Last year was a challenging one for the retail pharmacy business. For example, Walgreens Boots Alliance said it would close about 1,200 stores between 2025 through 2027, with last year seeing the end of 500. Rite Aid has closed many stores as part of its bankruptcy filing.
This isn’t a new story. From 2011 to 2021, nearly 30% of U.S. pharmacies shut their doors, with independent stores disproportionately affected, according to a recent report published in Health Affairs.
A new research report from Colliers finds that the role of retail pharmacies has changed over time, moving far beyond roles as medication dispensaries. Pharmacists are “among the most accessible and trusted sources of medical advice” while the locations provide wellness-related products, home goods, groceries, and personal products, the CRE firm said.
Recommended For You
Previous GlobeSt.com reporting has shown that retail pharmacies feel multiple financial pressures. The Federal Trade Commission among others has noted that pharmacy benefit managers (PBMs) — the middlemen between manufacturers and drug stores — have a significant impact on the profit levels of drug stores of all sizes. And then, all the other product lines the stores sell face significant competition from low-cost major sellers, online and physical.
There are four major types of pharmacies: retail chains (about a third of stores and a third of prescription revenues); regional (grocers and mass retail, about 30% of stores); independent (numbers steadily decreasing since 1980); and mail-order and online (low penetration with greater competition from chains moving to omnichannel operations).
According to Colliers, there are three major current challenges to retail pharmacies. The first is “limited leverage,” which touches on the FTC’s point about PBMs. The pharmacies have little room to negotiate with the PBMs, which have often reacted to resistance over pricing models by steering consumers to preferred locations, breaking customer loyalty.
Inflation is another factor, driving up the cost of all goods including the front-of-house variety of products, making it difficult to maintain margins. When prices rise too much, consumers look for alternatives.
And then, as is true in many aspects of healthcare, staffing is a problem. Fluctuations in hiring and retention along with rapid expansion of locations often leave locations understaffed, creating customer dissatisfaction.
New entrants like Amazon and Walmart show the potential for disruption. Amazon Pharmacy has online ordering and 24/7 pharmacist accessibility. In 2025, they plan to open 20 new pharmacies in U.S. cities, although that leaves their presence tiny compared to traditional chains. Walmart planned a series of in-store health clinics, but the effort didn’t transfer customer loyalty; last year the company announced the closure of the clinics.
According to Colliers, there are some possibilities for pharmacies moving forward. In theory, the chains could mine the consumer medical data they already have to consider new in-store offerings and consultative services, including home delivery, same-day delivery, and on-demand pharmacist support. Regional pharmacies could become one-stop shops for “all things health.” Independents could relocate to places that have limited access to pharmacies. Mail-order and online could try offering benefits from in-person experiences.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
