While pharmacies did feel the pain of the pandemic like other retail sectors, they hardly suffered an extended period of weakness. And their recent performance - driven by vaccines and wider reopenings - has put even relative strength into context, as key brands have seen exceptional growth of late.
Looking at visit rates for CVS, Walgreens and Rite Aid compared to the equivalent months in 2019 shows the sector’s strong position. CVS and Walgreens have seen significant monthly visits growth with May 2021 marking increases of 14.1% and 14.1% respectively for the two brands when compared to May 2019. This followed March and April performances that saw average monthly increases of 14.8% and12.9% for CVS and Walgreens respectively. And while Rite Aid is still seeing significant visit declines when compared to 2019, the gaps have shrunk from as much as 38.2% in January to just over 20% in March, April and May.
And while the growth is impressive in its own right, it’s the consistency of their strength that deepens the longer-term confidence in the sector. Weekly breakdowns show that both CVS and Walgreens have experienced exceptionally strong growth every week since the week beginning March 1st.
Strong Long-Term Positioning
COVID vaccines clearly play a role in this rebound, but there is also more to be said about the strategies these brands have championed for years, and the long-term benefits they provide. Pharmacy locations are heavily centered around daily routines, and the return of work and school is providing a lift. These brands are also exceptionally well aligned with key trends like a growing focus on health and wellness. But the secret weapon may be the wide variety of goods on offer. Pharmacy locations offer a wide range of daily necessities, meaning that a stop for a medicine can easily turn into a much larger basket as visitors make their way through the aisles.
The Real Test: Rite Aid’s Comeback
However, the real test of the pharmacy segment’s overall success may become clearer when looking at Rite Aid. Rite Aid was already struggling pre-pandemic, and the unique effect of COVID on urban traffic had an even greater effect on this chain. But even Rite Aid is on the recovery with visits down just 18.3% and 18.1% respectively the weeks beginning May 31st and June 7th, when compared to the equivalent weeks in 2019. This is a massive improvement on visits from the first two weeks of February when visits were down 41.1% and 37.0% respectively. If the brand can maintain the trajectory as residents and commuters return to cities, the impact could be significant.
Will CVS and Walgreens continue to rise? Can Rite Aid close the gap? Visit Placer.ai to find out.