CVS Health Plans to Close 900 Stores, Focus on Digital Strategy
WOONSOCKET, R.I. — CVS Health Corp. (NYSE: CVS) plans to close about 900 stores over the next three years, or about 300 stores a year, starting in the spring of 2022. The pharmacy retailer says the decision to close its stores was in order to focus more on its digital strategy.
The store closures equal about 9 percent of the approximately 10,000 locations that the retailer currently operates. CVS says it will help those who lose their jobs as a result of the store closures to find a different role at another one of the retailer’s locations, according to CNBC.
As part of the plan to close many of its stores, CVS Health will create new store formats. The retailer released three models for its new store layouts including sites dedicated to offering primary care services; an enhanced version of HealthHub locations with products and services designed for everyday health and wellness needs; and traditional CVS pharmacy stores that provide prescription services and health, wellness, personal care and other retail offerings.
CVS Health plans to build 1,000 HealthHub locations by the end of the year, CNBC reports. This model includes a wider range of medical products and medical services from mental health therapy appointments to screenings for chronic conditions.
The company says the changes in store design and store closures is in response to changes in population and customer buying habits. The COVID-19 pandemic shifted the means in which many customers receive healthcare needs, as more customers today are getting prescriptions filled online, visiting telehealth doctors and picking up personal care items through curbside pickup. Additionally, big-name retailers such as Amazon and Walmart negatively impacted the healthcare sector by selling many healthcare products online, adding competition for pharmacy retailers such as CVS Health.
Along with the news to close hundreds of stores, the retailer has announced changes in leadership. Prem Shah has been named to the newly created role of chief pharmacy officer (CPO) and will immediately oversee the pharmacy strategy.
In January 2022, Shah and Michelle Peluso will become co-presidents of CVS Health’s retail business, with Peluso overseeing front-store strategy and operations. The two both have experience working at CVS Health as Shah joined the company in 2013 and is currently executive vice president of specialty pharmacy and product innovation, while Peluso joined in 2021 as executive vice president and chief customer officer.
“Prem and Michelle are ideally suited for their new roles and will be instrumental to CVS Health as we continue to execute against our strategy of delivering an integrated health care experience centered around the consumer,” says Karen Lynch, president and CEO of CVS Health.
Additionally, Neela Montgomery, currently executive vice president and president of CVS Retail/Pharmacy, has decided to leave the company. Montgomery will remain in her role until the end of 2021.
The retailer’s stock price opened on Friday, Nov. 19 at $95.06 per share, up from $66.06 a year ago, a 43.9 percent increase.
— Julia Sanders