Retailers such as Walmart, Costco, and dollar stores are expected to benefit from Rite Aid’s bankruptcy and the closure of other drugstore chains, according to UBS. The rise of eCommerce, fluctuations in supply and demand caused the Covid-19 pandemic, and higher operating costs have all contributed to a challenging retail environment for drugstores. Shoppers have increasingly turned to mass-market retailers for their everyday needs, forcing drugstore chains to adapt or face decline. UBS predicts that more drugstore closures will occur in the coming years as consumer habits change. Rite Aid recently filed for Chapter 11 bankruptcy and plans to close more stores, while CVS Health and Walgreens also face threats and have announced plans to close hundreds of locations. Traditional retailers like Kroger, Walmart, Costco, and Target have an opportunity to expand into the health-care sector and capture a larger share of prescription and front-store sales. Dollar stores, in particular, could take advantage of the real estate left behind closed drugstores. Walmart is well-positioned to benefit from the closure of CVS locations, with 88% of them within a 15-minute drive from at least one Walmart store. Walmart, Costco, and Kroger generated similar pharmacy sales per store in 2022, making them strong contenders in the health-care sector. Walmart’s stock has performed well this year, and analysts have assigned an overweight rating to the company. Costco has also seen gains in its stock price, while Kroger’s shares have remained flat. Dollar Tree and Dollar General, despite seeing sales decline, have plans for expansion and could fill the vacant drugstore locations. These retailers offer competitive pricing and a range of goods that are difficult for online retailers like Amazon to compete with. Overall, the closure of drugstore chains presents an opportunity for traditional retailers to increase their share of the health-care market and expand their offerings to consumers.
