CVS has recently decided to eliminate cigarettes from their vast options of items to purchase at all of their locations. Surprising at first you might ask yourself, why would a company willingly give up on over two billion dollars of profit annually? The primary answer being conveyed by CVS executives is that “Tobacco products have no place in a setting where health care is delivered.”
This company is making a bold statement that money does not affect the way we feel about our customers. Scott Mushkin, an analyst with Wolfe Research in New York stated that “ CVS has aligned its business to the pharmacy, Tobacco is an ancillary business, and it’s not the reason why most people go to CVS.”
Rite Aid, Walgreens and Walmart are three of CVS’s direct competitors that will gain financially off of the decisions to pull Tobacco sales. After the announcement as of October 1, 2014 CVS will no longer sell Tobacco products, their stocks dropped by 1% and subsequently Walgreens rose by 3.4%. Vince Willmore, spokesman for the Campaign for Tobacco-Free Kids “CVS made a very compelling argument today that if you’re in the business of health care, you shouldn’t be in the business of selling tobacco products.”
People in the health care fields are rallying around this monumental decision from the largest convenience store. The move will make it easier to form partnerships with doctors, hospital, and insurers and allow the chain to expand its brand as a health care provider.
Clearly a lot of thought has gone into the decision of pulling all tobacco sales from all CVS locations. I feel as though this is a smart move by the convenience store giant. They have set a standard now that healthcare comes first. Yes they will probably have a short term loss in revenue, but looking at their overall sales of $125 billion, $2 billion is a drop in the bucket, a small price to pay to change the for a complete change in the face of the company.
People will still come to CVS for their retail needs. Will some sales be lost from people coming in for tobacco products and purchasing impulse items, sure, but the overall goal will be met by going healthy. Good for them that they will no longer profit off of the sales of making people sick. A humorous quote I found by, Dr. Stephen Needel “Good for them that they’re taking a stand, and I’m selling my CVS stock.
CVS ENDING TOBACCO SALESPROs CONs Enhance Brand image2 Billion lost in profitAlignment with docs and patient careLost impulse businessRe-energize anti smoking campaignsTurned off by going healthyRise in anti smoking aidsShift to competitorsCigarette prices will be higherCigarette prices will be higherMinute Clinic expansionStocks droppingNew Connections in healthcarePush to drop other items, such as sodaHealth Conscious
CVS’s Competitors as a result of recent announcementPROs CONs Profits raiseLoss in new health care expansionMore foot trafficNegative image for not following after CVSFree publicityTobacco costs are higher
The Rite Aid CreedAt Rite Aid, our goal is to follow the highest principles of ethics and honor in all of our relationships, including those with our customers, employees, suppliers, stakeholders, and shareholders. We established our Code of Ethicsand Business Conduct in order to reinforce our commitment to ethical business practices. Our code not only applies to Rite Aid associates and our Board of Directors, but also to our suppliers and other companies with which Rite Aid works.
The Walgreens Creed
“We believe in the goods we merchandise, in ourselves and in our ability to render satisfaction. We believe that honest goods can be sold to honest people by honest methods. We believe in working, not waiting; in laughing, not weeping; in boosting, not knocking; and in the pleasure of selling our products. We believe that we can get what we go after, and that we are not down and out until we have lost faith in ourselves.
We believe in today and the work we are doing, in tomorrow and the work we hope to do, and in the sure reward the future holds. We believe in courtesy, in kindness, in generosity, in cheer, in friendship, and in honest competition. Walgreens is still working to do things this way even in the Internet age.”
Rite Aid and Walgreens are very similar in the approach they take on business. Both Companies are convenience / specialty retailers, with almost identical business models. They both uphold very strict guidelines and rules to ensure a safe environment for both customer and employee. They both stand on the same basic principle that they are continually evaluating the tobacco products and will still offer them because their clientele still has a demand for them
“About Us.” CVS Caremark. N.p., n.d. Web. 20 Feb. 2014.”Business.” BostonGlobe.com. N.p., n.d. Web. 20 Feb. 2014.”Code of Ethics.” – Rite Aid. N.p., n.d. Web. 19 Feb. 2014. “Company Information.” Welcome to Walgreens. N.p., n.d. Web. 20 Feb. 2014.