Smoked Out – Why CVS’s Decision to End Tobacco Sales is a Progressive One
About a week prior to announcing strong profit and revenue growth for fiscal 2013, CVS Caremark arguably made an even bigger and more powerful announcement: that by October 1st, 2014, all 7,600 of its retail locations would no longer be selling tobacco products. Obviously, the decision has wide-ranging implications across multiple retail industries. Terminating these sales will cost CVS an estimated $2 billion in annual revenue. But looking forward down the road for CVS, this will become known as more of a business statement than a business decision, even while both may apply.
Tobacco products, especially big-company cigarettes, are incredibly addictive. Almost unfairly addictive, and that’s the way the tobacco companies want them. And the effectiveness of the addictive components has only increased over the past couple of decades. These products lead to millions of illnesses and death in our country. Yet they are so readily available on every street corner, with no foreseeable slowing of traction. Yes, numerous studies have been published, social media campaigns have been launched, and the number of smokers has declined. Tobacco usage is still an epidemic in the U.S. that has wide ranging cost implications not only to users, but non-users as well.
CVS is the first national drug chain to make this type of decision. After the announcement, Walgreens released a statement that the company “will continue to evaluate the choice of products our customers want, while also continuing to educate them and provide smoking cessation products and alternatives that help reduce the demand for tobacco products.” Both retailers are attempting to become ‘health-care’ companies, as evidenced by numerous activities over the past few years. Walgreens has been rolling out its ‘Well Experience’ store format since 2011, attempting to offer a better ‘health care experience’ within its stores. CVS acquired Caremark and has been increasing its health focus in-store while continuing to pump up Minute Clinic openings, even commonly referring to its retail customers as patients. The sale of tobacco contradicts what the company is attempting to stand for.
CVS is making a strong statement here and setting a wise example, even with the inevitable sales decline (although low-margin sales). Some argue that if CVS truly wants to be in the ‘health care’ business, it needs to stop selling beer, fatty and processed frozen foods, sugary candy, and so on. These products, when consumed irresponsibly, can also be hazardous to one’s health. I firmly disagree with that assessment, for a number of reasons, with the main one being most things can be enjoyed in moderation. Cigarettes are concocted specifically to addict and potentially kill you. Responsible alcohol consumption and occasional eating of not-so healthy foods will not kill you. Occasional cigarette smoking, for most people, will lead to more cigarette smoking. Regular, long-term cigarette smoking potentially leads to mounds of health problems down the road. Down the road for CVS, a tobacco-free retail environment will lead to an even more reputable and respected ‘health care’ company.