Why Supermarkets Are Closing Their Pharmacy Counters
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Here's your money briefing. I'm J.R. Whelan at The Wall Street Journal in New York. Supermarket chains used to rely on pharmacies inside their stores to attract shoppers and drive revenue.
Why are supermarkets closing their in-store pharmacy counters?
That is until the big drugstore chains came to dominate the market and encroach on the grocery store's turf.
Lately, particularly in the last year or so, both CVS and Walgreens have been working to make their drugstores a one-stop shop for patients, really, and particularly patients who have chronic diseases.
That's Wall Street Journal reporter Sharon Turlep. She'll explain how changing shopping habits have contributed to the widespread closing of supermarket-based pharmacies. That's next.
It used to be easy enough to pick up medication and prescriptions at the pharmacy inside the grocery store. But more grocery chains are closing their pharmacy counters as they lose the battle with large drugstore chains. And Wall Street Journal reporter Sharon Turlep is here with some details. So Sharon, for a long time, grocers saw in-house pharmacies as a way to bring in shoppers.
Not only did they bring in shoppers, they were relatively easy to start up. There was low capital costs. It didn't require a lot of employees. So they were a really good way to bring in shoppers and generate some more revenue.
But then the big boys in the form of the big drugstore chains came to town.
Yes, and that changed everything. Not only did they have new competitors as these big chains, and we're talking about CVS and Walgreens, bought up smaller chains. They became bigger. They got more market power.
How have big drugstore chains like CVS and Walgreens changed the pharmacy landscape?
And then CVS in particular started buying other pieces of the healthcare industry. CVS now owns the insurer Aetna. It has its own pharmacy benefit manager, which is a company that negotiates prices. So these big chains have a lot of power now.
And so these individual drugstores as part of the larger chains have really become one-stop pharmacy shopping places for consumers.
Lately, particularly in the last year or so, both CVS and Walgreens have been working to make their drugstores a one-stop shop for patients, really, and particularly patients who have chronic diseases. So not only can you get your drugs and get a blood pressure test, if you're diabetic, you might be able to get your annual eye test. You can get advice at clinics where you can get medical advice, diagnostics. And this has only begun. These services are expanding.
But it's also a sign of consumers changing shopping habits as well.
Consumers are getting more and more of their goods online. Grocery is one of the last things to shift to online, but it is shifting to online. And also, consumers are getting their prescriptions more and more in 90-day chunks, so they just aren't going to physically pick them up as much.
But grocery chains like Kroger have fared a little better than some other regional grocery companies.
Sure, because a lot of this is really about market power. So Kroger is the biggest grocer in the country, and it's one of the biggest pharmacy chains. So one of the things that happens with the bigger chains, CVS, Walgreens, even Kroger, they can negotiate deals to be preferred providers, and they can shut out an entire regional grocery chain in this type of deal. Kroger has a little bit more heft than a regional chain with 30 stores.
You know, there's a really tough balance here because consumers want very intimate service. They want that mom and pop feel. And they had that in the smaller drugstores. But then we just talked about the changing shopping habits and something has to give.
Yeah. And I think this is an area where grocery chains in particular are disadvantaged, even to independent mom and pop drug stores. And now these independent stores have been closing in legions as well. But you'll find a lot of loyalty to the hundred year old chain on Main Street, whereas, you know, these grocery chains fall a little bit in the middle ground. I mean, they're a little more personal, a little homey. But I mean, a lot of people just aren't really that attached to their grocery store pharmacy.
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