CVS Ceases Tobacco Sales


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CVS had shocked the industry and those on Wall Street when the company announced their plans to remove all tobacco products from all of their stores by year’s end. Yesterday CVS shocked the industry again when they announced that they were able to remove all types of tobacco products from all of their stores a month earlier than was expected. Cigarettes and other tobacco products are officially off of CVS shelves across the nation!

The CVS ChangesCVS

In an effort to solidify their position in the pharmacy retail industry the CVS/Caremark Corporation has decided to change their corporate name to CVS Health. As a company spokesmen stated, the company has decided to change their name in a effort to reflect “its broader health care commitment” to the future of health and the well being of their American consumers. The CEO Larry Merlo has said that the purpose behind changing the name gives more insight to the view of the company by the company so that the customers too will know how dedicated the company is to maintaining healthy and a health conscious environment. Pharmacy retailers like CVS have in the past been criticized for their sales practices; on one hand the companies have been promoting a more healthy lifestyle whereas on the other hand they have been selling products that are detrimental to that lifestyle.

In February the company sent shock waves throughout the industry when they announced that tobacco products would no longer have a place on their shelves. The CEO of CVS was quoted to have said that by removing tobacco products from the company’s shelving would cost the company about 2 billion dollars annually in sales which is worth about 3 percent of overall revenue. While many in the industry are unwilling to part with the high revenue brought in by tobacco products, those in the corporate management of CVS believe that if the brand is going to market itself more as a healthy pharmacy retail outlet then the brand should live up to the expectations of what means to be health conscious. CVS currently operates 7,700 pharmacies, 900 walk in clinics, and a large pharmacy benefit company known as CVS/Caremark. So the recall on selling tobacco product might be somewhat of a minor hit when it comes to annual profits, overall the company has already received praise from the consumer market applauding the decision to remove products that counter the brand image of the company.

The Move to End Cigarette SalesCVS 2

The move to end cigarette sales has started from an idea and turned into quite the trend throughout the industry of various retail outlets. CVS may be one of the first but it will certainly not be the last. Other retail outlets are also jumping on the bandwagon like Wal-Mart and Walgreens have both decided to discontinue selling tobacco products. As these other companies join in on moving into the health care business and have begun staffing retail clinics, the more that business changes will occur to match the lifestyles they have been promoting. All three locations have been investing funding into staffing their locations with nurses and pharmacists in order to help their consumers with more available services and one stop shopping. Merlo has decided that the company should become a model of achievement for the industry so that if other companies are to follow suit, they would be following the CVS example.

Last month CVS partnered up with MedStar Health which is a 10 hospital system down near Washington D.C. The partnership between MedStar Health and CVS Health has brought the affiliation number of health systems and health care providers to about 41 across the country with the drugstore chain. With the implementation of the Affordable Care Act going into effect, the partnership between these companies will have a two-fold effect on CVS. On one hand it will push for brand recognition which will help on the drugstore sales side. On the other hand it will allow customers and patients to be able to receive care in network without having to deal with the stress of having to see doctors out of network. In short, by CVS ending their tobacco sales now, the company will be able to partner up with other health care providers which will increase the overall wealth and solidify the future of the company in two industries.

CVS has taken a step in a new direction, one that the leadership of the company feels will ultimately help the brand in sales. While the company may be short changing itself out of 2 billion dollars in annual sales, the company has taken the steps to further itself in two industries. The brand will continue to promote a healthy lifestyle and now will not be contradicting itself via business practices.

 

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