Walgreens To Close 1,200 Stores As Amazon Pharmacy Expands

Walgreens is preparing to shutter 1,200 stores as Amazon Pharmacy gears up to launch in 20 new cities. The competition between these two retail giants is intensifying, with each promising a revolutionary pharmacy experience, albeit with contrasting visions. As Walgreens faces a challenging year, it plans to close approximately 14 percent of its locations over the next three years, a strategic move that follows similar actions by Rite Aid and CVS.

This year has been particularly tough for Walgreens and other drugstore chains. On October 15, CEO Tim Wentworth announced the substantial store closures during an earnings call, signaling a shift in business strategy. With the rise of online and delivery pharmacy options, traditional retail pharmacies are forced to adapt or face declining relevance in the market.

As Walgreens consolidates its physical presence, Amazon Pharmacy is expanding its reach. On October 9, Amazon announced plans to make nearly half of U.S. customers eligible for same-day medication delivery by the end of 2025. This rapid growth in delivery services is mirrored by Walmart's recent launch of same-day prescription delivery in six states, expected to expand to 49 states by the end of January.

Rick Gates, Walgreens' chief pharmacy officer, recognizes the changing landscape but remains optimistic about the brand's brick-and-mortar future. "Everybody said mail-order pharmacy was going to take away all the customers," Gates stated. He emphasizes that consumers have various ways to engage with healthcare, and Walgreens aims to be a convenient pharmacy-led solution for them.

Walgreens is embracing an "omni-channel" approach, focusing on digital, delivery, in-store, and drive-through services. Gates envisions a future where technology enhances the physical shopping experience, allowing pharmacists to spend more time with patients. With over 40 percent of prescriptions being filled by micro-fulfillment sites, Walgreens aims to streamline operations while still providing personalized care.

Despite these innovations, Walgreens faces significant challenges due to declining reimbursement rates from pharmacy benefit managers and health plans. The company is committed to investing in services like immunizations and health screenings to broaden its engagement within the industry and meet the evolving needs of consumers.

As Walgreens reduces its store count, it hopes to maintain connections with customers through delivery services and other channels. Gates emphasizes that while they are "thinning out a network," they are not abandoning entire geographic areas but rather adapting to consumer expectations.

In contrast, Amazon Pharmacy's rapid expansion raises questions about the future of traditional pharmacies. John Love, vice president of Amazon Pharmacy, highlights the drawbacks of conventional pharmacies, such as long wait times and limited hours, which can frustrate customers. Amazon aims to pioneer "pharmacy 3.0," offering a digital-forward approach that promises 24/7 customer engagement and swift medication delivery.

With Amazon's new launch, 29 percent of pharmacy deserts—areas with limited access to pharmacies—will gain same-day delivery. This shift toward delivery-based pharmacy solutions may alter the landscape significantly, especially for those in underserved communities. As both companies navigate this evolving market, the future of pharmacies looks to be a blend of digital convenience and community-focused care.