Popular drugstore chain Walgreens is set to close several hundred stores this year as it continues to struggle with many challenges that have plagued brick-and-mortar stores since 2020.
The drugstore giant has suffered tremendously since the online-shopping boom spurred on by the pandemic in 2020, which has essentially tanked several big names. While other companies—including Walmart and Target—have pivoted to conform to the change in customer behavior, businesses like Walgreens were forced to endure the losses.
Not every retailer can easily transition into an online business. Walgreens provides prescriptions and numerous healthcare services for customers, such as vaccines. Providing such seminal services requires a physical storefront because Americans will be less likely to trust medication they bought online. Drug stores are often opened in areas with high potential for foot traffic, like urban city centers. The practice also hurts the business due to the increase in retail store theft. It may have become an easier target in the eyes of offenders.
Retail theft, coupled with decreasing profits from prescription reimbursements, pointless store openings in expensive areas, a major decrease in foot traffic thanks to the rise of online shopping, and a shaky investment in VillageMD, has steadily tanked the company since 2020. The company is reportedly cutting down its investment in VillageMD and will no longer be its majority owner.
According to the report by the Food Industry Network, the company is taking the private route to save the business, which means it will be closing several hundred stores that are not meeting profit goals. As reported by the Wall Street Journal, CEO Tim Wentworth said there would be mass closings of Walgreens locations over the next few years. The announcement was foreshadowed in 2024 when the drug store chain subtly suggested that a whopping 500 stores would be shuttered in the 2025 fiscal year. According to a recent report, Walgreens examines all 8,600 stores to determine a “meaningful percentage” to close.
The COVID pandemic unexpectedly changed the retail industry forever as fewer people left their homes to buy products. Retail giants have been able to create online services to mitigate losses, but businesses like Walgreens, Joanne Fabrics, and Macy's have struggled to exist in the world of online shopping.
Experts say the shifts only prove that the biggest competitor of any retail business is change. It could occur anytime, and there's no telling how severe the impact will be on the business. Consumers may have a sudden change in taste or overhaul their search for products and services. Some shoppers are even employing artificial intelligence to quickly find what they are looking for, meaning a traditional search engine may eventually become obsolete.
