In a new plan, CVS is cutting its traditional stores in half and sweeping out the skincare, pretzels, and stationery you would expect at a standard location.
The drugstore giant is preparing to open 12 new mini-stores in cities and towns across the U.S. by this time next year focusing on a full-service pharmacy with healthcare products, including over-the-counter pain medications and first-aid supplies, per a Saturday report from The Wall Street Journal.
The mini-stores will not offer other consumer goods usually expected in a CVS like shampoo and greeting cards.
At around 5,000 square feet, the new stores will be less than half the size of a typical CVS, which ranges from 11,000 to 15,000 square feet. CVS is in the early phase of developing the new stores and plans to have the first few locations operating by the end of 2025.
Related: CVS Is Testing an App That Lets Shoppers Unlock Store Cases Themselves.
Julie Utterback, senior equity analyst for Morningstar, told WSJ that 80% of CVS’s sales last year came from its pharmacy department — so focusing mini-stores on that division made sense.
“That is where most of the value is generated,” Utterback told the outlet. “The front of the store operations has been in question for a while.”
In 2023, 78.9% of CVS’s revenue came from prescription drugs while 21.1% came from front store and other products. CVS’s latest earnings report, released last month for the final quarter of 2024, showed that the drugstore chain saw sales growth of 4.2% from the same time a year ago, partly due to growth in its pharmacy business. CVS sales hit $97.71 billion in Q4 2024.
CVS and other drugstore chains like Walgreens have struggled recently to contend with foot traffic and heightened competition from retailers like Walmart.
According to CNN Business, the front end of drugstores, with snacks and toiletries, have seen fewer sales as shoppers turn to Amazon, Walmart, and Target to fill those needs. In response to these challenges, CVS has closed stores and undertaken cost-cutting measures.
CVS laid off nearly 3,000 workers in October 2024 and closed 900 stores (while opening 100 new locations) over the past three years as part of a plan announced in November 2021. It plans to close another 270 stores, and open 30, in 2025.
Rival Walgreens has also been closing stores. In October 2024, the company said that it would shut 1,200 locations over the next three years, with 500 stores slated to close in 2025.
Walgreens also agreed to be acquired by private equity firm Sycamore Partners last week in a $10 billion deal as part of its turnaround plan.
CVS had more than 9,000 locations as of December 31 making it the biggest pharmacy in the U.S.
