CVS to close nearly 1,000 stores over 3 years as part of online retail shift
SANTA CLARA, California – As the retail business evolves, a large drugstore chain is closing one of its 10 stores to make major changes. Other chains are grappling with their own challenges to adapt to a changing retail landscape.
According to CVS, 900 of its stores will disappear over the next three years. They say that by closing about 10% of its stores, it is shifting to a more online digital strategy and shifting from simply providing prescriptions and sundries to health workers more direct to patients in their stores.
“A lot of the current locations may not be particularly useful or be the right kind of locations for this new type of service,” said Professor Kirthi Kalyanam, director of the Retail Management Institute at the University of Santa Clara. He also says that some retailers are in danger of becoming unnecessary.
“A lot of these retailers have been a little too slow to close stores and renovate stores. They are dragging their feet,” Kalyanam said.
For example, California’s very last Kmart, in Grass Valley, closes on December 19, and there are only 21 stores left nationwide. On November 9, DSW announced the closure of its four-story store in Union Square and 64 other of its stores.
However, Macy’s has announced that it plans to close 10 stores in January, but delayed 60 scheduled closings as it found online sales to be stronger in markets where it has stores.
“Often for these retailers, e-commerce is a less profitable business than in-store commerce,” Kalyanam said. And, closing the doors takes away from a store the enormous effect of being a free, living billboard. “Your ad spend can double if you close your physical store because that billboard effect is so strong,” the professor said.
Because America’s brick and mortar malls, linear malls, and malls grew from 90,000 in 2000 to 115,000 in 2020, we probably had far too many places to shop. That’s why financial giant UBS predicts that if online shopping increases from 18% of retail sales today to 27% in five years, it predicts that some 80,000 retail stores will close but more could appear. . “Consumer behavior is changing faster than the ability of retailers to respond to that consumer behavior,” said Professor Kalyanam.
Even the mighty Amazon has set up stores for this billboard effect.