Healthcare Shifts From Brick & Mortar To ‘Click & Mortar’
Retail giant CVS is closing 900 stores to focus on the emerging digital market.
Another step in digital conversion has arrived. CVS Health announced that it will close about 900 stores over the next three years. This is significant, still rather complex, impacted by multiple factors. The shift to online retail is only part of the story, but the bigger conversion to digital health is another element that has far-reaching consequences. It’s a big bet that is costing CVS over a billion dollars as the company cut net earnings-per-share guidance range for 2021 to $5.46 to $5.67 from $6.13 to $6.23. But at last glance, the stock is up on the news and that’s another reflection on what the future is telling us.
It’s not completely clear if this shift is a plan based on a futuristic perspective that is shaping tomorrow’s experience or a reaction to the economics of pharmacy. Certainly, we see the shift to on-line sales. But adding to the complexity are the demands of staffing. Both the profession and traditional retail roles are expensive and difficult to fill and manage in today’s economy. Whatever the cause, the days of brick and mortar are being transformed to “click and mortar.” And it’s important to note that while 900 stores is a large number, it only reflects 9% of the current 10,000 retail stores for CVS. The traditional retail footprint is largely the same, at least for now.
Overall, the economics of the retail shopping experience is changing. The consumer no longer combines a traditional buying experience of prescription products with various personal items such as toothpaste and shampoo. And the result is that this broader offering may be “wasted space” in the expensive retail market.
CVS is also evolving the in-store experience with their “minute clinic” that offers live, walk-in consultations for up a wide range of conditions as well as a telemedicine component for adults and children over two years of age. The 24/7 telemedicine visit costs $59.
Digital transformation is happening now. Healthcare can be at the center of this evolution of care driven by technology, the empowered consumer and the nudge from retail to drive both services and creation of a favorable user experience. The many and varied digital health tools that are available today — from at-home ECG monitoring to blood glucose monitoring — can add an expanded dimension to the utility and convenience of of this in-person and digital experience.
The technology is here today, and demanded by the fickle consumer. Whether you buy your toothpaste online or at the local pharmacy, the toothpaste of technology is out of the tube, and there’s no putting it back.