Walgreens to shut down 1,200 locations as it navigates challenging retail landscape
Date
10/16/2024 5:40:51 AM
(MENAFN) Walgreens is planning to close approximately 1,200 locations as the drugstore chain and its competitors navigate a challenging retail landscape, where U.S. shoppers are increasingly turning to alternative options for convenience. This decision reflects a broader trend in the industry, where drugstores that once occupied prime retail spaces are now reevaluating their roles amid declining prescription reimbursements, rising operational costs, persistent theft, and competition from online retailers and discount stores. The surge in demand for vaccinations during the COVID-19 pandemic provided a temporary boost, but that momentum has since diminished.
The announcement of store closures comes as Walgreens faces increasing pressure, with rival CVS Health completing a three-year plan to shut down 900 stores and Rite Aid recently emerging from bankruptcy with around 1,300 locations. This consolidation raises concerns in many communities regarding access to essential healthcare services and prescriptions. Industry analysts and drugstore leaders acknowledge the need for a transformation in how these chains operate and the value they deliver to customers.
Neil Saunders, managing director of consulting firm GlobalData, emphasized that drugstores must fundamentally rethink their business models. He stated, “They’ve really got to rethink how they do business and, most importantly, what they mean and what value they bring to the customer.” Walgreens Boots Alliance Inc., which operates around 8,500 stores in the U.S., has already indicated plans for a turnaround strategy, aiming to close about 500 stores in its current fiscal year, which began last month. The company has not disclosed specific locations but will focus on underperforming stores, especially those with owned properties or expiring leases.
CEO Tim Wentworth highlighted that approximately 6,000 of Walgreens' stores remain profitable, providing a solid foundation for the company’s future. He expressed confidence in a retail pharmacy-led model that aligns with consumer needs, stating, “This solid base supports our conviction in a retail pharmacy led model that is relevant to our consumers.” In response to evolving consumer behavior, Walgreens is also reviewing its product offerings and plans to increase the availability of Walgreens-branded items in its stores, aiming to adapt to the changing retail environment.
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