Walgreens, CVS Poised For More Success This Year
The increasing cross-shopping data between the two can also explain why Walgreens and CVS are now heavily focused on building out their healthcare offerings.
Walgreens and CVS rounded out 2021 with robust year-over-year increases in foot traffic, buoyed by consumer demand for wellness products and COVID vaccines and tests.
An analysis of foot traffic data from Placer.ai’s Shira Petrack reveals that neither chain showed any real dip in visits during the Delta and Omicron COVID surges, and both finished the year “far ahead” of 2019 visit metrics. CVS saw a 32.5% Yo2Y foot traffic increase in December, while Walgreens posted 27.8% more visits than December 2019.
“However these brands decide to optimize their brick-and-mortar strategy, one thing is sure – Walgreens and CVS are incredibly well positioned for offline success in 2022,” Petrack says.
Walgreens has increasingly focused on smaller-format pharmacy-focused stores and has said it will open at 600 primary care practices by 2025, a pivot into healthcare anchored by the company’s majority investments in VillageMD and CareCentrix. Meanwhile, CVS is closing stores, a move Petrack said should be viewed as “right-sizing” to optimize the chain’s fleet of stores.
And Placer.ai’s data suggests that the brands aren’t cannibalizing one another: the share of CVS customers who also visit Walgreens grew from 26.5% in Q1 2021 to 34% in Q4 2021, Petrack said, while the share of Walgreens customers who also shopped at CVS ticked up from 24.2% in Q1 to 31.7% in Q4.
“Since both CVS and Walgreens are seeing hefty visit increases, there is clearly enough consumer demand to support both brand’s strength and expansion. But the increasing cross-shopping data between the two can also explain why Walgreens and CVS are now heavily focused on building out their healthcare offerings,” Petrack says. “Customers are more likely to be loyal to their healthcare provider than to their local pharmacy, so the transition to healthcare provision may well cut down on cross-shopping – while opening up robust, long-term revenue streams that can cement the current pandemic visit boom.”
And Rite Aid, which started off the year with a 38.1% Yo2Y visit gap, also improved, posting a 3.5% increase over pre-pandemic levels. Petrack predicts the brand is “well positioned” for a 2022 turnaround: “While this visit increase may seem modest compared to CVS and Walgreens’ huge foot traffic jumps, it is still an incredibly positive indication of the brand’s potential,” she notes.