Get Our Email Newsletter

How Will Retail Industry’s Pharmacy Mega-Merger Impact Consumer Trends?

When Walgreens announced its plan to acquire Rite Aid for an estimated $17.2 billion last week, it led to speculation as to what the deal would mean for this aspect of the retail industry, and how the deal might impact consumer trends across the drug store market.

The deal puts together the nation’s second and third largest pharmacy chains that combined will have nearly 13,000 U.S. stores. That would catapult the merged company above CVS, which has 7,800 stores. Through the retail merger Walgreens would more than double its presence in a handful of states, including New York, New Jersey, Pennsylvania, Virginia and Michigan.

This would also result in two companies accounting for 99 percent of drug store sales. Walgreens now accounts for 31 percent of sales in the drug store market, and would gain an additional 10 percent share with Rite Aid, according to IBISWorld, one of the world’s leading publishers of business intelligence. CVS alone accounts for 58 percent of the market. Those figures don’t account for similar sales at other kinds of retailers.

- Digital Partner -

The proposed retail merger will also have to pass antitrust review and requires the approval of the Federal Trade Commission. Walgreens is willing to unload up to 1,000 stores in order to win regulatory approval of the deal, the company said in a securities filing. Rite Aid stores would keep their names “initially,” but Walgreens plans to create “a fully harmonized portfolio of stores” over time, the company said in announcing the deal.

CEO Stefano Pessina said in a statement that the deal would allow Walgreens to provide “more heath and wellness solutions…in stores and online.” Walgreens expects that the retail merger will result in over $1 billion in operational synergies, which may be key to competing in an industry that is increasingly prone to other consumer trends, including competition from mail-order prescription companies and wholesalers, among a myriad of other competitors.

Pharmacies have increasingly looked to expand their healthcare offerings in order to meet the demands of evolving consumer trends; a strategy that focuses on creating coordinated care systems with doctors and insurance companies.

Walgreens’ strategy is to become a one-stop shop for wellness. Both Walgreens and Rite Aid share the vision of becoming a key intermediary in the health and wellness sector, evidenced by consumer trends such as offering flu vaccines and other vaccinations. Moreover, Walgreens is poised to tap into an excess supply of patient demand for care in line with the physician shortage. Similarly, Rite Aid has partnered with local physicians and patients alike to help bolster prescription compliance and mitigate complications. Overall, focusing on chronic health ailments has been a key strategy for both Walgreens and Rite Aid, which will likely allow the companies to share the costs of this service expansion.

As consumer trends continue to evolve across the retail industry, pharmacies and drug stores will likely be viewed as an integral intermediary between patients and physicians. As a result, acquisitions will become increasingly key to manage costs and streamline care, according to business analysts.

Loss Prevention Magazine updates delivered to your inbox

Get the free daily newsletter read by thousands of loss prevention professionals, security, and retail management from the store level to the c-suite.

What's New

Digital Partners

Become a Digital Partner

Violence in the Workplace

Download this 34-page special report from Loss Prevention Magazine about types and frequency of violent incidents, impacts on employees and customers, effectiveness of tools and training, and much more.


View All | Sponsor a Webinar


View All | Submit a Whitepaper

LP Solutions

View All | Submit Your Content

Loss Prevention Media Logo

Stay up-to-date with our free email newsletter

The trusted newsletter for loss prevention professionals, security and retail management. Get the latest news, best practices, technology updates, management tips, career opportunities and more.

No, thank you.

View our privacy policy.