For many businesses in the US, the constant struggle against the economic downturn is forcing big changes. CVS is making its own in an attempt to stay afloat and competitive in a changing market.
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The national chain is already tightening its belt, with the closure of over 1,000 stores across the US. If even the pharmaceutical market is struggling, then the US is in real trouble. Drug, Cosmetic, and Toiletry Wholesaling markets sit comfortably at the third largest in the US, with a $1.4 trillion market size in 2024.
Despite these staggering numbers, even CVS is having to make changes to its tactics. Pressures from rivals like Target and online retailers such as Amazon have demanded changes from the company. Now, along with their closures, they also intend to start a new type of store.
The proposed changes to CVS will introduce smaller stores that function only as pharmacies. Stripping back the dead weight, they are going to supply only pharmaceuticals and some over-the-counter items. These small stores will be around 5,000 square feet.
A CVS spokesperson introduced the changes they are making to their new outlets. "The new pharmacies will be introduced in select neighborhoods to help bridge gaps in care and make it easier for patients to access medications, immunizations, and other pharmacist-provided health care services."
CVS Isn't Alone In Drastic Comapany Changes
Businesses across the US, ranging from food chains to hobby shops, have had to change their business models to survive the ongoing economic winter. The economic downturn is due to numerous elements, including post-pandemic loan repayments, changing attitudes toward spending, and political turmoil.
For CVS, their struggle comes from two directions. The first is the falling reimbursement rates for prescription drugs. When a prescription drug is given, the insurance company will reimburse some of the cost. Recently, those reimbursement rates have dropped, leaving companies like CVS out of pocket.
The second cause for concern comes from the front end of the store, which CVS looks to drop in its changes. Things like cosmetics, confectionary, and household staples are more commonly purchased from competitors.
Whether or not these changes will be enough to pull the pharmaceutical giant from the brink only stands to be seen.
