Retail Watchers

CVS is closing dozens of pharmacies inside of Target stores. Target is going to be very upset. Without a pharmacy, many customers will bypass Target and go to Walmart or some other store with a pharmacy.

The pharmacy customers drop off prescriptions and can fill up an entire cart of merchandise and groceries while they wait. Target will lose a significant amount of sales.

CVS saw that running a pharmacy without a front end was subject to losses. We all saw this coming for some time.

https://chainstoreage.com/news-briefs/2 ... get-stores

https://www.cnbc.com/2024/01/11/cvs-to- ... onths.html

I wonder how many of the potentially affected 'host' Target locations(likely about 5-10% of the locations with pharmacies)are low volume to begin with.

I recall that Nugget sold its handful of pharmacies to Long's around 2000 only for CVS to close them by the mid 2010's.

It is not a question of low volume vs high volume. These pharmacies could be very busy, but if the customers are unprofitable customers with insurance plans that give terrible reimbursement rates then the pharmacy would be losing money.

If a pharmacy does low volume, but the patients have profitable insurance then the pharmacy will produce a profit. If the majority of customers are low income Medicaid patients then the pharmacy will lose more money if the prescription counts are high. You lose money on insulin, weight loss drugs, brand name drugs, etc.

Corporate says don't order medications. Keep the drug inventory low. Because if you order too much of the money losing drugs then you end up giving the drugs away at a loss.

There is no question Corporate wants you to not order expensive drugs. Corporate calls it "lean operations." Pharmacy work hours for employees are based on the pharmacy profit.

Alpha8472 wrote: ↑January 11th, 2024, 7:04 pm CVS is closing dozens of pharmacies inside of Target stores. Target is going to be very upset. Without a pharmacy, many customers will bypass Target and go to Walmart or some other store with a pharmacy.

The pharmacy customers drop off prescriptions and can fill up an entire cart of merchandise and groceries while they wait. Target will lose a significant amount of sales.

CVS saw that running a pharmacy without a front end was subject to losses. We all saw this coming for some time.

https://chainstoreage.com/news-briefs/2 ... get-stores

"Dozens" out of 1,800 CVS inside Target is sort of vague. Is that 24, or 96?

Also I am curious if this is part of the previously quoted 900 store closures or these are additional closures in addition to the 900 previously announced store closures.

Some of these CVS inside Target are stupid. For instance in Placerville, CA there is a rather poorly performing Target in a former Kmart, and it has a CVS inside which seems to run limited hours. Then two storefronts down is an oversized and somewhat busy full size CVS (former Longs). This opening made no sense.

I suspect these closures are more motivated by CVS's staffing problems. In Reno they have stores closing pharmacy at 5 PM and 6 PM and 7 PM even on weekdays due to lack of staffing (these should be open until 9 PM or 10 PM). For some reason if there is a Walgreens nearby they figure out how to keep the pharmacy open until 9 PM. Funny how competition works.

Alpha8472 wrote: ↑January 11th, 2024, 7:04 pm CVS saw that running a pharmacy without a front end was subject to losses. We all saw this coming for some time.

I disagree with that sentiment for two reasons:

Pharmacies in CVS and Walgreens are the profit centers of their main stores - why do you think front store pricing there is so high? To make up for the losses in that area. Neither company makes money off the front end like they do the pharmacy. Is there a lot of paperwork to do it? Yes, but that's how they operate.

Target's pharmacies were old dogs to begin with - I never saw a busy Target pharmacy. Target was late to the Pharmacy game, and tried to run them like the stores - chic but not a full selection of everything. I used my local one for some time, but they kept shortening the hours and the number of employees to the point that I just could not get there when they were open.

I had hinted that the relationship was not great... I wonder if Target will attempt to get back into the pharmacy business and this will be the beginning of phasing out CVS? It's tough to get back into the business at this point though.

The Target pharmacists I know said that they lost a lot of business after converting to CVS. No reason to go there if there's a CVS closer to home.

I used Target Pharmacy for a good while--they did some innovative Target-y design-oriented things (they had an upside-down pill bottle that was inspired, along with color-coded bands for the caps so you could tell apart different persons' prescriptions) that of course all went into the shi$$er when CVS took over.

ClownLoach wrote: ↑January 12th, 2024, 8:43 am I had hinted that the relationship was not great... I wonder if Target will attempt to get back into the pharmacy business and this will be the beginning of phasing out CVS? It's tough to get back into the business at this point though.

The Target pharmacists I know said that they lost a lot of business after converting to CVS. No reason to go there if there's a CVS closer to home.

Some of the CVS stores are right across the street from Target. in Cedar Hills, OR, the Target CVS is within 500 feet of a freestanding CVS store. You see that all over NYC as well. Perhaps this cleans up that little mess.

wnetmacman wrote: ↑January 12th, 2024, 7:10 am

Alpha8472 wrote: ↑January 11th, 2024, 7:04 pm CVS saw that running a pharmacy without a front end was subject to losses. We all saw this coming for some time.

I disagree with that sentiment for two reasons:

Pharmacies in CVS and Walgreens are the profit centers of their main stores - why do you think front store pricing there is so high? To make up for the losses in that area. Neither company makes money off the front end like they do the pharmacy. Is there a lot of paperwork to do it? Yes, but that's how they operate.

Target's pharmacies were old dogs to begin with - I never saw a busy Target pharmacy. Target was late to the Pharmacy game, and tried to run them like the stores - chic but not a full selection of everything. I used my local one for some time, but they kept shortening the hours and the number of employees to the point that I just could not get there when they were open.

If the front end was profitable, then why are all the chains cutting it to minimum assortment, jacking up prices to sky high, all self checkouts, and piloting what are in effect pharmacy only stores? Obviously they are not making money there these days due to higher labor costs and margin pressures that volume competitors like Walmart and Target don't have.

Target pharmacy did just fine and they lost a lot of business when converting them to CVS. They weren't super busy, but now you rarely see customers at the pharmacy especially since CVS cut back the hours. It is a bad partnership because CVS is a bad operator that wants to operate at a very low service level. When they took over Target pharmacy the first thing they did was either lay off workers or transfer them to understaffed CVS stores they didn't want to go to. Now that more Targets are going to be left without a pharmacy this is going to really become a deal they regret. I wonder if they have a full non compete agreement, or if Target can reopen these closed pharmacies. If they operate them the same way they did before (plus learn the dirty tricks like not ordering money losing drugs) they will easily be able to recruit unhappy CVS and Walgreens pharmacists and staff.

babs wrote: ↑January 12th, 2024, 8:50 am

ClownLoach wrote: ↑January 12th, 2024, 8:43 am I had hinted that the relationship was not great... I wonder if Target will attempt to get back into the pharmacy business and this will be the beginning of phasing out CVS? It's tough to get back into the business at this point though.

The Target pharmacists I know said that they lost a lot of business after converting to CVS. No reason to go there if there's a CVS closer to home.

Some of the CVS stores are right across the street from Target. in Cedar Hills, OR, the Target CVS is within 500 feet of a freestanding CVS store. You see that all over NYC as well. Perhaps this cleans up that little mess.

It does, but it also shows the true colors of CVS - they chose to keep their stores over Target which shows how little commitment they really had to this deal. Again they removed a reason to visit that Target store because the odds are the customer drives past as many as 5 CVS before they hit that Target. They also made bad decisions, for example apparently CVS knew they were being booted in Long Beach from their store in front of the Target express there as it was going to be redeveloped, but still chose not to open a pharmacy inside the Target. Now the busiest intersection in the entire city, footsteps from both CSU Long Beach and a massive US Naval Hospital doesn't have a pharmacy.

I wonder if they intend to eventually close nearly all the Target locations (except where there is no CVS nearby like much of the PNW where the Target locations became their market entry) and leave them high and dry. They would probably just transfer everyone to their CVS stores they can't staff because nobody wants to work there. Hopefully Target retained the rights to operate pharmacies if CVS chooses to leave a store.