One way is that they keep you captive in the store with money in your hand and nothing to do. Your Rx is for a factory sealed bottle of pills. All they need to do is take it off the shelf and hand it to you. But instead, they tell you it will take about an hour or two, go and walk around the store and see if there are any impulse purchases that you just can’t resist. How are you fixed for acetylene welding torches? How about this set of English Bone China?
That “hour or two” may be because there are 100 prescriptions in line ahead of yours. They may be busier than they appear to the layperson. :rolleyes:
Besides many prescriptions are not for “a factory sealed bottle of pills” but instead are counted out into a bottle for you. And if you object to waiting for the prescription, call ahead and then use the drive-thru to pick it up. That way, you can’t be tempted into buying “acetylene welding torches” or a “set of English Bone China”.
I can’t remember the last time I actually had to wait at a pharmacy. The doctor calls ahead my prescription; I show up a few hours later in the day and pick it up right away. Or, these days, I’ll even get a text alert saying my prescription is ready.
Allow me to propose a radical theory: they actually aren’t making a profit.
But each of them believes that they eventually WILL make a profit if they hang in there long enough. This can happen a couple ways. One, some of their competition might go out of business and then they gain more market share. Two, the real estate where the store is built will probably become more valuable and they can sell the building itself for a decent profit.
Well, Walgreens Boots Alliance (the company which owns both Walgreens and Boots, a big UK pharmacy chain) had net earnings of $4 billion in 2017. CVS had net income of $5.3 billion in 2016. So, that’s probably not it.
In my neighborhood that calculation would be different. While it would most certainly be cheaper to grab the bottle of shampoo at CVS it certainly wouldn’t be quicker. Because ever since they closed the CVS that was across the street from the other CVS, the place has been packed. Lines are usually long even for the self-checkout. Sometimes 20-30 customers for the 5 stations. And even longer for a human cashier.
By contrast, I find it much easier to grab an item and take it through the self-checkout at the grocery store. The lines are way shorter.
In actuality I order an Amazon Prime Pantry box every few months and I include shampoo and conditioner. You pay an extra flat rate charge per box but the item prices are really good.
One of the employees at my local CVS claimed it was the busiest location in the country. I’m not sure if I believe her, if I look online it appears lots of stores make that claim. It may be the busiest ( or one of them) in terms of number of checkouts but I doubt it’s the highest volume cash wise. The demographics of the area skew too young so I don’t think they’re racking up expensive prescription sales the way a store located in a retirement area would.
In California I would imagine that a lot of the revenue is from selling alcohol. They are basically larger 7 elevens with a pharmacy in the corner. The vast majority of store space is devoted to things other than prescriptions and maybe only about 1/4 is vaguely medical related.
I was talking about the individual stores not making a profit. I’m not surprised to hear that the company as a whole is making a profit (possibly due to the two ways I mentioned). If a company owns hundreds of stores, I have no doubt that some of their individual stores make a lot of profit, some make very little, and some probably lose money. Why keep the in-the-red store open? Because they hope it won’t stay that way forever. The parent company hopes that this store will become profitable some day, or at least that they’ll make a profit when they sell the building.
I’ve worked for several large corporations, and had many others as clients, and all I can say is that this is probably not the strategy that Walgreens and CVS are pursuing. Big companies simply don’t operate that way.
Walgreens and CVS close underperforming locations all the time. They have a rigorous set of criteria that they use for selecting store locations, based on anticipated traffic volume, and I simply have a difficult time believing that any large retail chain will keep an underperforming store open for very long, based on the “hopes” that it’ll turn around someday. If they find that a location just isn’t cutting it, they may change the management team there, and they may use local advertising and promotions to try to increase traffic at that store, but if the store continues to see weak sales for an extended period of time (due to changes in traffic patterns, a new competitor nearby, etc.) they’ll close it.
I think that the answer to the OP’s question is:
- Retail pharmacies / drugstores are more profitable than the layman realizes
- Drugstores likely don’t need to be busy all the time that they’re open in order to be profitable
- There’s enough loyalty (possibly forced in part by insurance carriers) that two drugstores in close proximity probably both have loyal clienteles
Keep in mind; Irrespective of who favors which pharmacy for their varying personal reasons, and irrespective of all the stabs at explaining corporate “business models” involved in their competition with each other… The reason one observes so many pharmacies in proximity to each other now, compared to decades ago, is that the DEMAND for their product has exploded in that time frame.
Pharmaceuticals have evolved in our society from an occasional need for the few… into an ever-present necessity for a huge, and rapidly expanding customer base. Hence: More pharmacies.
Don’t discount the size of the vitamins & nutritional supplements and homeopathic market in the US.
Notice how many of the products they sell are “complementary” health approaches.
It is a similar effect as to why 4,691 GNC stores which is similar to the number of Dairy Queen’s or Papa John locations in the US.
I am as ignorant as everyone else, but a thought occurred to me. The only logical explanation I can come up with that makes any sense business-wise is that perhaps the really large drugstore chains are constantly building more and more stores to force competing drugstore chains to have to build more stores as well. Perhaps it isn’t directly about profits, easy access, the expensive extra shit you buy as you wander around, etc. It’s just a thought, but maybe it’s a strategy to exhaust the resources of the competing chains. It’s seemingly ridiculous to me that there’s a drugstore on nearly every street corner in cities with relatively small populations. It’s obviously not cost-effective to build two Rite-Aids within a half mile, for example. Just my theory.
I think kenobi nailed it.
Another thought, for those who go into a big drug store, and see it nearly empty: are you visiting during the day (especially between 9:30am and 3pm)? At least around here, that’s when a lot of senior citizens (who are big users of drug stores) do their errands. They wait until after morning rush hour, so that traffic isn’t as heavy, and that’s when they head out to go to the drug store, the grocery store, etc. During the day, if I happen to visit a Walgreens, it’s pretty busy.
CVS no longer carries tobacco products such as cigarettes. I prefer them over Walgreens for that reason alone. I also noticed the employees at CVS in the pharmacy and the rest of the store seem more professional. CVS can also e-mail your receipt easily without having to enter it in, because they have your e-mail address on-file from the rewards card.
CVS seems to be moving to be more of a health company and provider with their minute clinics (I think that’s the name). Walgreens continues to sell cigarettes and hasn’t changed much.
This has a lot to do with it. As a retiree from a certain state, my wife (and I, as a dependent insured) used CVS for prescriptions. It wasn’t our only option, but it was by far the cheapest. This meant we were in the store on a regular basis, perhaps making additional purchases when convenient.
My wife just went to Medicare as her primary coverage, so now the Kroger’s pharmacy is the best deal. Again, she goes there and makes additional purchases. Until I go on Medicare, I’m still stuck running over to CVS.
If there were no CVS convenient to me, I would have to go to another pharmacy and pay an additional $5 to $15 per prescription. The whole situation is out of a Marketing 101 class.
Walgreens now has similar clinics in many of their locations, as well.
But, yes, CVS is pursuing vertical integration within healthcare, in a way that Walgreens isn’t. They bought Caremark (a mail-order pharmacy) several years ago, and they’re currently trying to purchase Aetna (one of the biggest US health insurers).
Pertinent to the thread title, if all the pharmacies are snowed under with 100 people waiting in line, maybe there need to be a lot more drug stores. The ones we’ve gut are clearly not sufficient.
How about having two lines. One for people whose Rx actually has to be prepared, hands on, and one for those who get a bottle off the shelf.
Funny, when I go to Ace Hardware, I don’t have to wait for an hour or two behind 100 customers ringing up a roll of duct tape.
You would, if most people’s tape had to be first found in the stock cabinet behind the counter and then the right length measured and cut.
In the pharmacy, if everyone is just buying a bottle of aspirin, it’s just as fast as if they’re getting duct tape in the hardware store.