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Executive Summary:
CVS is introducing a new pharmacy-only store model as part of its strategic shift to optimize operations and reduce costs. These smaller-format locations, averaging under 5,000 square feet, will focus solely on prescription and over-the-counter medications, catering to the specific healthcare needs of each community.
This move comes as CVS faces increasing competition and changing consumer behaviors. The company aims to streamline its retail footprint while maintaining growth in its pharmacy services, which saw a 7% revenue increase in Q4 2024. By eliminating grocery and convenience items, CVS can reduce staffing costs and improve the efficiency of prescription fulfillment.
Despite this shift, CVS is not abandoning traditional stores. The company plans to open around 30 full-sized locations this year, including new in-store pharmacies within Target locations. The pharmacy-only format is expected to provide a more convenient and efficient experience for patients while reducing the burden of retail theft and operational expenses associated with larger storefronts.
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