Walgreens plans "significant" store closures

[storewanderer]

I THINK buckguy is saying that not all regions of a company's stores are the same and perhaps some of the broadstroking that we all do might be tempered a bit?

They have these "simple stores" as I photoed in ALL of their regions. This is not a regional decision. This is a corporate decision and there is management at corporate that oversees this "simple store" program. When corporate decided stores were going to this program there was nothing anyone could do but "go along with it."

These stores receive significantly less inventory (zero backstock), at the time in 2017 they had major staffing cuts occur (now the labor model in these isn't all that different from the other stores), in an effort to drastically cut costs and make these stores lose less money. They didn't think it would impact sales "much" since the stores were already low volume but it actually did impact sales. However they kept up with it and the associated cuts in expenses and seem to be satisfied with how the program is going. They also pay their store management less in these stores (implemented once they do a switch in store managers) as the management wages are based on store tier and these stores drop down a tier or two. They also pay current/new promote store managers SIGNIFICANTLY less than they paid store managers 15 years ago (tenured managers still get their higher salary but slowly they are retiring).

In addition to endcaps being gone they also eliminated sidecaps and various other merchandise displays. The idea here was to run these in a convenience store type fashion and just accept that there is not much foot traffic and impulse buy efforts were severely cut back. I am not saying this was a good move (It is awful and keeps getting worse- just the last dental reset they did on these stores earlier this year made it so I can't shop them because they don't carry numerous SKUs of single toothbrush/3oz toothpastes I buy with coupons there most weeks) but they seem happy with it I guess, since the program is still going.

There have been some anomalies with this program that I question the logic of- for instance a store with a high volume pharmacy but a very low volume front end will still get this "simple store" program even if it was profitable. That is an odd case and not overly common with Walgreens (this scenario is VERY common with CVS).

There is also a sort of halfway program with this on some stores where some (but really not that many) SKUs were cut, some aisles have cardboard boxes only on the bottom shelf of some sets (such as shampoo), and back facing endcaps are removed. This program was intended for lowish (but not "DIRE" low like the "Simple Stores") volume stores that they viewed as over-SKUed but still get to have backstock, etc.

[buckguy]

It's funny how everyone just inserts their own hobby horse (with no evidence) and takes all this at face value does the kind of apocalyptic thing that's popular here. The conditions you describe may be something you see locally but don't exist everywhere. For example, Walgreen's manages to keep endcaps stocked in DC and in stores I've seen in other places (NYC, Ohio, Philly). They will benefit from whatever further closures Rite Aid has.

Even the statement about 75% of stores driving profitability could be seen as vaguer than it looks--they probably need some of the less profitable stores to maintain market position in key locations and so they're not necessarily planning to close 25% of their stores. They are overbuilt in NYC, for example, but would be cautious about closing too many of the stores. CVS might be interested in taking some of those locations. I wouldn't be surprised if they closed or shrank some of the flagship stores--the one at Union Station has never achieved the volume they probably expected (it's in the basement next to a food court that has take a while to revive), but they seem to like those locations and have a new store in the Moynihan train hall at Penn Station which does a lot of business and they may be happy to stay in Union Station with different terms. There's another flagship in downtown that DC has never done much volume even though there's no CVS close-by, so I wouldn't be surprised if it closed.

I doubt that they would exit entire regions, esp. if they have long histories there. We don't have a lot of southeastern representation here, but some of the weakest stores they picked-up from Rite Aid were in southeastern markets where they had gotten off to a mixed start in the early 2000s. These were Eckerd's with no customers and no difference when Jean Coutu owned them. If they were to leave markets, I would not be surprised if Atlanta, for example, was one of them, although it has long-term growth potential. On the other hand they have long histories in parts of Florida as well as Nashville and New Orleans and I would imagine they would be careful about closures in those locations.

Has CVS closed the 900 stores they projected by now?---I don't think so. They have quietly closed more stores in the DC area during the past few months than in the recent past, but those tended to be close to existing stores. Walgreen's plans for closures seems like a similar "bold statement" that easily could fall short in the long run. The most useful observation here is ClownLoach's mention that they probably have a lot of leases nearing termination or other changes in terms which means that this is probably an effort to set the bases for renegotiating a lot of those leases.

No evidence? We discussed this topic years ago. I posted photos. I have seen stores like this coast to coast; typically in rural areas and far edges of suburbs of larger areas. Very rare for them to be in larger cities or suburbs closer to the core of larger cities.

https://www.retailwatchers.com/viewtopi ... ard#p14116

Do you see the photos? The endcaps are REMOVED. The aisles have various shelf space that has NO MERCHANDISE and is instead filled by cardboard marketing photos. This isn't the stores doing- this is a CORPORATE INITIATIVE that covers literally thousands of stores. I shop in these stores (clearly you don't since you don't know what we are talking about- be glad none of the stores you shop are like this). The assortment in these stores is SEVERELY LACKING in all categories. They also tend to have even higher than typical Walgreens pricing.

Another problem with this initiative is it does not typically account for changes in market conditions. For instance one of the Walgreens that got this program back in 2017 is over in Sparks in a neighborhood that isn't the greatest but in my opinion isn't as bad as its local reputation. When Walgreens did the simplified store to that store as the store was extremely low traffic at the time, there was a Kmart and a Family Dollar in the same shopping center, and a CVS across the street. All of those retailers, one by one, have closed. The Walgreens has become fairly busy but they still don't bother to re-SKU it back to having a full assortment again despite efforts by the store manager to get a full assortment back into the store. Conversely there is a different Walgreens I visit in my area sometimes that is NOT a "simplified store" because back during this program rollout, it did high enough volume to keep a full assortment, but as time has gone on the market conditions changed and the store now does very little volume, less than most others in the area, yet it still gets to keep a full assortment (albeit 1-2 units of each item).

CVS was to close 900 stores over a 3 year period and that store closure program is proceeding as planned. They are continuing to close new stores every month.

I THINK buckguy is saying that not all regions of a company's stores are the same and perhaps some of the broadstroking that we all do might be tempered a bit?

That's pretty much it---plus the catastrophizing that goes with it. Not to mention taking corporate announcements at face value. As for CVS closing stores---they did it before they made their big announcement, they'll do it later. They don't seem to be doing it in a big way.

[Retailuser]

I also wonder if they are going to cut more twenty four (24) jour locations? It seems like that is a bad time for thief.

[Alpha8472]

There is a 24 hour Walgreens in my city. It is a low crime rich suburb, but the 24 hour Walgreens attracts all sorts of homeless people and crime. It is the only pharmacy open 24 hours in the entire county. The employees say late at night all the crazies come by.

The pharmacy has been robbed so many times. It was getting ridiculous. They need to put up bullet proof glass. Much of the merchandise is locked up. Homeless people traveled by train from San Francisco and have set up camps near the Walgreens. If they shut down this 24 hour store, the neighborhood would improve drastically.

Even a reduction in hours to 10 PM would greatly improve the area. No more late night robberies and crazy homeless shoplifters. This store usually only has 1 cashier to monitor the store.

[rwsandiego]

...Even the statement about 75% of stores driving profitability could be seen as vaguer than it looks...

You are absolutely right. This is a throwaway statement that means "We have a lot of dead wood, we don't really know exactly how much, but it's less than a third and more than five percent, plus we need a call to action so we sound like we are 'doing something'." Not super-proud to say this, but I've held my nose and written statements like this for executive presentations myself. Don't put too much stock in them.

...they probably need some of the less profitable stores to maintain market position in key locations and so they're not necessarily planning to close 25% of their stores. They are overbuilt in NYC, for example, but would be cautious about closing too many of the stores. CVS might be interested in taking some of those locations. I wouldn't be surprised if they closed or shrank some of the flagship stores--the one at Union Station has never achieved the volume they probably expected (it's in the basement next to a food court that has take a while to revive), but they seem to like those locations and have a new store in the Moynihan train hall at Penn Station which does a lot of business and they may be happy to stay in Union Station with different terms. There's another flagship in downtown that DC has never done much volume even though there's no CVS close-by, so I wouldn't be surprised if it closed...

Closing some stores in midtown Manhattan, downtown Chicago, or a tony LA suburb won't cause much of a stir. Close a store in a marginal area, creating a "pharmacy desert," and you have a PR nightmare on your hands, complete with demonstrations, speeches, and damaged reputations. That's why Woodward said "we have to look at them" and not "we're closing 25% of our stores."

...On the other hand they have long histories in parts of Florida as well as Nashville and New Orleans and I would imagine they would be careful about closures in those locations...

Seeing as snowbirds come to Florida from Northern markets that have been Walgreens territory for decades, mass closings in some areas of Florida would be a huge mistake. When customers fill prescriptions at Walgreens because they can easily pick them up in Milwaukee or Miami and suddenly they can't, there's no reason to get them filled there at all.

...The most useful observation here is ClownLoach's mention that they probably have a lot of leases nearing termination or other changes in terms which means that this is probably an effort to set the bases for renegotiating a lot of those leases.

And there you have it - a call to action.

[Alpha8472]

Transferring prescriptions from Walgreens to another pharmacy is usually easy. The new pharmacy will call Walgreens and Walgreens will fax the prescriptions over in minutes. It is much easier than people think usually. I work in a pharmacy and for the most part transferring prescriptions is easy.

[reymann]

Transferring prescriptions from Walgreens to another pharmacy is usually easy. The new pharmacy will call Walgreens and Walgreens will fax the prescriptions over in minutes. It is much easier than people think usually. I work in a pharmacy and for the most part transferring prescriptions is easy.

Publix will end up getting a lot of the transfers from shuttered Walgreens stores in Florida. As for snowbirds Walgreens may try to push they delivery services for them.

[storewanderer]

No evidence? We discussed this topic years ago. I posted photos. I have seen stores like this coast to coast; typically in rural areas and far edges of suburbs of larger areas. Very rare for them to be in larger cities or suburbs closer to the core of larger cities.

https://www.retailwatchers.com/viewtopi ... ard#p14116

Do you see the photos? The endcaps are REMOVED. The aisles have various shelf space that has NO MERCHANDISE and is instead filled by cardboard marketing photos. This isn't the stores doing- this is a CORPORATE INITIATIVE that covers literally thousands of stores. I shop in these stores (clearly you don't since you don't know what we are talking about- be glad none of the stores you shop are like this). The assortment in these stores is SEVERELY LACKING in all categories. They also tend to have even higher than typical Walgreens pricing.

Another problem with this initiative is it does not typically account for changes in market conditions. For instance one of the Walgreens that got this program back in 2017 is over in Sparks in a neighborhood that isn't the greatest but in my opinion isn't as bad as its local reputation. When Walgreens did the simplified store to that store as the store was extremely low traffic at the time, there was a Kmart and a Family Dollar in the same shopping center, and a CVS across the street. All of those retailers, one by one, have closed. The Walgreens has become fairly busy but they still don't bother to re-SKU it back to having a full assortment again despite efforts by the store manager to get a full assortment back into the store. Conversely there is a different Walgreens I visit in my area sometimes that is NOT a "simplified store" because back during this program rollout, it did high enough volume to keep a full assortment, but as time has gone on the market conditions changed and the store now does very little volume, less than most others in the area, yet it still gets to keep a full assortment (albeit 1-2 units of each item).

CVS was to close 900 stores over a 3 year period and that store closure program is proceeding as planned. They are continuing to close new stores every month.

I THINK buckguy is saying that not all regions of a company's stores are the same and perhaps some of the broadstroking that we all do might be tempered a bit?

That's pretty much it---plus the catastrophizing that goes with it. Not to mention taking corporate announcements at face value. As for CVS closing stores---they did it before they made their big announcement, they'll do it later. They don't seem to be doing it in a big way.

CVS has closed 550+ net stores since 2021...

Prior to 2021 their store count, net, grew every year. The last time they did any acquiring was 2016 with Target. 1,600 Target units are included in the count.

https://www.statista.com/statistics/241 ... ince-2005/

What would you define as closing stores in a big way?

The other reality here is Walgreens actually has more stores than CVS... since CVS 9,500 or whatever stores includes 1,600 Target units. Walgreens store count around 8,500 stores is pretty much all actual stores...

[storewanderer]

...Even the statement about 75% of stores driving profitability could be seen as vaguer than it looks...

You are absolutely right. This is a throwaway statement that means "We have a lot of dead wood, we don't really know exactly how much, but it's less than a third and more than five percent, plus we need a call to action so we sound like we are 'doing something'." Not super-proud to say this, but I've held my nose and written statements like this for executive presentations myself. Don't put too much stock in them.

...they probably need some of the less profitable stores to maintain market position in key locations and so they're not necessarily planning to close 25% of their stores. They are overbuilt in NYC, for example, but would be cautious about closing too many of the stores. CVS might be interested in taking some of those locations. I wouldn't be surprised if they closed or shrank some of the flagship stores--the one at Union Station has never achieved the volume they probably expected (it's in the basement next to a food court that has take a while to revive), but they seem to like those locations and have a new store in the Moynihan train hall at Penn Station which does a lot of business and they may be happy to stay in Union Station with different terms. There's another flagship in downtown that DC has never done much volume even though there's no CVS close-by, so I wouldn't be surprised if it closed...

Closing some stores in midtown Manhattan, downtown Chicago, or a tony LA suburb won't cause much of a stir. Close a store in a marginal area, creating a "pharmacy desert," and you have a PR nightmare on your hands, complete with demonstrations, speeches, and damaged reputations. That's why Woodward said "we have to look at them" and not "we're closing 25% of our stores."

...On the other hand they have long histories in parts of Florida as well as Nashville and New Orleans and I would imagine they would be careful about closures in those locations...

Seeing as snowbirds come to Florida from Northern markets that have been Walgreens territory for decades, mass closings in some areas of Florida would be a huge mistake. When customers fill prescriptions at Walgreens because they can easily pick them up in Milwaukee or Miami and suddenly they can't, there's no reason to get them filled there at all.

...The most useful observation here is ClownLoach's mention that they probably have a lot of leases nearing termination or other changes in terms which means that this is probably an effort to set the bases for renegotiating a lot of those leases.

And there you have it - a call to action.

They've closed various stores in marginal areas already, before this initiative. And they've been accused of creating pharmacy deserts. Many articles on Google so I'll link one of many:
https://baystatebanner.com/2024/02/14/w ... cy-desert/

I go into these stores and have watched customer counts keep falling. They have many stores that are struggling. The 25% figure seems right to me.

The problem is if they don't do something to drive sales, next year it'll be 30% of the chain is underperforming, then in 2026 it'll be 35%, etc. They need to do something to drive sales and traffic in competitive locations. I think they've alienated a lot of customers similar to Sears over the years and many folks will just flat out NOT be back.

Again I think CVS has won. And I don't like CVS. I don't say that happily. But you know what- when I go to CVS assuming they have the items I am looking for I go in I go to self checkout and I am out the door quickly and sales/coupons work as I expect them to work and Extra Bucks generate as I expect every time.

Walgreens is a complete train wreck; no self checkout, slow slow slow point of sale system, frequent issues with digital coupons not attaching, Catalina printers that print their loyalty rewards frequently broken, last week their Catalina printed me some $4 off any shopping visit coupons then when I tried to redeem their system rejected them. The supervisor told me there was nothing he could do if the system rejected it (he had given me the coupon 10 minutes prior) and threw the coupon away... "since it doesn't work you don't need it back..." I got the coupons back and learned on a different message board those specific coupons take a few days to work every ad cycle... went back days later and sure enough they worked. Dealt with that same supervisor and he was stumped why it worked that day.

[Alpha8472]

Many stores lose money on coupons. They are difficult for the store to redeem, and getting the money back is spotty at best. I am sure many store managers would prefer customers to give up and discard those coupons in the trash.

The purpose of coupons is to entice the customer to come back another day and fill up another basket with merchandise. So of course some coupons purposely have a delay so you would have to make another trip.