This week CVS Caremark, the second-largest pharmacy chain in the US, announced that it will stop selling tobacco products starting October 1st. This landmark decision makes it the first national pharmacy company to cease tobacco sales; the last major retailer to do so was Target in 1996.
In the short and medium-term this will cost them more than cigarette manufacturers, totalling some $2 billion in tobacco and related sales. In the long-term, it may decrease the number of smokers and help increase e-cigarette sales.
What was the driving force behind this? Why now? The answer to these questions lies in two key developments, one to do with regulations and consumer attitudes and the other about the future of retail space.
On the one hand, there is a growing emphasis on healthy outcomes, managing chronic diseases and controlling healthcare costs in the States. This Assault on Pleasure is strengthening at a time when over half of Americans suffer from one or more chronic diseases. Overindulgence of any kind is increasingly frowned upon, with cigarette use being an exemplar. A combination of clear health concerns, social pressures and higher prices due to targeted tax hikes are all major drivers of this decision.
This answers the question of why CVS would come to such as decision, but why now? Herein lies a deeper story. Since the advent of Amazon and the like, brick-and-mortar stores have been continuously challenged to prove the need for their existence in a world demanding ever more flexibility and convenience. Amazon’s new Flow feature in its mobile app lets a consumer place an order by simply pointing your iPhone camera at a product. Meanwhile, CVS has been busy building 800 MinuteClinics within its stores. The online retail giant’s latest innovation is pushing to win the market for everyday items, while CVS is morphing to fit a new slogan: come here to be healthy, not just buy stuff.
As such, the decision to remove tobacco products is in line with consumer attitudes and CVS’s aim to be the go-to retail pharmacy for those who care about being healthy. This is a story of Retail Reloaded meets Assault on Pleasure. And heck, what better way to do so than with the endorsement of the President of the United States?
Author: Renu Singh, Analyst, nVision USA
Image: StockMonkeys.com
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