Contrary to what many may have thought, CVS’s cigarette ban has appeared to actually boost their sales. CVS’s sales have gone up by 9.7% compared to last year. Since the company has rebranded itself as CVS Health, the company stores should appear to be more healthful. “They can’t market themselves as a health-care servicer when they’re selling one of the most unhealthy products around” (I couldn’t have said it any better myself). With a healthier brand and an increase in revenue, the company can attract bigger and better corporate partners as well as develop contracts with larger insurance companies and employers. Although “front-of-store” sales have fallen (magazines, candy, gum and small snacks), the company predicts that they will make up for it in the end. Especially with the money they can earn with “…a larger portion of the country’s expanding health-care market…”. Only a small percentage of CVS’s revenue (about $2billion annually) will be lost from cigarette sales. “Health-care spending in the U.S. is projected to grow by 5.6 percent this year and by another 6 percent a year from 2015-2023, according to predictions by federal auditors”.
Plus “Minute Clinics” are popping up in CVS stores across the nation, that offer flu shots and blood pressure tests- just like a patient in a doctors office. The exception? CVS offers these services at a lower budget, and most stores are located closer to home than doctors offices! This added bonus, will bring in more customers and surely more revenue.
All info taken from this, Huffington Post, article.
This is a great decision on CVS’ part. The fact that people can purchase cigarettes just about anywhere really does increase the frequency and the magnitude of smoking. CVS’ decision to take the healthy route and refuse to sell cigarettes is a great promotion and the corporation should be proud. I had no idea that they offered flu shots and other vaccinations though! What a useful idea!
I remember having to give a presentation on this in Econ last year. I agree that the removal of tobacco products was the right move on CVS’s part–in the more healthcare-oriented model they are going after, it is pretty hypocritical to then profit from selling products that are so bad for you. But I think the argument could be made that selling junk food like candy bars and soda is also hypocritical, if they are trying to offer these “minute clinics” with blood pressure tests. There is a big difference between cigarettes and Hersey bars (and I don’t think that they should stop selling junk food), but CVS will never, in my mind, replace a clinic or doctor’s office.