Wow . . . CVS has stopped
selling cigarettes, a move that will cost the company over $2 billion a year in
sales. Bravo. I smoked pretty much all my life, but clearly there's no good
that comes from it. It contributed by my health issues a couple of years ago,
probably cost one of my best friends his life, and is responsible for thousands
of deaths every year (realizing that people make the decision to smoke or not).
According to ABC, “CVS
Health runs 7,870 drugstores. The front-end figure from those stores would have
been flat if CVS hadn’t pulled tobacco products from its shelves nearly a year
ago. The drugstore chain actually helped profitability by dumping thin-margin
tobacco products, but its executives knew they would take a sales hit because smokers
often grab other products when they stop in for their next pack.”
That was my experience in
my liquor store. We contemplated dropping cigarettes (my father never liked the
idea that we sold them), but not only did they generate revenue on their own,
but only rarely did people come into the store just to buy cigarettes. They
almost always bought wine or liquor, or at least a 6-pack. So in a store with
sales of about $1.5 million, cigarettes generated maybe $50,000 to $75,000, but
the overriding issues always was, “If we drop cigarettes, how many customers do
we lose and how much do we lose in sales of other items when they come in?”
So CVS customer are probably tracking the same spending habits. But there's no doubt that cigarettes probably don't belong in a store of a company trying the steer its image into that of a health care company. Not only that, smoking's expensive. Even here in New Hampshire, cigarettes are $5-plus a pack, so a pack a day's going to cost you $40 a week, $140 a month and at least $1,700 a year. While one can reasonably argue that the CVS move was a business decision made in the face of increased competition and lower national cigarette sales, the move was still bold. They should be commended for it.
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