CVS announced Wednesday that they plan to stop selling cigarettes and tobacco products. While many Americans might like to believe that CVS is just blowing smoke, the drug store giant has decided to kick the habit by October 1, 2014.
Their reasoning behind this bold move is the shift the company is manifesting towards branding and delivering more similarly to that of a health care provider. CVS, like many other major pharmacies, are changing from drugstores that simply fill prescriptions, to more cohesive wellness centers that provide basic health care services to customers. CVS President and CEO Larry Merlo said, “Cigarettes have no place in an environment where health care is being delivered”.
CVS is taking a risk with this new policy change. The drugstore is projected to lose 2 billion dollars in revenue per year and they will experience a decrease in foot traffic to the store. Despite these setbacks, this risk could be a leap in the right direction.
There are numerous benefits that CVS could gain from stopping the sale of cigarettes in their stores. CVS has garnered media attention and general public approval as well as an advantage over competing pharmacies to create partnerships with hospitals and physicians. The company has new credibility that they are more than just a drugstore and their patients health comes first, above all else.
Other companies have had to face similar ethical decisions like the one CVS encountered. Despite the loss of potentially millions of dollars in advertisement sales, Google decided to not allow businesses to advertise for alcohol or marijuana on its websites. This decision may be costly but allows Google to hold onto its quality name and value for the long haul.
In 1982, Johnson & Johnson famously recalled 31 million bottles of Tylenol capsules. At the time, recalling products were nearly unheard of. Many believed that Johnson & Johnson would never recover from the recall. The risky decision on the part of Johnson and Johnson paid off in the long run. The company remains a trusted company in the eyes of the consumer.
Sometimes taking big risks can pay big dividends.
What’s your take on CVS’s decision to stop selling cigarettes?
Photo Cred: Matt Trostle