CVS stops selling tobacco products

Fair enough. The average CVS store will have to replace around $600 a day in revenue (at an equivalent cost) for this to be a break-even proposition with respect to sales, but not with respect to profits.

Cigarettes and other tobacco products have a margin of about 15%, so that's about $90 a day in lost profits.

Health and beauty items have margins of between 30% and 50%. So, if we're assuming they're going to use the shelf space for items in the 30% margin range, they have to find about $300 a day in new revenue.

 

CVS has their tobacco products behind the cashier. I don't know
if that would be considered prime space or not. You certainly don't
get a lot of impulse purchases.

 

I'm pretty sure they're behind the cashier because that's how you control them. Given that, that's probably why the cashier's stand is so wide ... Without having to control for tobacco, you could do any number of things, like increasing the number of cashier stations, or reducing the size of the cashier area and repositioning that as revenue-generating square footage.

All I'm saying is that, in addition to the PR/marketing/branding aspect of dropping tobacco, there probably are ample operations-related issues that also make the move make sense.

 

I would push back with this -- there are differing levels of obesity whereas, for smoking, you generally either smoke or you don't. The insurance companies pretty much declare ALL of us "overweight" or "obese", even with my BMI in the mid-20s.

That 350-pound woman in the motorized cart at Walmart won't see 75 as she searches for her ointments. Some smokers do see 75.

Smokers can also quit -- millions do each year.

Obese people rarely go from 350 pounds at age 40 to 180 pounds at age 42...and maintain that lower weight.

 

Its not really new news. They announced this a few months ago.

 

I thought CVS announced the no-smokes policy months ago (or at least threw it out there), and, yeah, the stated reason was that it would buttress its position as a health company. It is also the largest chain of in-store clinics, and has an enormous pharmacy benefits management business.

Of course, you can still buy alcohol and fatty foods. In fact, it wouldn't shock me if CVS' alcohol aisle gets bigger as a result of the freed space. That matches -- beats -- tobacco in profit margin. Plus, people still drink. And you can put hard liquor behind the counter where the smokes used to be. And Walgreens a few years ago resumed alcohol sales after a 15-year hiatus.

http://online.wSportsJournalists.com/news/articles/SB10001424052748704515704575282370477702814

 

I can imagine the boardroom...

"...we'll take the tobacco off the shelves but let's keep the candy and sugar. In fact, let's offer more of those product. Those are high-profit impulse buys. Years later, we can get that same consumer on diabetes supplies. By then, they'll be our loyal customers for decades."

 

That is a really wacky comparison.

Candy and sugar can be consumed in moderation to little or no negative effect. Many people overdo it, but doctors don't advise people "don't eat sugar EVER."

I'm not aware of any diet or health recommendation that allows a moderate amount of smoking.

 

According to the NYT article in the first post, their plan is to expand their healthcare offerings, including the minute clinics in stores and offering employers prescription-drug benefits management. The numbers in the NYT article ($90 billion worth this year) far outweight ditching the tobacco.

I wonder if their stores in Colorado sell marijuana.

 

There isn't one. Some people are just desperate to support smoker's rights and they will stand by any argument they can find.