Sort of a nitpick, but Caremark isn’t a “mail order pharmacy” (both they and CVS were clients of mine leading up to the merger). Caremark is the world’s largest Prescription Benefits Manager (PBM). That’s what made the merger (if you could call it that - it was more like a mutual takeover, from what I saw) interesting. The world’s largest prescription retailer and the world’s largest PBM combining forces could be incredibly good or evil - I reserve judgement since, thankfully, I’m not a regular consumer in those industries.
CVS is actually, in this game, the mail order pharmacy. Caremark doesn’t put hands on drugs - as the industry title implies, they manage prescription benefits. Totally different game. Calling Caremark a pharmacy is like saying your car dealership is Allstate or Geico or whatever. That’s not how that works.
A transparency reveal. I’m a professor of Pharmacy Practice who studies the profession. So consider this at least a highly educated opinion. The chains once sought to increase their markets. Market saturation (except in rural areas) was reached. Now they are engaged in a long term battle for market share. Last year, Walgreens was #1 with 11,000+ locations, now CVS is in the lead. Numerous studies over the years have shown the key variable in Rx and dollar volume is location, location, location. And they all use more or less the same algorithms for determining the best locations. My university sets in a town of maybe 30,000 people; we have one intersection with a different pharmacy on each corner. Prior to the 2008 economic “oopsie”, W was opening a new store every day, somewhere in the country. CVS jumped ahead with a major merger. With market share comes market power, and the ability to negotiate more lucrative contracts with the pharmacy benefit managers. (PBMs are very interested in your ability to provide easily accessible coverage to all the employees of their clients, the companies or the companies insurance vendor who manage employee benefits).Which has led to basically two huge sumo wrestlers, and a scattering of very much smaller chains (grocery stores can operate their pharmacys more or less as loss leaders, to get your grocery spend) and indys that try and provide a higher level of personalized service at a (slightly) higher cost. But back to the OP’s question- you look at the demographics, the traffic patterns, per capita income, etc, and eventually the model spits out an optimal location. Everyone gets more or less the same answer, and we get these seemingly bizarre concentrations. And an underperforming store could change overnight if you sign a new contract with one of the players that includes lower cost in co-pays/co-insurance to individuals. So, yes, they do maintain underperforming stores, sometimes even empty buildings when they buy out some smaller chain or indy. And they are NOT playing nice. See:
A few years ago Rite Aid built a brand new drugstore from the ground up right across the street from a Walgreens. It lasted maybe 9 months before they decided to close it, I guess because it was underperforming. There’s another Rite Aid less than 2 miles away.
The store was empty and used used for random low level retail for years until it was finally totally remodeled and turned into a bank.
And I have to agree with a point made earlier in this thread: A few years ago the health insurance plan I was on was such that it was much cheaper to get my prescription drugs at CVS than elsewhere. Presumably other plans similarly favor Walgreens, etc. That would partially explain why they can be next to each other and still both do well.
When I graduated in the mid 1990s, Walgreens alone could have hired all the new graduates, with some to spare.
I am proud to say that I never worked for them. Some Walgreens stores, and other chains and some rural independents too, are doing experiments with telepharmacy and other ways to have a legally operating store without a pharmacist on site. :smack: I first heard mutterings about that more than 20 years ago, from someone who had worked for them.
I used to notice much the same thing in my old neighborhood in L.A. There were several CVS pharmacies within a mile or two of our house, but I did also notice that that one of these was definitely larger than the others, had a 24-hour prescription counter, and a larger stock of non-drug items like cosmetics and safety razor blades. I could find my blades only at the latter at the big CVS.
Some Walgreens stores, and other chains and some rural independents too, are doing experiments with telepharmacy and other ways to have a legally operating store without a pharmacist on site. :smack: I first heard mutterings about that more than 20 years ago, from someone who had worked for them.