "selling those records" to the nearby pharmacy instead of choosing to operate inside the supermarket.
CVS to take over Schnucks Pharmacies
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Re: CVS operating Schnucks (Grocer) Pharmacies

Post by pseudo3d »

Pharmacies aren't the money-maker they used to be, but a supermarket (basically the very definition of food and drug) getting out of the pharmacy business should sound alarm bells ringing.

I've never been to Schnucks, but it seems to be one of the poorest-performing regionals out there. Hy-Vee has done perhaps irreparable damage to Cub Foods' market share in Minneapolis (after only entering the area about 7 years ago), H-E-B continues to do gangbusters in its territories, Giant Eagle continuing to add Market District stores, Publix continuing to expand and multiply, and Price Chopper continues learning as it transitions the chain toward Market 32.

None of these other chains have ever pulled out of a market after expanding (at least not in the last past 20 years), which Schnucks did--their Memphis stores were sold in 2011 after they bought Seessel's from Albertsons in 2002 and converted them to their own brand. Since then, they haven't entered any new markets.
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Re: CVS operating Schnucks (Grocer) Pharmacies

Post by Alpha8472 »

I can see some of those supermarket pharmacies losing a lot of money if they are low volume. The sad part is that many of the pharmacy employees will probably not be rehired by CVS. CVS is notorious for understaffing their pharmacies. Once the pharmacies are converted to CVS they will probably switch over to minimal staffing. That will probably mean firing the pharmacy technicians and leaving the sole pharmacist as the only employee. Many of these supermarket pharmacies get so few prescriptions that CVS would say that the prescription count barely justifies having 1 employee on payroll.
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Re: CVS operating Schnucks (Grocer) Pharmacies

Post by buckguy »

Memphis is one of those odd markets that have been an elephant's graveyard for operators over the years and yet eternally mediocre Kroger has succeeded. Giant Eagle is odd comparator as they have not done that well moving westward---they left Toledo rather quickly---and southward into Maryland didn't work for them either. Their Market District stores are a joke compared with Whole Foods or a true upscale chain like Heinen's in Cleveland.

Schnucks has been the dominant chain St Louis for decades and their strategy in recent years has been to acquire stores in and around their core markets. Their sales have been flat for the last several years which would not be unexpected given that they're not in a growing market and have increasing competition. They're clearly looking to improve profits having closed a logistics facility and contracting out distribution to further flung stores. They've also closed some of the stores they picked up from Shop & Save which weren't profitable. They probably bought a lot of those stores with the intention of closing them but keeping out new competition.

Supermarkets generally don't have much market penetration on prescriptions and with the trend toward mail prescriptions and the role of prescription plan managers like CVS Caremark, supermarket pharmacies seemed destined to slowly disappear or get leased to CVS or Walgreen.
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Re: CVS operating Schnucks (Grocer) Pharmacies

Post by pseudo3d »

buckguy wrote: March 11th, 2020, 7:09 am Supermarkets generally don't have much market penetration on prescriptions and with the trend toward mail prescriptions and the role of prescription plan managers like CVS Caremark, supermarket pharmacies seemed destined to slowly disappear or get leased to CVS or Walgreen.
In the grand scheme of things, they don't have a great market share on pharmacies, but in any given city, they have a share of customers and can make it work, and even if the pharmacy itself doesn't make (much) money, it can help customers get into the main store.

As it stands right now, supermarkets that exit the pharmacy business are going nowhere fast. When New Albertsons or Winn-Dixie started closing a pharmacy in a store, that usually indicated the store was on its way out, and whole chains that do it that do it are even worse (Marsh, Shopko). My guess is that Schnucks getting out of the pharmacy business (and the article points out that pharmacies near a CVS were closed entirely, something I think Target DIDN'T do) is a cry for help but also a poison pill to ward off Kroger or Albertsons from sniffing at it.
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Re: CVS operating Schnucks (Grocer) Pharmacies

Post by storewanderer »

Schnucks has a pricing issue. Their prices are too high. They actually have pretty good looking stores with nice, large, and very extensive fresh departments. Produce and bakery are particularly large and very high quality. They seem to staff their stores well and generally are a decent enough place to shop.

With that said I thought 5 years ago they would fit in as a Kroger division like a glove. They reminded me so much of Fred Meyer on the grocery side (which at the time was noticeably better than the usual Kroger), I thought I was at Fred Meyer.

Schnucks also runs in a lot of less than affluent markets and areas that are very working class. They seem to be trying to run an upper middle class type of store, in a lot of medium sized markets that are solidly middle class at best.

With that said, it is interesting they have chosen to exit the pharmacy business. Schnucks has a history of running large stores, old Schnucks Walgreens co-branded stores decades ago, etc. But I would not say an exit is a sign of a weak regional. Stater Bros. exited pharmacy and it is anything but a weak regional. But Stater also does not have a history of running large format combo stores. Raleys got rid of 1/4 of its pharmacies and is not what I'd call a weak regional (though they have a number of weak spots geographically) and historically has a history of, and built its company on, running large format combo grocery/drug stores.
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Re: CVS operating Schnucks (Grocer) Pharmacies

Post by pseudo3d »

storewanderer wrote: March 11th, 2020, 7:55 pm With that said, it is interesting they have chosen to exit the pharmacy business. Schnucks has a history of running large stores, old Schnucks Walgreens co-branded stores decades ago, etc. But I would not say an exit is a sign of a weak regional. Stater Bros. exited pharmacy and it is anything but a weak regional. But Stater also does not have a history of running large format combo stores. Raleys got rid of 1/4 of its pharmacies and is not what I'd call a weak regional (though they have a number of weak spots geographically) and historically has a history of, and built its company on, running large format combo grocery/drug stores.
Stater Bros. had pharmacies in about 10% of their stores, and seemed to be more of an experiment than anything else, as the store, from my impressions, seeks to try to capture the "hometown" feel of grocery stores, not trying to be the best and the brightest super combo store out there, or trying to expand to new markets through new-builds or acquisitions, much as nearly every other grocery operator has done (and it's a long list).

Raley's shuttering a third of their in-store pharmacies (27 of 96) suggests more of evaluating which pharmacies worked and which ones didn't, but it does seem to put it on the watch list.

However, yanking the plug on the entire pharmacy operation for a regional chain sounds alarm bells ringing (especially since overlapping locations are closing—I don't think Target's was like that). Target's CVS deal was somewhat lessened by the fact that Target seemed to have an idea of where they wanted to take the chain, and operating pharmacies wasn't part of that plan. Schnucks on the other hand...
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Re: CVS operating Schnucks (Grocer) Pharmacies

Post by Alpha8472 »

CVS will only open a pharmacy in a store that does not sell tobacco. This means that most supermarket chains are off limits to CVS.

Many store chains will not be willing to give up tobacco just to have CVS take over their failing pharmacy operations.

When Elephant Pharmacy was failing, they lost their contract to secure brand name drugs. This made it so that people could not get their urgent brand name only drugs such as essential HIV medications to keep patients alive. Patients ended up transferring their prescriptions to other pharmacies which led to the closure of the entire chain. If you cannot keep medications in stock, your business is dead. Failing pharmacy operations is the first symptom of a business that could go out of business.

With so few pharmacies Schnucks was probably not able to secure decent prices on drugs. CVS with its buying power can get drugs at lower prices and keep profitability.
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Re: CVS operating Schnucks (Grocer) Pharmacies

Post by veteran+ »

It is disturbing to accept that CVS seems to be unstoppable.

IMO, Riteaid is the most horrible major drug store chain in the USA and CVS is a close second (BTW, I can't stand Walgreens either).

Unfortunately CVS is currently my drug store because there are no others in my area. Also the nearest grocery stores do NOT have pharmacies. Even the Target has a CVS with shorter hours of operation.

I will NOT go inside a Walmart so I'm stuck with CVS.

Frankly I am hard pressed to say ANYTHING nice about CVS. Prices are HIGH but not as high as Riteaid. Employees? VERY few and very stressed and NOT happy. The pharmacy and everything about it is a TOTAL joke from important things to minor things.

These chains (Walgreens, Riteaid, CVS) were "allowed" to get bigger and bigger with all those promises that NEVER came true.

Same ole story over and over again and we never seem to get it. LOL :lol:
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Re: CVS operating Schnucks (Grocer) Pharmacies

Post by klkla »

pseudo3d wrote: March 11th, 2020, 9:01 pm Stater Bros. had pharmacies in about 10% of their stores, and seemed to be more of an experiment than anything else.
I don't think it was an experiment. Many of the divested stores they bought when Albertson's and Lucky merged had pharmacies. That was the reason for going into the pharmacy business.
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