CVS to close 900 stores

Alpha8472
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Re: CVS to close 900 stores

Post by Alpha8472 »

The CVS pharmacies inside of Target are actually a good source of profit for CVS. The big source of profit now is made by vaccinations and expensive insulin. The busy Target stores are the perfect place to get people who want vaccinations. Flu, shingles, pneumonia vaccines, etc. A single vaccination could be equal to the profit of 50 prescriptions.

The locations in Target are too small for doctor's offices. CVS would want to add doctor's offices as well. That is where the profit is made.

The problem with mail order pharmacies is that they lack the 2 most profitable items of brick and mortar pharmacies: insulin and vaccinations. Most mail order pharmacies do not deliver insulin. It is very expensive to overnight insulin and when it arrives it is unlikely people will be at the house to make sure it does not sit in the sun all day long.

Target has been adding Optical Sales and Eye Exam doctors to their stores. It is a source of profit. CVS so far has not added any optical. Their stores have so little traffic, that it would not make sense.
Last edited by Alpha8472 on November 21st, 2021, 3:15 pm, edited 1 time in total.
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Re: CVS to close 900 stores

Post by buckguy »

storewanderer wrote: November 20th, 2021, 7:00 pm Discount Drug Mart kind of reminded me of a Longs or a Drug Emporium type of place. Really was a step back going into that store. The one I went into was a modern looking freestanding building outside, even with a drive through pharmacy. Once inside, it was like being transported back 30 years. I was surprised they even had scanning registers.

Marc's was a weird place. Seemed like a Big Lots meets Grocery Outlet meets 99 Cents Only.

All of the above are clearly depending a lot more on sales of merchandise than prescriptions. Whether or not that is how they want it to be, that is how it is, and they seem to operate accordingly.
Marc's began as Bernie Schulman's. Schulman was an original partner in Revco which pioneered prescription-heavy discount drug stores that focused on health and beauty to the exclusion of other lines. Bernie Schulman's began by underpricing everyone else on prescriptions--at Revco, he had learned how to deal with drugmakers who didn't want their products discounted. The first store (still open) was a former super market in the 25K sf range, so they had non-drug items which were usually closeouts. Ironically it was in a plaza with a Revco at tehe other end. They moved into food in the 90s after management changed (Schulman died and his wife ran the stores for awhile) and supermarket ownership in Cleveland became more concentrated under Giant Eagle. They operated mostly in former supermarkets in the beginning and invested little in decor or anything else and managed costs closely---a friend of mine worked for them in earlier years. They were cash only for a long time, then added Discover and finally added VISA and MC in the last 10 years. Their new builds are very basic and the front end is always light. I pickup health and beauty items when I'm in Ohio--usually at the original store--which hasn't been touched in ages. They still underprice (the reason to go there) and no one seems to mind.

Their model grew organically and I would imagine that they are very conservative about where they open and what they sell. there is some customization---the original store sells items from an Italian bakery.
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Re: CVS to close 900 stores

Post by jamcool »

For some reason Revco made a single expansion West..to Arizona in the late 60s, buying the Ryan-Evans chain in Phoenix and adjacent areas. The Ryan/Revco stores were smaller than their main competitors in Phoenix-Walgreens and Skaggs-just prescriptions and HBA, plus a small amount of sundries like candy and snacks.
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Re: CVS to close 900 stores

Post by mbz321 »

Alpha8472 wrote: November 21st, 2021, 11:10 am CVS so far has not added any optical. Their stores have so little traffic, that it would not make sense.
Actually, there are several CVS locations now with optical departments. I believe it is like most other optical operations where the Doctors are independent, not employed by CVS.

https://www.cvs.com/optical/optical-center-locations
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Re: CVS to close 900 stores

Post by Alpha8472 »

I would think that CVS really has a tough time competing with Lenscrafters in most areas. There are Lenscrafters all over the place including Macy's.

The CVS Optical Centers seem to be only in Southern California. I have not seen any in Northern California where most CVS stores were former Longs Drugs. Longs never had Optical centers. However, Longs Drugs had Quest Diagnostics offices in some of their stores.
Last edited by Alpha8472 on November 21st, 2021, 8:36 pm, edited 1 time in total.
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Re: CVS to close 900 stores

Post by storewanderer »

buckguy wrote: November 21st, 2021, 12:33 pm

Marc's began as Bernie Schulman's. Schulman was an original partner in Revco which pioneered prescription-heavy discount drug stores that focused on health and beauty to the exclusion of other lines. Bernie Schulman's began by underpricing everyone else on prescriptions--at Revco, he had learned how to deal with drugmakers who didn't want their products discounted. The first store (still open) was a former super market in the 25K sf range, so they had non-drug items which were usually closeouts. Ironically it was in a plaza with a Revco at tehe other end. They moved into food in the 90s after management changed (Schulman died and his wife ran the stores for awhile) and supermarket ownership in Cleveland became more concentrated under Giant Eagle. They operated mostly in former supermarkets in the beginning and invested little in decor or anything else and managed costs closely---a friend of mine worked for them in earlier years. They were cash only for a long time, then added Discover and finally added VISA and MC in the last 10 years. Their new builds are very basic and the front end is always light. I pickup health and beauty items when I'm in Ohio--usually at the original store--which hasn't been touched in ages. They still underprice (the reason to go there) and no one seems to mind.

Their model grew organically and I would imagine that they are very conservative about where they open and what they sell. there is some customization---the original store sells items from an Italian bakery.
My funny story on Marc's was I took a trip back and flew into Columbus but flew part of the way there on Frontier which was the first time I had flown them then switched airlines in DEN. Given their baggage charges, but hearing you could pack a backpack free, and given it was summer, I went with a backpack on the plane there figuring I would just pick up a new suitcase at some point while I was on my trip. I figured I could literally buy a new cheap suitcase, for what Frontier would charge me to carry a suitcase on or check a suitcase. So after visiting some of the various tourist? attractions in Columbus including Giant Eagle, Kroger, etc., I stumbled upon Marc's. I spent a good amount of time in the store given it was the first time I had been inside one. In an alcove in the back corner of the store was a giant display of luggage, all at very reasonable prices. I would say I got what I paid for but it served the purpose at the time.
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Re: CVS to close 900 stores

Post by BillyGr »

storewanderer wrote: November 20th, 2021, 9:55 pm The one category where I think all of these drugstore chains seriously underperform is vitamins. How did these chains lose that category the way they have? They have a ton of SKUs but seem to be completely ineffective at moving any volume of product. They spend hours every week putting up/taking down the sale tags for the never ending buy one get one free sales that seem to just change brands every week.
Simple answer - the prices.

Our local (chain) supermarket is cheaper for many of the vitamin items than the drugstores are even when it is buy 1 get 1 free.

So why buy 2 there and still spend more than buying 2 at regular price at the supermarket?

(I would suspect it is even worse if compared to other options such as a Walmart or club store).
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Re: CVS to close 900 stores

Post by storewanderer »

BillyGr wrote: November 22nd, 2021, 9:46 am
storewanderer wrote: November 20th, 2021, 9:55 pm The one category where I think all of these drugstore chains seriously underperform is vitamins. How did these chains lose that category the way they have? They have a ton of SKUs but seem to be completely ineffective at moving any volume of product. They spend hours every week putting up/taking down the sale tags for the never ending buy one get one free sales that seem to just change brands every week.
Simple answer - the prices.

Our local (chain) supermarket is cheaper for many of the vitamin items than the drugstores are even when it is buy 1 get 1 free.

So why buy 2 there and still spend more than buying 2 at regular price at the supermarket?

(I would suspect it is even worse if compared to other options such as a Walmart or club store).
I always felt the other problem was more they did not get into herbal/alternative type vitamins heavily enough. Rite Aid tried to pivot a bit with GNC into "body building" type powder etc. items which in my view in the 90's and early 00's did get them some movement but since then I think sales on that stuff have long since moved online.

Vitamins are a good business as people will take them regularly, every day. OTC medicines are nice and high profit but the reality is a lot of people only take them on an as needed basis, not every day.
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Re: CVS to close 900 stores

Post by buckguy »

The only chain I can remember ever doing much with vitamins was Revco, which for them was their original business (the V in Revco stood for vitamins). Places like GNC are better position than drug chains to capitalize on the latest nutritional fad involving vitamins, although I don't think there's as much of that going on as in the past. Instead you get things like Melatonin.
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