February 06, 2014
Does CVS Love You More than Walgreens?
Posted by Christine Hurt

This week, CVS/Caremark announced that it will slowly stop selling tobacco products at its 7600 U.S. stores.  Why?  The company states that "is simply the right thing to do."  This may correct, particularly for a pharmacy-centric chain that it part pharmacy benefits manager (the Caremark part).  It does seem weird, when you think about it, to be able to buy dangerous health products the same place you get a flu shot.  One doesn't imagine that many mini-health clinics sell tobacco products, and that is what both CVS and Caremark are trying to brand themselves as.  Therefore, as a CSR skeptic, I'm thinking that it might also be a profitable thing to do.

News accounts estimate the decision will decrease sales by $2 billion out of $123 billion annually (1.6%).  (Funnily, some accounts think this is substantial, and others think it is insignificant.)  And, if people only run into CVS to buy cigarettes, but also pick up high-margin impulse buys, the number theoretically could be more.  Or, it could be that people who come in to pick up prescriptions, which might take time to fill, buy more additional goods.  Therefore, if you could attract more pharmacy customers by branding yourself "tobacco-free," then the move might have even less impact.  Also, CVS wants to market itself as a provider of smoking-cessation services and products.

Not to mention the free publicity CVS is getting this week.

But, CVS isn't giving up on beer, wine and liquor.  Though these items aren't anywhere to be found on the CVS website, they are on the last page of the weekly ad.

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