A little over six months ago, CVS agreed to acquire the Target Pharmacy business for a little under $2 billion. The deal was completed in December. Going forward, that means the 1,672 Target pharmacies in 47 U.S. states will now officially rebrand as CVS locations once the renovations are complete. With 9,500 total locations nationwide, CVS is the nation’s largest pharmacy chain.
CEO Larry Merlo and Target CEO Brian Cornell noted in a joint interview with USA TODAY that although their respective red-and-white brands compete head to head on occasion, the pharmacy deal makes sense for both sides.
“As far as the pharmacy experience goes, we are partners,” Merlo said. “Brian and I are very comfortable that we have complementary strengths, brands and, very importantly, cultures.”
The move also allowed Target to get out of the pharmacy business, an increasingly complex venue as prescription drug management becomes more complicated from a cost and regulatory perspective.
Cornell said Target customers will benefit from access to CVS drugs and clinical services while “at the same time it allows us to free up our resources” to focus on “signature categories.”
“It’s probably best for them to just outsource it,” Forrester Research retail analyst Sucharita Mulpuru noted. “If you can get that foot traffic into the store then you can get additional add-on purchases.”
“You’re not going to find Armani putting his brand into Walmart,” Lewis said in an interview. “The brands have to be somewhat compatible.”