Drugstore industry seeking remedies

CHICAGO — Changing consumer habits have emptied malls, sent department stores into bankruptcy and transformed grocery stores.

Now it’s the drugstore’s turn. Walgreens disclosed last week that it will close 200 U.S. stores. Then CVS Health said it will slow the pace at which it opens new locations.

For pharmacies, which also face pressures related to reimbursements for medication, getting customers to come in once a month for a prescription refill, or for an occasional gallon of milk or bottle of shampoo, isn’t enough. Walgreens and CVS are both trying to give customers more reasons to visit their stores by offering more health services and better merchandise.

“One of the reasons why they’re closing stores right now is to better position themselves for the future,” said Brian Owens, a senior vice president of retail insight at consulting firm Kantar.

In the past, dispensing medications was the focus, and now drugstores are shifting to make the consumer the focus, he said.

“The store has to work differently for them than it did in the past,” he said.

Walgreens will begin its 200 store closings this fall. It has not identified which locations will close. The news comes just months after Walgreens said it would aim to cut $1.5 billion in annual costs by 2022.

Meanwhile, CVS Health Executive Vice President Kevin Hourican said on an earnings call last week that CVS plans to open 100 stores this year and 50 next year, down from about 300 new stores a year a few years ago. CVS announced in May that it had decided to close 46 underperforming locations.

CVS, which acquired health insurer Aetna in November, plans to turn 1,500 of its stores into socalled HealthHUBs, in which a significant portion of the store is dedicated to health services and products, such as nutritional counseling and equipment for

Nancy Stone / Chicago Tribune Walgreens is closing 200 U.S. stores, and CVS is scaling back on new locations. More health services and partnerships with other retailers will be key to their future, analysts say.