The decision by pharmacy giant CVS to shutter 900 stores over the next three years as part of a pivot to a more omnichannel healthcare approach is a sign of changing dynamics in the sector.
In addition to a shuffling of the C-suite — Prem Shah and Michelle Peluso take over as co-presidents of CVS Health’s retail business in January 2022, and Executive Vice President and President, CVS Retail/Pharmacy Neela Montgomery is departing at year’s end — the company is expanding on an omnichannel strategy with national healthcare superstore ambitions.
A statement issued on Thursday (Nov. 18) said that after a strategic review, “CVS Health will create new store formats to drive higher engagement with consumers. Three distinct models will serve as community health destinations: sites dedicated to offering primary care services; an enhanced version of HealthHUB locations with products and services designed for everyday health and wellness needs; and traditional CVS Pharmacy stores that provide prescription services and health, wellness, personal care and other convenient retail offerings.”
The CVS HealthHUB model gives an idea of what the new store strategy looks like. Currently found in 135 CVS locations, HealthHUB sites offer many of the services found at Urgent Care clinics, including screenings, monitoring and treatment of certain chronic health conditions via its MinuteClinic® model, as well as telehealth services and home delivery of medical supplies.
CVS President and CEO Karen S. Lynch said, “Our retail stores are fundamental to our strategy and who we are as a company. We remain focused on the competitive advantage provided by our presence in thousands of communities across the country, which complements our rapidly expanding digital presence.”
See also: CVS: Consumers ‘Incredibly Challenged’ by Current Healthcare Landscape
‘One-Stop’ Healthcare Repositions Retailers
This latest move by CVS reflects a broader trend of major retailers redoubling their focus on core profitable parts of their business.
In the world of payments tech, a useful corollary is PayPal’s super app, which rolls up the functions of a number of different apps into a single view. More companies are testing this route to carve out a niche of their own by leveraging connected economy efficiencies.
Appointing soon-to-be CVS Health Co-President Prem Shah to the newly created role of chief pharmacy officer to “oversee the omnichannel pharmacy strategy, effective immediately,” the chain is putting all the pieces in place to become a provider of affordable consumer care.
Lance Wilkes, VP, senior equity analyst at Sanford C. Bernstein, told Reuters that “we see this as consistent with our expected long-term strategy for CVS, moving to grow managed care and care delivery, while shrinking the legacy brick-and-mortar retail business.”
Walmart is moving in the same direction. In October, CEO Roz Brewer told investors and analysts during a presentation that the company is creating “a range of consumer-centric healthcare solutions, which will form the engine for our next phase of growth.”
Brewer said, “Consumers are embracing retail pharmacy to manage their healthcare more than ever,” adding that “we have established a tech-enabled care model powered by a healthcare platform that is omnichannel and personalized for the consumers we serve.”
See also: Walgreens Launches New Business Segment Focused on Healthcare
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More