As of this past Wednesday, September 10, CVS Caremark Corporation made the decision to change their name to CVS Health, and to go along with their new name, discontinue their sales of all tobacco products. This meant taking a $2 billion cut in their annual sales. Like they say "no risk, no reward," and CVS is hoping their risk will be rewarded by the public by being seen as the pharmacy that really is all about health, and hopefully bring in new clients who want their products sold at, the now tobacco free, CVS stores. The discontinuation of selling tobacco products could also help take American's one step closer to being tobacco free, as was previously discovered was the case in Boston and and San Francisco. Both locations banned the selling of tobacco products in pharmacies, and as it turns out, tobacco sales fell by 13.3%. CVS plans to use the previously tobacco occupied spaces to advertise that they are no longer selling tobacco products, along with selling products that help quit the usage of tobacco products.
I think it will be interesting to see if other retailers follow in the footsteps of CVS. I can see this going two ways. Either this will increase the demand of tobacco products at all other retailers because the supply has now slightly decreased, thus also raising the, already ridiculously high, prices of tobacco products, or health clients will flock to CVS to sell their products, increasing CVS's revenue. Other retailers will see this increase and jump on the bandwagon and become tobacco free. Something very positive about this potential outcome is that the more available products that help people quit using tobacco becomes, the cheaper these products will be. With less retailers selling tobacco products and more selling quitting products, it would be cheaper for American's to kick this nasty habit rather than keep giving in to the addiction.
Link: http://stocks.org/company/cvs-is-now-cvs-health-nysecvs-after-stopping-the-sale-of-tobacco-products/25280/
I find it interesting that CVS has taken the initiative to take a cut in its sales to focus more open global health. The fact that CVS Health is showing such strong business ethics is admirable. I do feel that the usage of Tobacco related products will decrease with this new policy that CVS is adopting.
ReplyDeleteI would also like to see what this decision leads to. It truly is a big step to decide not to sell these products because I bet there's a good amount of revenue that comes from these sales.
ReplyDeleteDiscontinuing the sale of all tobacco products despite the fact that it will decrease annual sales by $2 billion really shows that CVS is truly interested in promoting health and wellness. It seems unusual for a company to quit selling products that generate such a large amount of revenue. I agree that it is admirable that the company is putting health first. I wonder if any other major drugstores will end up choosing to stop selling these products and whether or not it will decrease the use of tobacco.
ReplyDeleteI agree with Haley and Shaaref. Discontinuing the sale of all tobacco products contrary to the large amount of revenue that they bring in truly demonstrates good business ethics and a commitment to a mission statement. However, I wonder if CVS will push themselves further as a company and eliminate the sale of items such as junk food, candy, and soda. I wonder how much revenue CVS will be willing to sacrifice to truly embrace their new name of CVS Health.
ReplyDeleteI find this to be a very good marketing strategy. It's good to see that a large corporation actually cares about the products its selling. While they will loose the $2 billion in cigarette sales, they should be able to make that up through products that help smokers beat there addiction. The American Lung Association calculated that each pack nation wide costs $5.51, but it costs a smoker substantially more in health problems latter in their life. It's going to be interesting to see if CVS sticks to this in the long run or goes back to its old ways. I would also like to see in the short run if sales in the store actually increased from this marketing strategy.
ReplyDeleteI think this was a good move on the part of CVS. No doubt is it a good way to improve their reputation and promote a healthy attitude, despite them taking such a large cut in revenue. I can see tobacco sales decreasing as a result, because less competition could cause sellers to raise their prices for cigarettes. Furthermore, maybe other pharmaceutical companies will follow in CVS's footsteps and stop selling tobacco as well, which could change cigarette consumption dramatically.
ReplyDeleteI like that CVS took initiative and took a leap of faith. It's a creative idea to drop a product that makes you product but I believe that this choice will bring in new customers focused on health while at the same time, they will not lose all of their previous customers who use tobacco because CVS has so many other quality products to be sold than just tobacco. I feel like in the short run it may cost them, but it will be interesting to see the long run effects this decision has on CVS.
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