Pharmacy foot traffic continued double-digit growth patterns as the retail sector continued its post-COVID-19 recovery, with CVS and Walgreens leading the pack.
The brands are poised to return to year-over-two-year growth by March 2021, according to new data from Placer.ai, with CVS seeing visit growth of 39/9% in August and Walgreens posting a 45.2% improvement in the same period. Foot traffic in September was up 22.1% for CVS and 26.2% for Walgreens, a decline that was likely tempered by the resumption of normal school and work patterns. Still, visits were still significantly higher than in September 2019.
“While COVID vaccines and testing – especially amid the rising Delta variant – and a wider focus on health certainly contributed, the unique retail environment clearly played a significant role,” Placer.ai’s Ethan Chernofsky says in a new analysis. “The summer saw a major spike in visits across the board with likely contributors ranging from pent up demand for brick and mortar retail to less international travel leading to larger groups making a retail trip.”
Rite Aid also enjoyed a steady recovery, with its visit gap with 2019 decreasing from more than 35% in January and February to just 4.3% and 6.8% in August and September, Chernofsky says. He cites Rite Aid’s concentration in major cities as well as large-scale closures, as limiting factors to visit growth. He says the chain could benefit most amongst its competitors from a wider return to work and school, which will boost cities.
But “the bigger question may be whether the strength created can drive a longer term boon for the players in the space,” he says. “COVID’s presence does not appear to be going away all that soon, and the impact this could have on continued testing and vaccinations is significant. In addition, the spectre of a pandemic does appear to drive a greater focus on health and wellness, and the brands in the space had already been pushing more clinic style options in recent years. This combination could drive a greater staying power to the visit strength.”
Essential retail – like pharmacies – have been a favorite of investors throughout the pandemic. Experts say these retailers have performed well because they have drive-throughs and offer convenience to get smaller household items. Earlier this summer, Limestone Asset Management and Orion Real Estate Group announced they had closed on a 27-location Walgreens portfolio for $133 million, a deal that encompassed 27 locations throughout the country.
“It has definitely been top of mind for investors as they look for deals,” John Feeney, senior vice president of The Boulder Group, told GlobeSt in an earlier interview. “This deal is emblematic of the push to essential retailers through the pandemic.”