Pharmacies Aim to Expand into Personalized Healthcare Services
The pharmacy sector has encountered a retail healthcare boom since the start of the pandemic, and pharmacies are finding ways to expand services in 2022 to continue providing positive healthcare experiences to customers.
While most other retailers had to make a shift to e-commerce in response to the pandemic, brick-and-mortar pharmacies continued to thrive. Walgreens and CVS saw a surge in foot traffic in 2021 compared to 2019 numbers (CVS had a 32.5% increase Yo2Y, Walgreens saw 27.8% increase), indicating that the Delta and Omicron variants had minimal impact on pharmacy sales. This increase in foot traffic can be attributed to customers seeking out wellness products and COVID tests and vaccines.
As we approach the spring of 2022, big-brand pharmacies are making commitments to invest more in healthcare, expanding into new areas like telehealth and primary care. Last November, CVS announced plans to close 900 stores in order to optimize their offerings. They plan to create three types of stores: one for primary care, one for HealthHUB sites and their traditional retail model.
Walgreens is taking a different approach and is focusing on smaller-format pharmacy-focused stores. Their recent investment in VillageMD and CareCentrix leads to a proposed expansion into primary care – they recently announced a plan to open 600 practices by 2025.
This shift to healthcare services in pharmacies is driven by customer loyalty. Currently, pharmacies like Walgreens and CVS experience heavy cross-traffic; consumers shop at both stores with no clear loyalty to either. By expanding into more personalized services, pharmacies can gain loyalty from their customers and cement long-term revenue streams.
As a commercial real estate advisor, I have transacted several pharmacies and they are traditionally very wise investments. With this expansion into new pharmacy healthcare models, I anticipate that the need for high quality commercial space will continue to rapidly increase, contributing to what is already forecast to be a banner year for CRE.
Justin Langlois, CCIM is a Commercial Real Estate Investment Advisor with Stirling Properties servicing Baton Rouge, Louisiana and surrounding markets. Please reach out to Justin to discuss your real estate investment strategies.