CVS CASE STUDY NO TOBACCO
2 Billion of annual profit “up in smoke”
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
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