In stark contrast to CVS’ recent announcement that they will stop selling tobacco products by October 2014, drug store retailer and chief competitor Walgreens stated that they currently have no plans to change their existing policy to sell tobacco products at all of their stores. The US’s largest drug store chain (employing 244,000 people across 8,000 stores nationwide) is used by 59% of Americans for their drug store needs, according to Mintel’s The Drug Store Shopper – US – 2014 report. It will be interesting to see consumer response to this decision, and if any backlash ends up being outweighed by a potential uptick in sales, as they fill the impending void in the marketplace.

According to Mintel’s data, consumers visit CVS stores slightly less than Walgreens. 53% have shopped at CVS stores for drug store needs compared to 57% of those who have shopped at Walgreens stores. Walgreens benefits from strong brand awareness as well as a high volume of stores across the country. In many cases, where there is a CVS, there is also a Walgreens nearby. Their decision to continue to offer tobacco may encourage some CVS shoppers to switch to Walgreens, where they can fill most of their other drug store needs at the same time without feeling too inconvenienced.

Still, this decision is somewhat surprising given their efforts in the last few years to be seen as a health and wellness destination—boasting their new and improved clinics and even implementing a special “Zen Balanced Living” section in one Chicago-based Walgreens store. It might be a wait-and-see approach to the matter, perhaps wanting to see the financial impact of the CVS decision before making any bold decisions of their own. Whether consumers respond negatively or positively to this decision, the customers that Walgreens is likely to gain in the short-term might just make it worth their while in the long-term as well.

Ali is a Senior Analyst with Mintel specializing in Retail and Apparel. With over 10 years of experience, Ali is an expert at identifying and analyzing retail and consumer trends and providing actionable insights to clients.

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