Drugstores tinkering with new looks

By Tom Murphy

AP Health Writer

Posted 8/5/24

America’s drugstores are testing smaller locations and more ways to offer care as price-sensitive shoppers look elsewhere.

Customers may see Walgreens stores that are one-fourth the size …

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Drugstores tinkering with new looks

Posted

America’s drugstores are testing smaller locations and more ways to offer care as price-sensitive shoppers look elsewhere.

Customers may see Walgreens stores that are one-fourth the size of a regular location or CVS drugstores with entire primary clinics stuffed inside. If these experiments succeed, the new stores might improve access to care and create a more lasting connection with customers, analysts say.

“Everyone looks at health care and says, ‘Oh yeah, it’s a market that’s ripe for disruption,’” said Neil Saunders, managing director of consulting and data analysis firm GlobalData. “But it isn’t easy to disrupt.”

Walgreens CEO Tim Wentworth said recently that his company could close a “significant portion” of underperforming stores in the next few years. CVS Health is going through a round of closings. Rite Aid has filed for bankruptcy. Thousands of independent drugstores have closed over the past five years.

The closures can leave gaps: An Associated Press analysis published in June found that urban neighborhoods that are majority Black and Latino have fewer pharmacies per capita than white majority neighborhoods.

There are still more than 30,000 drugstores scattered around the country, but even Walgreens executives admit that the market is overbuilt.

The stores have struggled with increased competition from Amazon and lower-price options like Walmart or Dollar Tree. They’re also dealing with theft, growing costs and thinner prescription reimbursement.

Some are responding with new looks. Walgreens is testing a store in Chicago that has digital kiosks where customers place orders. A separate desk offers pickup of items ordered at the kiosks or online. The company also has opened about 100 mini drugstores focused on health and wellness and featuring store-brand merchandise.

Walgreens started testing these stores in 2019 and plans to add more this year.

Walgreens spokesman Jim Cohn said shopper preferences are shifting, and the company aims “to meet them where, when and how they want to shop.”

Saunders notes these stores are less expensive to run and allow the company to serve areas without enough people to support a bigger store.

At one of these locations in Indianapolis, only four short aisles separate the front door and the pharmacy counter in the back. Healthy snacks, vitamins, first aid supplies, and the usual mix of antacids and Advil fill its shelves.

But there are no magazines and only small selections of greeting cards and beauty products at the store, which is closed on Sundays and sits about a half mile from a vacant Walgreens.

Customer Leonard King has visited several times. He says his prescriptions are ready on time, and the store seems to have decent supplies.

“Being a diabetic, sometimes medicines are hard to get,” the 67-year-old Indianapolis resident said.

But King also said he misses being able to shop for things like toiletry items that can be found at bigger stores.