CVS Health is rolling out new and smaller pharmacy formats amid hundreds of drugstore closures across the industry and investor pressure to boost profits.
CVS this year will rollout “smaller format” locations in at least a dozen locations, the Wall Street Journal reported over the weekend. This comes as CVS’ main rival Walgreens Boots Alliance works on a financial turnaround, closes hundreds of stores and prepares for private ownership after Walgreens last week announced a $10 billion sale to Sycamore Partners.
“We plan to open a dozen or more smaller format CVS Pharmacy locations in select communities nationally over the next year,” CVS confirmed Sunday in a statement. “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.”
New and smaller formats are not new for either CVS or Walgreens, which was opening “small stores” in 2019.
But the push for new sizes and formats has taken on more urgency because both companies have large amounts of debt and face escalating pressure from flat or falling sales of general merchandise in the front of their stores.
Meanwhile, both companies own or lease real estate and don’t need as much space in their stores as more Americans shop online and traditional drugstores like CVS, Rite Aid and Walgreens face more pressure from the likes of Amazon as well as developments in technology and prescription distribution that give patients less need to physically come into a store.
CVS has already been reformatting stores they have closed to include a traditional pharmacy as well as a senior center that includes medical care providers, social workers and community activities operated by Oak Street Health, which CVS paid $10 billion for two years ago.
CVS says the smaller drugstore format is in keeping with a “customized approach” to its “footprint that is focused on the specific needs of the communities we serve” and to “better support patient and ensure the right geographic coverage.”
CVS closed 900 stores between 2022 and 2024 and plans to close another 270 this year. Meanwhile, Walgreens is in the process of closing 1,200 of its 8,500 stores in the U.S. over three years. And just last year, Rite Aid emerged from federal bankruptcy protection as a more regional drugstore chain operating in 16 states after shedding more than 500 stores during the bankruptcy proceedings.
Still, CVS said closing stores doesn’t mean exiting markets and 85% Americans still live within 10 miles of its retail pharmacies. The company has also been opening pharmacies including 100 stores between 2022 and 2024 and has “plans to open nearly 30 CVS Pharmacy locations, including those inside Target stores, in 2025, in addition to the new small-format pharmacies,” the company said.
“We plan to open a dozen or more smaller format CVS Pharmacy locations in select communities nationally over the next year,” CVS said in its statement. “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. Each location will average less than 5,000 square feet, will feature a full-service pharmacy with limited over-the-counter products available for purchase and will be designed to meet the community’s specific pharmacy needs.”
