CVS Plans Chain of Smaller-Footprint Pharmacy-Focused Stores

Core Insights - CVS is opening 12 smaller stores focused on healthcare, averaging under 5,000 square feet, which is less than half the size of typical CVS locations [1][2] - The new stores will offer full-service pharmacies but will limit retail products, excluding snacks and beauty items [2] - CVS has closed 800 locations since 2021 and plans to close an additional 270 this year as part of a broader store closure strategy [3] Company Strategy - The shift to smaller healthcare-focused stores aligns with CVS's sales, where 80% of last year's revenue came from the pharmacy department [4] - The company is undergoing a strategic review to address rising competition from both physical and online retailers in the prescription medication market [4] - Analysts suggest that while CVS is exploring private labels to boost sales, the current store model may not attract consumers effectively [5] Industry Context - Pharmacy chains, including CVS, are facing challenges from discount retailers and increasing shoplifting incidents, prompting cost-cutting measures and store closures [2] - The competitive landscape is further complicated by rising insurance costs and a downgraded star rating from Medicare Advantage, impacting long-term growth prospects [6]