Changing consumer trends and market dynamics are leading to hundreds of pharmacy store closures in the U.S.
Brick-and-mortar locations are losing to mail-order and digital options, according to a J.D. Power study of pharmacy customers. Between 2023 and 2024, overall customer satisfaction in physical drug stores declined 10 points on a 1,000-point scale, and satisfaction scores for mail-order pharmacies increased six points.
In August 2023, all Winn-Dixie pharmacies closed. Soon after, Rite Aid filed for bankruptcy and shuttered about 500 of its 2,000-plus locations. And CVS is closing 900 of its nearly 2,000 locations in a three-year plan announced in 2021.
Similar to CVS, Walgreens is also shutting down sites in a phased approach. In 2019, it announced 200 closures, and in mid-2023, laid plans for another 150. It plans to close 1,200 more, according to a recent earnings report.
There are several reasons behind the changing landscape. Brick-and-mortar locations have longer wait times, are less trustworthy and present more difficulties when ordering prescriptions compared to digital and mail-order options, customers say.
Before announcing the latest closures, Walgreens Boots Alliance CEO Tim Wentworth said 25% of the company's stores were underperforming. Of the company's 8,700 drug stores, 13.8% — or about 1 in 7 — are the latest to face termination. A spokesperson told Becker's the organization plans to "redeploy the majority of our team members from those stores that we close." The company would not confirm the number of affected employees.
Apart from convenience, reliability and trust, physical pharmacies are also losing when it comes to safety. Most of the 1,200 stores Walgreens is closing were chosen because they are near another location or because of shoplifting, The Wall Street Journal reported in June.
"Criminals engaging in mass retail theft are brazen, sometimes threatening and even physically harming workers," Michael Hogue, PharmD, CEO of the American Pharmacists Association, said in August. "As large corporations are downsizing and pharmacy owners are making decisions about locations to close, the amount of 'shrinkage' or retail theft occurring at a given location is increasingly part of the equation."
Physical locations are also facing higher costs and lower reimbursement rates for prescription drugs. Most profits come from these reimbursements, but sales at the front of the store — snacks and household items — are also declining because of competitors like Amazon, CNN reported Oct. 16.
In response, retail pharmacy companies are switching course to setting up digital kiosks and smaller stores and squeezing primary clinics inside pharmacies.