Walgreens is not ready to kick its cigarette habit

Discussion
Photo: Walgreens
Jan 28, 2016
George Anderson

On a trip last month to Walgreens with my eight-year-old, I was asked (paraphrasing here) why the store sold cigarettes when the pharmacist gave people immunizations to keep them from getting sick and sold them medicine if they fell ill.

This branding conundrum has become starker over the past couple of years since CVS ended the sale of tobacco in its stores. While cigarette sales may seem at odds with Walgreens’ “Happy & Healthy” messaging, the apparent discrepancy has not been enough to get the chain to follow the lead set by CVS.

“Our main focus is to try to get people to quit smoking, and we provide a lot of opportunities in stores to do that,” James Skinner, executive chairman of the company, told the Chicago Tribune yesterday at the company’s annual shareholders meeting. “We also provide [products] for consumers who decide they want to smoke.”

In a Sept. 2014 survey on RetailWire, 57 percent of respondents said it was very or somewhat likely that Walgreens and other retailers would ban the sale of cigarettes over the next five years. With less than three years left in that timeline, it seems the 43 percent who said it was somewhat or very unlikely that cigarettes would be banned are likely to be proven correct.

Parent company Walgreens Boots Alliance announced earlier this month that its Retail Pharmacy USA business (Walgreens and Duane Reade) was up 4.2 percent year over year. Comp store sales were up 5.8 percent. The division’s pharmacy sales were up 6.7 percent overall and 9.3 percent on a comp basis.

Do you see Walgreens’ cigarettes sales as inconsistent with its branding message? Does Walgreens’ duty to generate returns for its shareholders mean it has to continue selling tobacco products?

Braintrust
"Walgreens will continue to sell cigarettes for the same reason there are pawn shops and payday loan outlets — there’s money in it. It’s profitable. In 2016, though, selling cigarettes in a pharmacy is, as my grandmother would have called it, "unseemly.""
"I assure you, the underlying reason CVS stopped selling cigarettes was that it wasn’t very profitable. The margins are tight. The regulations and inventory control are heavy. There is great concern about shrink. CVS made a business decision and turned it into a PR positive."
"Reading through the comments I’m struck by how some see this as a brand question and others see it as a test of the viability of rugged individualism. Let’s take these points one by one."

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22 Comments on "Walgreens is not ready to kick its cigarette habit"

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Ken Morris
BrainTrust

The absurdity of Walgreens’ sales of tobacco products is just beyond belief. How can they claim to be serious about the health of their customer base and continue to poison it at the same time? There may be no bigger killer of a generation or three than this scourge and yet Walgreens continues this two-faced debacle. Surely there are other products Walgreens can integrate into their product hierarchy. The press coverage associated with dropping the category alone will make up for the lost margin.

Joel Rubinson
BrainTrust

From a personal freedom point of view, I hated CVS’ heavy handed approach. I applaud Walgreens for not caving into political correctness and the thought that the government knows what is better for us than we do. By the way, I am NOT a smoker but I am an advocate for personal liberties. Happy and healthy is a choice we should all make, but the emphasis is on the word CHOICE.

Cathy Hotka
BrainTrust

Walgreens will continue to sell cigarettes for the same reason there are pawn shops and payday loan outlets — there’s money in it. It’s profitable. It can be lucrative to address the needs of the vulnerable of society.

In 2016, though, selling cigarettes in a pharmacy is, as my grandmother would have called it, “unseemly.”

Max Goldberg
BrainTrust

There is a basic incongruence with pharmacies selling cigarettes. At the same time, those companies have an obligation to maximize profits for shareholders. By continuing to sell cigarettes, Walgreens mocks its core brand message. How that will resonate with consumers is yet to be seen.

Dr. Stephen Needel
BrainTrust

I’m with Joel re: personal liberties and, as a smoker (I know, I know) I’ve stopped going to CVS and started at Walgreens — I don’t think I’m alone here. When I walk into any of the four CVS stores in my neighborhood, the first thing I see is the candy aisle, with carbonated beverages at the end in coolers. After two aisles of candy we come to snacks, chips, etc. If they are serious about health, they’d get rid of that stuff too. No fair picking one thing that’s bad for you and leaving all the rest.

Tom Redd
Guest

A drugstore is a supply point for what people need — be that food, smokes, pop, etc. They can try like heck to be a health place, but unless they ditch all the unhealthy stuff they cannot be a hospital. Regular Coke vs. Diet Coke? That can be as bad as smoking (on some people). Sorry Ken, but I think the CVS move was overdone and CVS still sells a massive amount of total junk food, candy, etc. That stuff is all bad for you.

Let old fashioned be old fashioned. Not all stores must change to meet the latest craze, like overly-aware health people.

Adrian Weidmann
BrainTrust

“Walgreens: On the Corner of Wall Street and Money (It’s What Makes Us Healthy and Happy!)” This is the reality behind Walgreens. Unlike CVS, apparently money trumps any marketing or brand messaging. If they’re going to sell tobacco then they should have the guts to change their marketing message as they certainly aren’t advocates of “healthy” for their customers. Their message is loud and clear: we’ll sell anything as long as it makes us money.

I applaud CVS even more now! Younger shoppers will reward CVS for making a meaningful difference in the world. I wish CVS was on my corner!

Gene Detroyer
BrainTrust

I assure you, the underlying reason CVS stopped selling cigarettes was that it wasn’t very profitable. The margins are tight. The regulations and inventory control are heavy. There is great concern about shrink. CVS made a business decision and turned it into a PR positive.

Did they stop selling soda? Did they stop selling candy and snacks? It really isn’t about health. Nor is CVS. Nor is Walgreens.

Roy White
Guest
Roy White
1 year 7 months ago

Cigarette sales are inconsistent with a pharmacy for the simple reason that a proven highly health damaging product should not be sold at all, much less in a venue that is dedicated to health, and a preponderant proportion of a Walgreens drug store’s volume is in prescriptions and OTC health products. This should, and did at Walgreens’ rival CVS, override the duty to increase shareholder value. Even from a business point of view, the setback sustained by dropping cigarettes should certainly be easily containable by a drug store corporation whose annual sales are over $100 billion. It was at CVS. Moreover, Walgreens has been through this before. The chain was once many years ago the largest liquor retailer in Chicago. It dropped those units and the chain is still around. It should repeat that move with cigarettes.

Ben Ball
BrainTrust

Stephano Messina and his Boots merchandising team have made it pretty clear that their intention is to take Walgreens deeper into the world of retailing (i.e., the front end) while CVS tacks to being the “health” store. I think there are two outstanding questions in that arena. One, can Walgreens take consumers upscale to beauty and brands like No. 7? And can the P&L stand the added floor personnel that make that work in the U.K.? Two, will the strategy work at all in an environment where potato chips, soft drinks and other consumables are available every 500 feet?

Ed Rosenbaum
BrainTrust

Cigarette sales in pharmacy-type stores such as Walgreens and CVS dates back to long before those stores were a presence. Cigarettes used to be sold out of vending machines long before being sold over the counter. I disagree with those who say we, the public, can dictate what a store sells. No, I am not a smoker. But I accept that those who do smoke can choose to do what they want when it comes to their life and tastes. By the way, where is smokeless tobacco (chewing)? Is it still being sold by Walgreens or CVS?

J. Peter Deeb
BrainTrust

Companies have responsibilities to their employees as well as their customers and I believe we are too politically correct in our approaches whether by government or businesses. We need to let people have the choice to buy the products they want. The human animal will always make some bad choices but our ancestors fought for our freedoms and neither the government nor businesses should take them away. If we banned or stopped selling everything that could hurt us our quality of life would dramatically change.

gordon arnold
Guest

Walgreens is a company and like any other company the employees are there to serve the corporate ownership’s right to conduct business legally. Walgreens is open to serve the customer and not to be regarded as the customer’s personal servant. As a free public service Walgreens offers an e-mail and street address to allow for public input. I do not smoke. I cannot stand the smell of tobacco products. I am of the opinion that those that who choose to smoke are making poor use of their hard-earned money and severely shortening their lives. But none of this is any of my business or anyone else’s.

Ryan Mathews
BrainTrust
Reading through the comments I’m struck by how some see this as a brand question and others see it as a test of the viability of rugged individualism. Let’s take these points one by one. In the end, it is all about branding and selling cigarettes is obviously antithetical to positioning yourself as a trusted health expert. Would you go to a doctor who recommended that you stop exercising, start eating more fried fast food and chug a bottle of bourbon every day? Of course not, although you might like how he or she thinks. The argument that cigarette sales ought to be allowed if you are selling salty snacks, candy, soft drinks, wine, etc. is spurious. If chain drug stores do evolve into neighborhood health centers — and I’m not sure they will — the margins will be strong enough to eliminate any and all dubious categories. And, while the 17 packets of sugar found in a can of a soft drink aren’t good for you, especially when consumed in excess, it isn’t the same thing as cigarettes which — when used as intended by the manufacturer — will either make you and others around you sick or kill you. So, there is… Read more »
Peter Charness
BrainTrust

Why wouldn’t you sell a drug (nicotine) in a drug store? Tobacco isn’t for me (just like birth control isn’t for some people).

Thankfully, for the most part, the drug store has to ignore partisan leanings and sell the products that customers want to purchase, regardless of the opinions of some groups who think that product shouldn’t be available.

If it’s not illegal to sell, then as others have noted, if it’s profitable enough, they will sell it.

Lee Kent
BrainTrust

A “drug” store is just what it says — a place to buy drugs that will help you become healthy. Not a place that sells “drugs” that will make you unhealthy!

Shame on them! And that’s my 2 cents.

Tim Moerke
Guest
Tim Moerke
1 year 7 months ago

I don’t see how anyone’s personal freedom is hurt by a merchant’s decision not to sell tobacco products. It’s no different than the decision to sell or not sell anything else; they are not obligated to provide every product a customer might want to buy.

Moreover, Walgreens’ fiduciary duty to shareholders also does not necessarily require them to carry tobacco products. As has been mentioned, other unhealthy products don’t carry the same profit-eroding operating costs that tobacco does — selling a lot of something, and profitably selling a lot of something, are two different things. If they can redirect the money, labor, etc. that they put into selling tobacco to more profitable use, then they would be better meeting their fiduciary duty by not selling tobacco products. I don’t know how those numbers would work out, but they would be worth investigating.

Craig Sundstrom
Guest

Let’s be honest here, CVS’s decision was every bit as much about money. By being a first mover, they were able to seize the role of officious bus.. er, “concerned retailer” and make it part of their brand strategy (or at least that was their plan; how well it’s working out we don’t really know).

Walgreens should get props for having a large percentage of stores in retail “deserts”… there’s more than one component of social responsibility.

Li McClelland
Guest
Li McClelland
1 year 7 months ago

Why is the poll question today phrased as if somehow only the shareholders’ needs are being met by Walgreens’ decision to sell tobacco in its stores ? What about the customers? Or do they not matter anymore? I’m not a smoker, but some people are, and smoking cigarettes is legal in this country. Apparently Walgreens has made a decision that selling what some of its regular customers ask for at the counter — cigarettes — is both in the corporation’s best interest AND provides customer service during a stop there.

I thought at the time that CVS’s pronouncement was sort of silly puffery and self-serving and I think Walgreens (which I prefer over CVS stores for many other reasons anyway) is smart to differentiate itself from CVS in this matter.

Tim Feemster
Guest
Tim Feemster
1 year 7 months ago

I see both sides, but even as a shareholder, I think they should not sell any tobacco products.

HY Louis
Guest
1 year 7 months ago

All branding messages are just feel good rhetoric. Walgreens is in the business of selling stuff people want. Liquor, drugs, narcotics, OTC drugs, junk food, and cigarettes. Most of that stuff isn’t good for you.

Brian Kelly
Guest
1 year 7 months ago

In the spirit of transparency, IM Retail Senior sold Charlie Walgreen cigars and smoking tobacco. Most drug stores had a cigar case. IM Senior also gave sample cigarettes to doctors for patients with troublesome coughs. (Toasted tobacco was better for you! 😉 )

Drug stores, like auto parts stores, either focus on the pharmacy or the front of the store. Today’s Walgreens are more convenience store than pharmacy with its burgeoning food offering.

I do like the approach of other pundits, who claim nicotine as a drug and therefore a rational item within the assortment. When the time comes, will CVS sell weed?

20% of the US smokes and that share seems to be locked in. Traffic matters.

As always, “retail ain’t for sissies!”

wpDiscuz
Braintrust
"Walgreens will continue to sell cigarettes for the same reason there are pawn shops and payday loan outlets — there’s money in it. It’s profitable. In 2016, though, selling cigarettes in a pharmacy is, as my grandmother would have called it, "unseemly.""
"I assure you, the underlying reason CVS stopped selling cigarettes was that it wasn’t very profitable. The margins are tight. The regulations and inventory control are heavy. There is great concern about shrink. CVS made a business decision and turned it into a PR positive."
"Reading through the comments I’m struck by how some see this as a brand question and others see it as a test of the viability of rugged individualism. Let’s take these points one by one."

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