Drugstore Chains Are Closing Thousands Of Stores In The US

Rite Aid, CVS, and Walgreens are closing thousands of stores throughout the US, moving away from the visions of US cities and suburbs with hubs for medicine and household essentials. 

Embed from Getty Images

Thousands of drugstore chains in US cities are closing down, including CVS’s, Rite Aid’s, and Walgreens. Rite Aid specifically filed for bankruptcy last week, and will supposedly be closing around 400 to 500 of its 2,200 stores in the US. 

Rite Aid’s bankruptcy has been a result of the competition from larger rivals in the industry, as well as expensive legal battles for its alleged role in fueling the opioid crisis, as well as a debt load of $3.3 billion. 

Walgreens, on the other hand, is experiencing walkouts among their pharmacists and technicians throughout the US due to low pay and understaffing issues; the same thing is happening for some CVS stores in Kansas City as well. All of these issues among drugstore chains have also been lingering since the pandemic.  

David Silverman, a senior director at Fitch Ratings, a credit rating agency that analyzes financial markets, spoke with the media regarding this recent downfall of drugstore chains in the US.

“The pandemic was not a strong time for drugstores.”

Rite Aid is the third largest standalone pharmacy chain in the nation, according to CNN, and its bankruptcy reflects the struggles that the retail pharmacy industry has been experiencing within the past few years. 

For most drugstores, their sales are dependent on filling prescriptions. In recent years, however, their profits have declined due to lowered reimbursement rates for prescription drugs. Household essentials, snacks, and other supplies typically sold in a drugstore are also facing declines in sales. 

Drugstores are currently being beaten by big-box stores and companies that include pharmacies such as Walmart and Amazon; especially for household goods. With the pandemic as well, less people were choosing to go to pharmacies, and were getting fewer elective procedures to avoid being in healthcare facilities, causing a decline in prescriptions being filled. 

Additionally, theft within drugstores has become a major issue within certain parts of the country. You may have even noticed your local CVS, Rite Aid, or Walgreens locking up more and more products to prevent this. However, by locking away so many items that require an employee to retrieve it for you is discouraging for customers, especially considering many of these retailers are understaffed.

Embed from Getty Images

“Theft appears to be hitting drug retailers more than other categories.” 

Embed from Getty Images

As a means of maintaining business, many drugstores are trying to embrace the more profitable aspects of the healthcare industry by becoming primary care providers. According to CNN,  CVS recently acquires health insurer Aetna while Walgreens took a majority stake in Village MD, a primary care network. 

As these retail pharmacy chains expanded in the past, independent pharmacies all over the nation felt the impact and had to close. In fact, according to global management consulting firm McKinsey, from 1980 to 2022 independent pharmacies decreased by nearly 50% throughout the US. 

“Roughly one out of every eight pharmacies closed between 2009 and 2015, which disproportionately affected independent pharmacies and low-income neighborhoods,” according to a study published in the Journal of the American Medical Association.