According to Kantar, “Drugstore retailers are focusing on transforming to offer value and convenience, as well as become the primary health destination for shoppers.” However, data indicates that people only use chain drugstores for their prescriptions”. Can they evolve into a health destination?

Recent quarters have shown that drugstores are reporting a decline in sales volume due to the passing of the pandemic. Although health and wellness sales are growing, more retailers are expanding their categories, making it more convenient for shoppers.

CVS is trying to grow into a “health destination,” but challenges remain. First, consumers don’t think of chain drugstores for health issues. They either go to their PCPs or immediate care clinics that have doctors on staff. Second, many primary care facilities have on-site diagnostic equipment (X-ray and MRI machines). When consumers have a health issue, will they go to a CVS “minute-clinic” or an immediate care facility with physicians and diagnostic equipment?

There is a strong focus on growing private-label penetration at chain drugstores to meet shopper demand for better-quality products at lower prices. Still, other retailers are also offering more selection.

The other issue with chain drugstores is the cost of doing business. Many want high slotting fees and vendors to pay directly for advertising. This can significantly impact product margins. Chain drug also has a habit of returning items that are slow to sell.

Finally, chain drugstores are dealing with a shortage of help. Some stores have had to cut pharmacy areas because they can’t hire enough pharmacists. At some stores, customer service is almost invisible, and waits to pick up prescriptions can top 20 minutes even if customers use their apps.

CVS’s PBM is number one, so they have a cash flow, but others aren’t so lucky. Chain drug is looking for that magic formula, but I think they will always be considered as just a place to get Rxs filled.