Several Major Pharmacies Close Thousands of Stores as Profits Plummet

This trend has led to the closure of thousands of small businesses and even large corporations that only offer specific products. Now, in 2024, hundreds of popular pharmacies are closing their doors for good.

Smaller grocery stores, retail shops, and drug stores have gone out of business all around the country. Instead of leaving a gap in the market for new brands to move in, customers seem to be leaning even more heavily on big box stores.

Millions of Americans stayed home for weeks and even months, buying the vast majority of their necessities online. Therefore, stores without a strong online presence or delivery options were forgotten.

As smaller stores have always had to charge more for products that the big-name companies, many Americans simply had to switch to box stores in order to ensure they didn’t spend more than they were earning.

In fact, the National Retail Association reported that because many people were out of work, police were hesitant to make arrests and confine shoplifters to close quarters, and products were more expensive, shoplifting became quite common practice around the country.

The cost of living is still exceptionally high, smaller stores still have to charge more than big box chains, and retail theft is still at an all-time high.

Executives for the brand say that they have been particularly hard hit by retail theft and organized retail crime.

However, while this practice saves Walgreens and other companies money on theft, it also makes it more difficult for customers to shop and deters them from shopping in these stores.

The company began a partnership with Village MD, a standalone clinic attached to hundreds of Walgreens locations. Unfortunately, the partnership forced the pharmacy to take a $6 billion loss as the primary care clinics went under.

On a Q3 earnings call, CEO Tim Wentworth told analysts, “We’re at the point where the current pharmacy model is not sustainable and the challenges in our operating environment require we approach the market differently. We are in active discussions … to align incentives and ensure we are paid fairly.”

Walgreens currently has over 8,600 storefronts throughout the country. Closing 25% of stores would mean up to 2,150 locations with thousands of employees laid off.

He said, “75% of our stores drive 100% of our profitability today. What that means is the others we take a hard look at, we are going to finalize a number that we will close.”

“The consumer is absolutely stunned by the absolute prices of things, and the fact that some of them may not be inflating doesn’t actually change their resistance to the current pricing,” he said. “So we’ve had to get really keen, particularly in discretionary things.”

That’s because stores in downtown areas are much more expensive to run, as they need additional staff and occasionally increased security. Stores in downtown areas are also much more susceptible to theft and shoplifting, which is one of the biggest causes of company losses.

Online shopping is a guaranteed way to remove shoplifting and avoid paying minimum-wage employees. Walgreens hopes that it can increase profits as under-performing stores are shut down.

CVS recently announced that it will also close more than 300 storefronts in 2024 and an additional 600 stores will be closing in 2025.

Amy Thibault explained, “[the closings] are based on our evaluation of changes in population, consumer buying patterns and future health needs to ensure we have the right pharmacy format in the right locations for patients.”

The brand has shuttered 431 stores nationwide since October 2023 and has already announced that dozens more will likely close next year.

They hope that by filing for bankruptcy and closing hundreds of stores, they will be able to stay afloat and, eventually, start turning a profit again. However, experts are unsure if they will be able to come back from this.

First, tens of thousands of people will lose their jobs. One report stated that more than 5,000 CVS employees will be let go between 2024 and 2025, thanks to their proposed closures.

Although large retailers like Walmart and Costco have pharmacies (hence the struggle for smaller stores to stay viable), these stores aren’t available on every street corner.

Some elderly Americans or others who don’t drive could find it difficult to get their prescriptions filled if their local pharmacy is shut down. Even those who do drive could find themselves in a dangerous situation if they need their medication right away.

According to one report, small businesses circulate more than three times the amount of money that large chains do into the local economy. In other words, small businesses, or even smaller businesses, are absolutely essential to the American economy.

However, as prices are currently so high, millions of Americans simply cannot afford to buy anything except the cheapest possible option. Until the cost of living comes back down, small businesses will continue to suffer.