Walgreens to Close 1,200 U.S. Stores, But Impact on Chicago Unlikely
Company Plans to Cut Costs and Focus on Profitable Stores
Walgreens, one of the largest drugstore chains in the United States, announced plans to close approximately 1,200 stores over the next three years. The company is seeking to turn around its struggling U.S. business, which contributed to a $3 billion quarterly loss.
Store Closures Unclear for Chicago
While the company has announced plans to close hundreds of stores, it has not disclosed which specific locations will be affected. Currently, there are 99 Walgreens stores listed in Chicago. One location, the North Lawndale store at 3401 W. Roosevelt Road, has been scheduled to close on November 12, according to social media posts by Ald. Monique Scott (24th).
Initial Wave of Closures
The company plans to close about 500 stores by the end of its current fiscal year, with the majority of closures taking place in the back half of the year. The closures will primarily affect stores with poor performance, those owned by the company, and those with expiring leases.
Preservation of Profitable Stores
Walgreens will prioritize closing underperforming stores, focusing on those with high profitability and growth potential. This approach acknowledges that 6,000 of the company’s approximately 8,500 U.S. stores are considered profitable and will serve as a foundation for future growth.
Steep Challenge Ahead for Traditional Drugstores
According to Neil Saunders, managing director of consulting and data analysis firm GlobalData, traditional drugstore chains like Walgreens face significant challenges, including rising costs, online competition, and dollar stores. The company must adapt to these changes to avoid a downward spiral.
Ongoing Challenges and Concerns
Walgreens has struggled with reimbursement issues for prescriptions and increasing operating costs. Its competitors, including CVS Health Corp. and Rite Aid Corp., have also faced similar challenges, leading to store closures. The latest round of closures raises concerns about potential pharmacy deserts, where residents may not have access to a nearby drugstore.
Long-term Growth and Strategy
Walgreens has previously announced plans to expand its primary care clinics next to some stores. However, after an aggressive expansion under previous CEO Rosalind Brewer, the company is reviewing its U.S. health care business and might sell all or part of its VillageMD clinic business.
Conclusion
The planned store closures will have significant implications for the retail industry and, more broadly, for the healthcare system. While the exact impact on Chicago remains unclear, the changes will undoubtedly reshape the landscape of drugstore chains. As Walgreens and its competitors adapt to the market, they must balance the need to cut costs with the requirement to maintain access to essential services.
FAQs
- How many Walgreens stores will be closed?
- Approximately 1,200 stores over the next three years.
- Which Chicago locations are affected?
- The North Lawndale store at 3401 W. Roosevelt Road has been scheduled to close on November 12, according to social media posts by Ald. Monique Scott (24th).
- When will the majority of store closures take place?
- The majority of closures will occur in the back half of the current fiscal year.
- What is the focus of the store closures?
- Closing underperforming stores, focusing on those with high profitability and growth potential.
