Company Man asks 'The Decline of Walgreens...What Happened?' A tale of the Retail Apocalypse

Today's post worth sharing next month is a followup to 'Why Walgreens And CVS Are Shutting Down Thousands Of Stores', tales of the Retail Apocalypse, Company Man asking The Decline of Walgreens...What Happened?

One of country's the oldest, biggest, and most iconic drugstores has been declining. This video attempts to identify some of the biggest reasons behind the struggles.

As I customarily do for Company Man Mike's videos, I'm displaying his complete list.

"Too many stores" — I guess being the (second) biggest drugstore chain has its disadvantages, one of them being too big when the retail environment changes. I am a paleontologist, so I am quite familiar with that story; being big becomes a disadvantage when the natural environment changes, too — adapt or die.

I'm recycling what I wrote earlier this month about "Pharmacy Operations"...

I learned a lot about the importance of the pharmacy to Walgreens and CVS — 76% of Walgreens in-store sales and 60% of the company's total revenue! Also, CVS is the leading Pharmacy Benefit Manager with CVS Health/Caremark having 34% market share. Since CVS also owns Aetna Insurance, it looks like they profit both coming and going. Near vertical integration, anyone?

...and "Retail Operations."

I'm a diabetic and asthmatic, so I am in my local Walgreens a lot to pick up my prescriptions. I also go there to pick up other supplies, but no longer my blood glucose test strips. I found out CVS had cheaper test strips, so I bought them there until my wife found them on Amazon for even cheaper. We now have them delivered on a regular schedule — price and convenience! That makes us examples of customers shifting their front-of-store shopping to Amazon.

I got some pushback from a commenter at MeWe, who asked skeptically, "Shopping at Amazon?" My wife and I have decided to cut back on our Amazon purchases and will re-evaluate our Amazon Prime membership when it expires this summer. Jeff Bezos rolling over for Hoover Cleveland pissed us off. That deserves its own post.

"Wider Scope" has worked well for CVS, but not so well for Walgreens, which both CNBC and Erik of Retail Archaeology noted. Too bad. That was a good strategy on paper.

I hadn't seen "Leadership Changes" as a source of Walgreens' problems before, but it's the kind of thing that Company Man Mike, with his eye for company history, has noticed in other troubled companies. One of those was Rite Aid, which he covered in Company Man asks 'The Decline of Rite Aid...What Happened?' A tale of the Retail Apocalypse for Black Friday/Buy Nothing Day. Leadership leaving the founding family wasn't required for that chain to start failing, just being passed to a bad son!

"Lawsuits" were among the main causes of Rite Aid declaring bankruptcy, so I shouldn't be surprised they are troubling Walgreens. As I wrote in 2023, "The Retail Apocalypse and the opioid crisis finally cross paths. After all the years I've written about both, it was time I saw it happen." Now I'm wondering how CVS is handling this issue.

CNBC listed "shrinkage" as an issue for both Walgreens and CVS earlier this month, but I think this is the first time I recall Company Man Mike putting "Theft" as one of a chain's issues. I mentioned shoplifting as contributing to Big Lots! filing for bankruptcy, but discounted it as employee grumbling on Nextdoor. Big Lots! management didn't give that as a reason for the chain going out of business.

Notice what's missing? Private equity, although that could be in Walgreens' future. I hope not.

This concludes today's tale of the Retail Apocalypse. Stay tuned for another evergreen entry tomorrow.