Inside This Issue - Opinion
CVS deserves praise for tough decision
February 17th, 2014
by David Pinto
Seldom has a decision by a chain drug retailer rocked the country so suddenly and dramatically as has CVS Caremark’s announcement that it intends to stop selling tobacco products in its 7,600 stores by October 1.
In the aftermath of the retailer’s decision, national and local media have dissected its impact and implications from an infinite variety of angles, ranging from its effect on the drug chain’s sales — CVS announced that its tobacco business brought in some $2 billion in annual revenue — to its impact on the smoking community (negligible, said most observers).
Very few analysts, however, paused to give appropriate credit for a health-based decision that was both ethically honest and financially challenging. Very few retailers have ever voluntarily relinquished $2 billion in sales, though Walgreens’ decision in another era to stop selling alcoholic products comes to mind (a decision that, by the way, a later generation of top managers reversed).
Circumstances and changing priorities dictated that the time would eventually come when a national retailer stopped selling products so obviously detrimental to health. Logic determined that that retailer would most likely be a health care retailer. After all, the business of America’s chain drug stores is health care.
Overwhelmingly, wellness is the primary attraction for the millions of people who shop drug stores daily, just as the availability of prescription drugs and related products and services accounts for over 80% of the business these stores transact. Conversely, as observers have pointed out, only 2% of all cigarette smokers buy their products in a drug store.
Still, CVS’ decision is not without risk. Consider, for example, the customers who visit the retailer’s stores to buy cigarettes. How often do they visit? What else do they buy? Will they, on principle, stop shopping CVS? Will they, on principle or diminishing convenience, stop filling their prescriptions at CVS? The questions are endless — and, at this point, unanswerable.
This much, however, is clear: CVS deserves both thanks and a strong measure of gratitude and support for making a decision that could more easily have been avoided, at a time when an operating philosophy that flies in the face of sales and earnings has become increasingly difficult to embrace.
The retailer’s top managers made this determination because too many people continue to die in this country from smoking. And CVS, perhaps the premier health care organization in America, could no longer accept the fact that it contributes to this death toll, even as it markets its ability to produce healthy outcomes.
It’s no secret that other retailers — and indeed other drug chains — have long wrestled with this issue, only to table it as either financially too risky or faulty on the grounds that it denies the American consumer the freedom of choice. After all, the prevailing logic goes, it’s not a retailer’s business if Americans want to kill themselves. Why make it so?
In the end, CVS’ decision to stop selling tobacco won’t hurt the drug chain to an inordinate degree. As many observers have stated, $2 billion in sales is not all that difficult to recapture, especially given those consumers who intend to reward the retailer for this decision by shopping its stores for more merchandise more often.
Even if the sales loss is permanent, however, this question must be asked: How can America’s foremost health care retailer justify selling tobacco in the same space that it operates MinuteClinic immediate health care facilities? How can tobacco and medicine coexist under the same roof? How can pharmacists dole out health care advice just aisles away from cigarette displays? How can the retailer’s top managers justify selling cigarettes and, when the almost inevitable happens, market smoking cessation products and other antismoking solutions?
CVS obviously found that these dichotomies could no longer be accepted or ignored. So the determination was made, certainly not without considerable internal debate, confrontation and rancor, to stop selling tobacco products.
In that context, this decision must be applauded as one of the more humane and altruistic yet made by an American retailer. Going forward, it will serve as an effective counterweight to those arguments and positions that turn on the premise that the U.S. business community is all about, and only about, money.
At CVS, it’s clearly about people as well.