What Retailers Can Learn from Walgreens and CVS: When Strategy Meets Reality

The path, once clear, is now cluttered with obstacles for CVS and Walgreens.

There was a time when I looked at Walgreens and CVS as two retailers positioned to lead the next great chapter of retail evolution. Their scale, community presence, and investments in health and wellness seemed to place them on a path to redefine what retail could be.

And yet, something went wrong.

Some decisions, in hindsight, proved to be missteps. Some market forces turned against them in unpredictable ways. And in other cases, the pace of change simply outran their ability to adapt.

So I turned to research - not to criticize, but to understand. Because, as retailers, we often make bold bets, and even the most promising plans can falter when disruption hits harder or faster than expected. The most important thing we can do is reflect, learn, and evolve.

What Walgreens and CVS Got Right: Early Signals of Growth and Vision

To understand what changed, we first have to recognize what started out right. Walgreens and CVS were not companies asleep at the wheel. They saw where the market was heading and moved with intention.

Their strategy wasn’t reactive - it was forward-looking. Both brands became cornerstones of local communities, offering convenient access to prescriptions, everyday essentials, and basic healthcare needs.

CVS took an ambitious leap by acquiring Caremark, a leading Pharmacy Benefit Manager (PBM), followed by the acquisition of Aetna, positioning itself as a vertically integrated healthcare ecosystem. Walgreens formed strategic partnerships with PBMs like Prime Therapeutics, building a foundation for prescription volume growth.

Both saw - and acted on - the demographic trends of an aging population, rising chronic conditions, and demand for convenient care. Their HealthHUB (CVS) and VillageMD (Walgreens) clinic models were early efforts to shift from transactional retail to integrated health and wellness ecosystems.

By most accounts, they were heading in the right direction.

Market Forces That Shifted the Playing Field

Retailers never operate in a vacuum. Even the best strategies can get derailed by changing consumer behavior, evolving economics, or industry disruption. In the case of Walgreens and CVS, several converging market forces shifted the ground beneath them - some predictable, others not.

And when disruption hits, timing and agility matter just as much as intent.

• Declining Prescription Margins: Reimbursement rates from insurers eroded profit margins, forcing both chains to do more with less.
  

• PBM Influence and Channel Control: PBMs began steering patients toward specific pharmacies based on contracts, weakening brand loyalty and redirecting volume - particularly hurting Walgreens when it lost key PBM relationships.
  

• Digital Disruption: Online pharmacy players and disrupters, like Mark Cuban’s Cost Plus Drugs, introduced disruptive pricing models with transparent pricing and direct-to-consumer delivery, reshaping consumer expectations more effectively than even Amazon’s PillPack.
  

• E-Commerce and Behavior Shifts: As consumers grew more comfortable with digital health and online ordering, reliance on physical store visits declined - even for staple items.
  

• Inflation and Economic Strain: Shrinking consumer spending power, rising theft concerns, and margin pressure from inflation added additional headwinds to profitability.

  
  

These weren't failures of vision. They were real-time tests of operational agility, and the industry landscape shifted faster than the systems in place could keep up.

Strategic Missteps: Where Execution Fell Short

External forces matter - but internal execution often determines whether a company adapts or stumbles. Walgreens and CVS had strong strategies, but their ability to bring those strategies to life faced critical challenges.

In many ways, the right strategy executed too slowly - or without enough flexibility - can become the wrong one in hindsight. That’s a hard truth most of us in retail have experienced firsthand.

• Overexpansion of Physical Footprint: Both chains aggressively expanded locations without sufficient attention to long-term profitability. As a result, CVS has been on a path to closing 900 stores; Walgreens is slated to close 1,200 stores by 2027.
  

• Delayed Digital Transformation: The rapid acceleration of digital health and retail left both playing catch-up. While competitors were building intuitive, customer-centric digital ecosystems, Walgreens and CVS lagged behind.
  

• Erosion of Customer Experience: Staff reductions, reliance on automated systems, excessive self-checkouts, and measures like locked cabinets - while understandable in response to theft - created friction that damaged brand trust.
  

• Overcomplicated Promotions and Programs: Loyalty programs and in-store coupons became confusing and cumbersome, undermining their intent to drive loyalty.
  

• Misaligned Healthcare Investments: Walgreens’ investment in VillageMD, once a bold move, has become a financial strain. Reports suggest the company may exit this venture entirely, highlighting the challenge of scaling clinical care models within a retail footprint.
  

What Could Have Been Done Differently

This isn’t about rewriting history - it’s about asking how things might have evolved differently had different choices been made. Hindsight doesn’t erase risk - it adds perspective. And that perspective is what allows retailers to evolve more effectively in the future.

• Balance Physical and Digital Investment: A more measured expansion strategy - paired with robust digital health investment earlier - could have positioned both brands better against online-first disruptors. Not every store is equally profitable, and not every digital touchpoint is interchangeable. The balance matters.
  

• Protect the Human Element of Service: Staffing matters. Human touchpoints, even in a tech-driven world, are still a key differentiator. Reducing labor costs shouldn’t come at the expense of customer trust and in-store experience. The best technology supports people - it doesn’t replace them.
  

• Smarter PBM Navigation: Walgreens, in particular, could have adopted a more balanced PBM strategy - avoiding over-reliance on exclusionary deals and focusing on diversified access points to serve a broader patient base. This would have reduced dependency on a single revenue stream and provided more resilience.
  

What They Can Still Do Today

The path forward isn’t closed - it's just more complex. Both Walgreens and CVS still hold strong community footprints, brand recognition, and industry relationships. Walgreens may gain a willing partner in transformation with the sale to Sycamore Partners. But success now depends on clarity, adaptability, and execution.

• Accelerate Digital Health Platforms: Telehealth, AI-assisted diagnostics, and seamless digital prescription tools must be more than bolt-ons - they need to be central to the customer journey. Integrating these capabilities not only meets current demand but strengthens long-term loyalty.
  

• Refine Store Networks Strategically: Ensure that closures are data-informed, not reactive. Store rationalization should include community needs, local partnerships, and opportunities to repurpose existing space (e.g., micro clinics, pickup hubs, or partner service centers).
  

• Clarify Healthcare Strategy: Especially for Walgreens - commit fully to primary care innovation or exit decisively. Straddling between retail and clinical models without clear direction risks alienating both customers and investors.
  

• Invest in Value-Driven Private Label Offerings: In an inflation-conscious market, value matters more than ever. Expanding affordable, well-branded private-label products can strengthen trust, increase margins, and provide a compelling alternative to national brands.
  

• Recommit to Customer Experience: Rebuilding human connections - through staffing, service training, and personalization technologies - offers an edge in a commoditized marketplace. It’s not just about service recovery - it’s about emotional loyalty.
  

What All Retailers Can Learn

When all is said and done, the reason that I decided to go down this rabbit hole - this isn’t just a Walgreens and CVS story - it’s a retail industry lesson. Their journey underscores how the best-laid strategies must be continually stress-tested against changing realities. Success in retail today depends not only on having a great plan but on having the ability to change that plan quickly and effectively when conditions shift.

Key Takeaways for All Retailers:

✅ Digital transformation must be proactive, not reactive. Technology should be integrated as a driver of relevance and efficiency - not a last-minute response to disruption. Those who lead in digital set the bar for customer expectations across the board.

✅ Physical and digital channels should complement, not compete. Customers don’t think in channels—they think in experiences. A seamless ecosystem that connects online and in-store touchpoints is no longer optional—it’s expected.

✅ Customer experience should never be sacrificed in the name of efficiency. Self-checkouts, automation, and shrink prevention tools may reduce short-term costs, but when they erode brand trust, the long-term cost is far greater.

✅ Vertical integration creates power—but also exposes risk. Owning more of the value chain can unlock new opportunities, but it also magnifies execution risk. Vertical strategies must be tightly aligned with core strengths and operational discipline.

✅ What worked yesterday may not work tomorrow. Be willing and able to pivot. Retail is not a static business. Agility, humility, and the willingness to question assumptions are just as important as strategy and scale. Final Thoughts: Learning from the Past to Shape the Future

Even the best-laid plans can stumble in the face of disruption. But those who learn quickly - and adapt even faster - can still build enduring success stories.

It’s easy to play Monday morning quarterback. In hindsight, everything looks obvious. But we often forget what the world looked like when those decisions were made. Retail amnesia is real - we’re quick to critique without context.

As Steve Jobs once said, “You can't connect the dots looking forward; you can only connect them looking backward.” And when we do, we often gain a deeper understanding of what worked, what didn’t, and - most importantly - why.

That’s why studying the history and impact of both our successes and failures isn’t just helpful - it’s essential. In retail.

And in life.

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Author's Note: This is a different type of article for me - one that started with a question, which led to an opinion, and wound up with me trying to piece together what happened and what I/we could learn from this. I believe both CVS and Walgreens will emerge from this and in the process, provide us with crumbs that can help us find our path forward.

For full transparency, I have included the articles and sources that I used - though ultimately, the opinions expressed in this article are mine. I welcome your feedback - even if it is to tell me that you disagree. Really, I mean it!

Endnotes:

• The Wall Street Journal, “Walgreens, CVS Close Stores and Cut Costs Amid Strategic Pivot,” September 2023.

• CNBC, “CVS and Walgreens Lay Off Hundreds as Retail Health Strategy Shifts,” October 2023.

• Walgreens Boots Alliance Investor Relations, “FY2024 Report and 2025 Strategy Briefing,” February 2025.

• McKinsey & Company, “The Next Wave of Healthcare Innovation: The Role of Retail,” January 2024.

• Bloomberg, “Drugstore Chains Confront Profit Pressures and New Competitors,” November 2023.

• Fortune, “CVS Health and Walgreens Face a New Era in Consumer Health,” December 2023.

• Retail Dive, “CVS, Walgreens Face Headwinds in Digital Health Pivot,” October 2023.

• Forrester Research, “Reimagining Consumer Experience in Retail Health,” January 2024.

• BDO, “2025 Retail Industry Outlook: Agility and Customer-Centric Retailing,” February 2025.

• S&P Global Ratings, “Healthcare Retail Risk and Resilience: CVS and Walgreens,” February 2025.

• Mark Cuban Cost Plus Drug Company, Official Company Website, accessed March 2025.

• National Retail Federation (NRF), “State of Retail: Agility, Workforce, and Customer Experience,” January 2025.

• CVS Health Investor Relations, “Q4 2024 Earnings Report and 2025 Strategic Roadmap,” February 2025.

• Health Affairs Journal, “Retail Health and the Changing Landscape of Care Delivery,” January 2024.

• PwC Health Research Institute, “The New Health Economy: Retail’s Growing Role in Care,” December 2023.