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 healthcare 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 over the past 5 years.
The closures can leave gaps: An analysis 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.