Walgreens to close 1,200 US stores as chain attempts to steady operations at home

Walgreens is planning to close around 1,200 locations, as the drugstore chain and its rivals battle to define their role for U.S. shoppers who no longer look to them first for convenience.

Drugstores that once snapped up prime retail space in towns and cities across the country are in retreat. They’ve been battered by shrinking prescription reimbursement, persistent theft, rising costs and consumers who have strayed to online retailers or competitors with better prices.

The boost they received from taking the navigator on vaccinations during the COVID-19 pandemic has long since faded.

Walgreens’ announcement Tuesday morning comes as rival CVS Health wraps up a three-year schedule to close 900 stores and Rite Aid emerges from financial setback, whittled down to about 1,300 locations.

As the companies retract, they raise concerns in many communities about access to health worry and prescriptions.

Drugstore leaders and analysts who pursue the industry declare smaller versions of these chains have a upcoming in U.S. retail, but they’re still trying to comprehend how that will play out.

“They’ve really got to rethink how they do business and, most importantly, what they cruel and what worth they bring to the customer,” said Neil Saunders, managing director of consulting and data analysis firm GlobalData.

Walgreens Boots Alliance Inc., which runs about 8,500 stores in the U.S., said in late June that it was finalizing a turnaround schedule in the U.S. that might navigator to hundreds of store closings.

The business said Tuesday that it will commence by closing about 500 stores in its current financial year, which started last month.

Walgreens didn’t declare where the store closings would receive place. It will prioritize impoverished-performing stores where the property is owned by the business, or where leases are expiring.

CEO Tim Wentworth told analysts Tuesday that the majority of its stores, or about 6,000, are profitable and provide the business with a foundation to construct on.

“This solid base supports our conviction in a retail pharmacy led model that is relevant to our consumers, and we intend to invest in these stores over the next several years,” said Wentworth, who became CEO nearly a year ago.

Wentworth said the remaining Walgreens stores will assist the business respond more quickly to shifting buyer behavior and buying patterns. The business also is taking another look at what it sells in its stores and planning to propose more Walgreens-branded products.

Walgreens also is experimenting with some smaller stores that would be less expensive to operate.

Drugstores also have been pushing to propose more worry, with pharmacists diagnosing and treating the flu, strep throat and COVID-19 in many states. Pharmacists declare they can play a key role in keeping their customers well since they often view people more frequently than household doctors.

Pharmacists can assist patients monitor their blood pressure, manage diabetes and quit smoking, among other things.

CVS also is squeezing primary worry clinics with doctors into some of its stores. But Walgreens is backing away from a similar push.

The Deerfield, Illinois, business said in August that it was reviewing its U.S. health worry operation, and it might sell all or part of its VillageMD clinic business. That announcement came less than two years after the business said it would spend billions to expand it.

Saunders, the analyst, said Walgreens has neglected its stores in recent years as it built its business through acquisitions. He said the appearance of the chain’s locations has suffered, and a lack of staffing hurts customer service.

He noted that store visits are slumping, and the business has lost trade distribute.

“And that has unraveled some of the economics of these stores,” he said.

Saunders said drugstores “have really shot themselves in the foot” because they no longer have a obvious way to differentiate themselves from other retailers.

“When you desire to get the large bucks from consumers, you have to be a goal for something,” he said. “And unfortunately, drugstores have increasingly become destinations for nothing.”