CVS Ending Tobacco Sales

[arizonaguy]

Source: http://www.cnn.com/2014/02/05/health/cvs-cigarettes/

CVS Caremark announced that it will stop selling cigarettes and other tobacco products at its CVS/pharmacy stores by October 1 of this year.

[Super S]

Target did the same thing a long time ago, and it makes sense if sales are falling and you have to take extra measures against theft by keeping tobacco behind the counter.

[BillyGr]

Target did the same thing a long time ago, and it makes sense if sales are falling and you have to take extra measures against theft by keeping tobacco behind the counter.

Not to mention all the extra rules to deal with about selling it (which also has something to do with it being behind the counter for the most part).

[arizonaguy]

Interestingly enough, many Target and CVS stores sell beer, wine, and liquor. I'd imagine that there are "special rules" involving the sales of these products as well.

[storewanderer]

Drugstore formats seem to struggle with theft on cigarettes. Typically in a rather cramped space behind a register counter being operated by a single employee. Camera views aren't great. It doesn't help that many drugstores are located in close distance to convenience stores, and the convenience stores often price the tobacco much lower.

[Alpha8472]

CVS Caremark is changing its name to CVS Health and has ended tobacco sales one month early. CVS Caremark was the part of the company that handles prescription insurance plans for companies. CVS Pharmacy bought this prescription insurance plan managing company in order to increase their own profits. Pharmacy benefit managing companies over the past several years starting pushing mail order pharmacies. CVS saw this and realized that these companies were pushing patients to get their prescriptions through mail order. This was killing CVS stores as those customers were going to mail order and CVS was losing out on sales in their stores.

CVS bought Caremark in order to get into this pharmacy benefit managing business so that they could push patients into going back to physical stores such as CVS Pharmacies. CVS depends on sales in their physical stores to keep their stores alive.

CVS corporate is now renaming itself to CVS health and cutting tobacco sales. CVS wants to project this new image as a healthcare company. They are going to lose 5% in store revenues in tobacco sales, but it is not a big loss. Profit margins on tobacco are fixed, and stores have struggled with theft of cigarettes for years.

CVS corporate is doing this name change and tobacco ban as a public relations move. There is a huge amount of money to be made as a Pharmacy Benefit Manager company. Pharmacy profit can go down hill quickly, but the insurance plan side is where huge profits are to be made when you are dealing with health plans for billion dollar corporations across the country.