US drug store chains are set to experience heightened foot traffic now that all adults are eligible for booster shots and children are able to receive their first COVID-19 vaccines. Similarly, consumers are likely to begin purchasing products to treat seasonal illnesses outside of COVID-19 as winter rapidly sets in. However, these boosts are temporary.
To achieve long term growth, drug stores are focusing on digital strategies, led by CVS announcing it will be closing 900 stores over the next three years. Further, pharmacies are increasingly providing a wider variety of health services, capitalizing on a surge in demand for healthcare. CVS, Walgreens and Rite Aid are all taking steps to move further into the primary care space as it becomes clear a shift toward healthcare is a path toward long term growth.
Related Stocks: CVS Health Corporation (CVS), Walgreens Boots Alliance, Inc. (WBA), Rite Aid Corporation (RAD)
Drug Stores Set for Short Term Vaccine, Flu Season Boost
The Center for Disease Control and Prevention (CDC) officially endorsed booster shots of the COVID-19 vaccines for all adults last week as the holiday season gets underway. Further, millions of children ages 5-11 are also eligible for their first COVID-19 shots and are likely to get them at pharmacies and drug stores.
An official from the CDC reported that nearly 70% of all COVID-19 shots have been administered at pharmacies, while more than 60% of adolescents have received their shots at drug stores.
Around 1,700 CVS stores in the US are distributing vaccines, writes the Wall Street Journal, while Walgreens reports that their pharmacy has administered more than 200,000 vaccines to elementary-age children through November 9th.
Rite Aid is also expected to play a crucial role in the rollout of both booster shots and vaccinations for children, per USA Today.
Meanwhile, flu season is rapidly approaching, and experts are warning of a more severe season than last year, when mask use and social distancing reduced the transmission of viruses. With just about everyone six months and older eligible for a flu shot, drug stores are likely to experience a double whammy of consumer demand for both COVID-19 vaccines and routine flu shots.
Millions of Americans will get their shots at one of CVS, Walgreens, or Rite Aid, bringing elevated foot traffic in each of these stores that get paid for each dose administered. While that’s certainly good news for drug stores, it will likely be a short-term boost for these companies.
Long-term, drug stores will have to adapt to the shift in consumer behavior, as more shoppers than ever are making purchases online and ordering goods to be delivered on their smartphones. Further, pharmacies are also diving further into the direct healthcare sector, a trend that must accelerate in the next few years for drug stores to stage a comeback.
Long Term Growth Awaits in Health Services, Digital Strategy
The short-term boost in foot traffic from vaccinations and seasonal illness’ is unlikely to outweigh the vast shift in consumer behavior toward online shopping and digital care.
MRP recently highlighted US drug store chains expanding their digital care outreach, and that trend appears to be accelerating. Further, the sector is likely to further integrate itself within the healthcare sector. The Wall Street Journal reports that demand for healthcare is booming, due to aging populations, greater access in emerging economies and permanent shifts from the COVID-19 pandemic such as telehealth usage and mental health awareness.
US drug store chains are noticing more people are getting prescriptions filled online as well as visiting doctors through telehealth channels, meaning these companies must prioritize their digital strategies in the coming years.
According to CNBC, CVS announced it will be closing about 900 stores over the next three years, beginning in the spring of 2022, and moving their focus toward online retail.
CVS has roughly 1,100 MinuteClinics, which provide urgent care services for common illnesses and administer flu shots. The company is also…
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