CVS' Success After Stopping Tobacco Sales Has Others Contemplating Similar Moves
By Christine Kern, contributing writer
Walgreens and other rivals launch moves to counter CVS lead in healthy living.
Although CVS faced initial drops in revenue as a result of their corporate decision to support healthy living by removing tobacco from its shelves, the retailer is now reporting earnings and sales are on the way back up, according to Investors.com.
In the company’s fourth quarter – the first full three-month period without tobacco sales – CVS said net revenues increased 12.9 percent to a record $37.1 billion.
“2014 will be remembered as the year in which we rebranded our company as CVS Health and made the right decision to exit the tobacco category, better aligning our company with patients, payors, and providers,” Larry Merlo said.
The company took the controversial stance last year after recognizing that selling tobacco products was in sharp contrast to their commitment to helping consumers work toward their best health. A statement on the CVS website read, “Cigarettes and tobacco products have no place in a setting where health care is delivered. This is the right thing to do.” The announcement was accompanied by videos by noted CVS Caremark representatives, including Larry Merlo, President and Chief Executive.
But CVS’ decision to stop selling tobacco products is also putting pressure on other retail drugstores to follow suit. The Chicago Tribune reported that Walgreens has launched a free, Internet-based smoking cessation program to counter CVS’ smoking ban initiative.
When CVS decided to stop selling all smoking-related products, it was letting go $2 billion in annual sales, revenue that it hoped to pick up elsewhere. Retail pharmacies like CVS, Rite Aid, and Walgreens have been trying to alter their images in order to become more comprehensive healthcare providers, including in-store clinics, vaccination administration, and other services, thereby tapping into the surge of newly insured individuals under Obamacare.
Walgreens has argued that it has to continue to sell tobacco products in its retail stores in order to remain competitive with other drug stores, convenience stores, and grocery stores. It has come under attack for this stance, according to the Chicago Tribune.
Michael Pozin, a Walgreens spokesman, told the Chicago Tribute that the chain has been evaluating its policy on tobacco sales for “some time,” and said that the company “will continue to evaluate the choice of products our customers want, while also helping to educate them and providing smoking cessation products and alternatives that help reduce the demand for tobacco products.”
Walgreens has announced a new partnership with GlaxoSmithKine to launch a free, Internet-based smoking cessation program called Sponsorship to Quit, which provides customized tools to help smokers track their progress while trying to quit.