Healthcare

Grocery Stores Shutter In-Store Pharmacies

Supermarket pharmacy counters are closing across the U.S. as they struggle to keep customers coming back.

The move, happening in states as varied as Washington, Minnesota and everywhere in between, comes as customers have been making fewer trips to visit pharmacy counters while doing grocery shopping. Also, the large hand of big pharmaceutical companies has had an influence.

Analysts and grocery stores alike are saying that the store pharmacies have several issues. They’re too small to pull good reimbursement rates on drugs, and they aren’t connected with big medical networks and insurers. They also lack the kind of amenities that people cherish at CVS and Walgreens, such as walk-in clinics and other such healthcare services.

The Wall Street Journal quotes Phillip Breker, who managed a pharmacy at Minneapolis-based grocery chain Lunds & Byerly, now closed down. Breker says that while he enjoyed the communal feel and being able to work with local people who he knew, he also saw the down-slide of the pharmacy’s finances and activity in its last years. Ultimately, he says the grocery chain made the right decision in closing it.

The trend is indicative of the losses felt by smaller mom-and-pop stores and grocery retailers, as people have tended to order more of their medications by mail or get them in large 90-day supplies.

Consolidations and mergers in the healthcare industry also contribute to the problem, with CVS and Walgreens holding claim to 40 percent of U.S. prescription revenues in 2018. With CVS and Walgreens’ connections to insurers and pharmacy companies, they also have access to the better deals on drug costs that have eluded smaller stores.

In addition to that, the chains are transforming pharmacies into more all-encompassing hubs for healthcare, having doctors on staff and offering more involved levels of service than they used to, such as blood testing, diet seminars and even yoga classes. At their HealthHubs, CVS aims to provide a wide range of medical services.

But even CVS and Walgreens are feeling the crunch of the move toward digitization, as they’re closing over 300 under-performing stores.

Other smaller pharmacies, like competitor Rite Aid, are struggling to stay afloat. Pharmacies in regional chains, like Sacramento, CA-based Raley's Supermarkets, are downsizing, and the aforementioned Lunds & Byerly has shuttered all its pharmacies.

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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