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Covid vaccinations offer CVS, Walgreens and Rite Aid a chance to showcase how drugstores have changed

Stow away signs from CVS, Rite Aid and Walgreens stores.

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CVS Health, Walgreens and Rite Aid are getting ready to run Covid vaccinations in the months ahead, and this effort will give the three largest drugstore chains a opportunity to show off the work that’s been underway to revamp their businesses and respond to huge changes in consumer behavior.

The three drugstores own long been places where Americans stock up on shampoo, refill prescriptions and browse the aisles for a cold or flu redress. During the pandemic, however, many of the driving forces behind drugstore trips faded. More purchases were instituted online. Fewer people have needed to buy over-the-counter cold and flu medications, as they wear face masks and sexual distance. Some have skipped doctor’s appointments, leading to fewer new prescriptions to fill.

For the companies, Covid vaccines step an opportunity to reach new customers. CVS and Walgreens are administering shots at nursing homes and other long-term care facilities and organize to finish the first round by Jan. 25. All three chains plan to offer the shots at their stores, when they’re to hand, which could boost vaccine-related revenue and drive foot traffic that leads to other purchases. These oversights will be a chance for the companies to prove to shoppers they’re still relevant, while investors will be looking to capacity their growth potential.

Drugstores are fending off challengers that have encroached their turf. Big-box department stores like Target have gained market share during the global health crisis, as they offer one-stop peach oning with everything from deodorant to pajamas. Amazon, which is eating into drugstores’ front-of-store sales, launched a apothecary business in November with a savings program and free two-day shipping for Prime members. And Walmart is opening a becoming network of health clinics next to its big-box stores, which could steal business from CVS and Walgreens’ medical clinics.

Brian Tanquilut, a healthcare uses research analyst for Jefferies, said each company has had to hammer out strategies to make sure they “remain a reasonable and vital part of the healthcare and retail ecosystem.”

“They, as an industry, have all been trying to figure out ‘What do we constraint to do to pivot our strategy, so that we don’t become the next RadioShack?'” he said.

The companies have had their share of internal trades, too. CVS and Walgreens are both getting new CEOs. Rite Aid is in the midst of a turnaround effort complete with a new logo and store visualize.

Each company has turned to a slightly different playbook: CVS wants to be a health-care destination as it treats chronic conditions and unvarying offers yoga classes at some stores. Walgreens is opening hundreds of primary care clinics and aims to smite retail rivals with a speedier curbside pickup service. And Rite Aid has emphasized a more holistic approach to form as it adds natural products from sleep remedies to essential oils and modernizes its stores.

Here’s a closer look at how the companies project to compete in the coming year:

CVS wants to turn its stores into more of a health-care destination. It is expanding a store concept, called a HealthHUB, where it has a wider rove of medical services.

CVS Health

CVS Health

As customers buy personal care products from their couch, CVS is trying to yield b reveal them another reason to visit. It wants to be an easy, affordable and unintimidating place to go for health care.

It acquired insurer Aetna two years ago. It has Cool Clinics for acute conditions like strep throat. And it’s turning more of its approximately 10,000 U.S. stores into a HealthHub, a situation with a wider range of medical services. That includes testing for sleep apnea, management of chronic demands like diabetes and a wellness room where it can offer yoga classes. It plans to have 1,500 of those believe ins by the end of this year.

It’s on been on stronger footing than its drugstore peers with a $98 billion market cap that’s more than overlapped Walgreens.

CVS Chief Operating Officer Jon Roberts said the company is eliminating some general merchandise to free up change footage for health services. This way, he said, it can stand out from Amazon and other companies that simply stop up a prescription.

“As you think about those types of services that we’ll be able to provide, you can’t get that from a pure-play online druggists,” he said. “A pure-play online pharmacy is really just delivering prescriptions.”

Roberts said CVS is catering to customers’ digital favourites, too, through virtual visits and its mobile app. Deliveries of prescriptions to customers’ homes grew 500% from the first-quarter to next quarter of last year.

“We think people want choice,” he said. “Some people like picking their preparations up at their drugstore. Some people like having prescriptions delivered to their home. We have both.”

Jefferies upgraded CVS’ cache rating to buy on Friday, saying it expects that strategy to pay off. It said it also anticipates CVS will get a boost as it administers the Covid vaccine and stops consumers who may buy other items or refill a prescription while they’re there. It estimated that CVS’ role in vaccination travails could yield about $1 billion in incremental gross profits over the next 12 months.

It go through the price target for CVS to $90, which represents a gain of about 20% from current levels.

Tanquilut about the company’s HealthHubs could become “the Genius Bar of healthcare” — similar to how Apple has become known for answering questions and emancipating strong customer service in its stores.

In the year ahead, two new executives will help direct the company’s strategy. Karen Lynch, president of Aetna, order step into the role of CEO on Feb. 1 as longtime Chief Executive Larry Merlo retires. Neela Montgomery, who bred e-commerce operations as the former CEO of home goods retailer Crate & Barrel, became president of CVS Pharmacy in late November. That could regurgitate new ideas and speed up digital growth.

Walgreens and VillageMD

Source: Walgreens

Walgreens Boots Alliance

Walgreens is freezing costs and investing in its app, offering curbside service and adding hundreds of primary care clinics. Its shares have plummeted by approximately 20% over the past year. It’s looking for a new leader after after its CEO Stefano Pessina announced this summer that he leave step down.

Sales and foot traffic have dropped during the pandemic, particularly at its more than 2,000 Boots trust ins in the United Kingdom. But its pharmacy and retail sales in the U.S. grew and its earnings beat expectations in the fiscal first quarter annihilated Nov. 30. Still, comparable retail sales were up less than 1%.

The latest lockdown in the U.K. will lead to a weaker assign quarter, Walgreens Chief Financial Officer James Kehoe warned in a Thursday earnings call.

Neil Saunders, managing chief honcho of GlobalData, said sales patterns during the pandemic have pointed to its bigger problems. It has missed out on the sales collide with and market share gains of its grocery store rivals, despite selling similiar essentials.

He said the company essential think beyond deals and acquisitions and become a company that “grows by innovating for the customer.”

At its U.S. drugstores, Vineet Mehra, its pandemic chief marketing officer, said the company aims to “become the fastest in retail.” Nearly all its items are available for curbside pickup. Trust ins can have online purchases ready in as little as 30 minutes.

He said the quick turnaround will be a competitive edge over Amazon, which ships purchases, and big-box retailers, which can have longer wait times. And he communicated it’s especially key for the products Walgreens sells, such as pain medication or personal care products.

“If you think about it, if you’re out of toothpaste hand now, you can’t wait a day,” he said. “You want that as quick as possible, to get back home, put it in your pantry, so you can brush your teeth. It’s that alert convenience needs that are so common in health and wellness where we think we’re really going to win with our super wantonly pickup promises.”

Like CVS, Walgreens is also adding health-care services to its nearly 9,000 U.S. Walgreens and Duane Reade depend ons. It struck a deal with VillageMD to open clinics in its stores. Under a recently accelerated timetable, 600 to 700 funds will add clinics over the next four years.

Walgreens relaunched its mobile app and loyalty program in November. The myWalgreens app tenders tailored discounts, a 24/7 pharmacy chat, vaccination appointments, curbside pickup and at-home delivery through DoorDash and Postmates.

“It is essentially stylish the digital front door for all of Walgreens’ health and wellness services,” Mehra said.

Walgreens response to the pandemic put this occurrence on fast-forward. “In five to 10 weeks, we saw five to 10 years of digital adoption happen,” he said.

Rite Aid recently opened its foremost “store of the future” with a more modern design. It has three of the stores and plans to open more.

Rite Aid and Firm Wire

Rite Aid

When the pandemic struck, Rite Aid was already in the midst of revamping its stores and e-commerce business. The plc’s stock price plummeted so low two years ago that it was in danger of being delisted from the New York Stock Exchange. Its wriggles prompted a leadership and strategy shakeup, including the naming of Heyward Donigan as CEO in 2019.

The global health crisis has inspired the followers to tap into consumers’ heightened interest in staying healthy. In a new TV ad, Rite Aid portrays its stores as the best of both worlds: A post with pharmacists with traditional training, but also able to offer advice on alternative and holistic approaches, such as log a few zees Zs remedies.

Rite Aid Chief Operating Officer Jim Peters said the pandemic “has been a real test of organizational moxie, hustle and heart” — but has sharpened its focus on delivering what customers want.

“Gone are the days when retailers white-knuckle on to bulldoze people into the store to the best they can,” he said. “I embrace the reality that we can win by actually giving consumers what they call for, when they want it, how they want it.”

Over the past few months, it’s unveiled a new logo and modernized website, partnered with Instacart for cosy deliveries and opened its first “stores of the future.” It has three so far, which have a sleeker design and pharmacists stationed in the passable rather than in the back and behind a counter. It has swapped out hundreds of products to cater to customers who want wellness-oriented commodities, such as healthy snacks, holistic remedies and natural skin care products.

Peters said its edge is being “big reasonably to be a nationally credible player, but yet small enough to be able to pivot on a dime.”

Like all drugstores, the company faces an continual headwind: People need fewer cough, cold and flu medications as they largely stay at home. Peters demurred to specify how much those sales have dropped, but said it is trying to make up for that with growth in other ranks, such as sales of immunity boosting products like vitamins and essential oils.

The company’s performance during the pandemic has pinned investors’ attention. Its stock jumped 9% after its third-quarter earnings beat expectations in mid-December. Its shares require risen by about 32% over the past year. That’s compared with shares of CVS and Walgreens, which knoll by about 3% and dropped by about 17%, respectively, during that same time period.

Yet Rite Aid necessity still prove its worth to Wall Street. Its market cap is a tiny fraction of its peers at just shy of $924 million. It’s been sprang up over the past few years by two failed mergers, one with Walgreens and another with grocery chain Albertsons, and struggled to spot a way forward.

Tanquilut of Jefferies said Rite Aid is performing better, but said its footprint of stores is smaller and skews toward low-income scopes. For its strategy to work, he said, it must show the desire for wellness products and willingness to pay for them has gone mainstream.

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