CVS and Walgreens are among the largest drugstore chains in America, with thousands of stores spread all over the country.
However, when visiting these pharmacies, you may have noticed that CVS and Walgreens stores are always located together. Here is the answer to this bewildering question!
Why Are CVS and Walgreens Always Together?
CVS and Walgreens are always located together because it allows each to benefit from the advertising of the other. It helps both stores to maintain maximum market share and avoid having to research the location if a competitor already has a store in that location.
If you want to know more about the effect of being together on their sales, which one has more stores, and which one is more profitable, keep on reading!
More Reasons Why Walgreens And CVS Are Always Located Together
Another reason why these two pharmacies are often located together is to take advantage of Hotelling’s Model of Spatial Competition.
Also called Hotelling’s law, it states that businesses that sell similar products tend to locate close together to obtain the maximum market share that is possible.
For example, if a customer from either store is unhappy about the service, pricing, or product range, they can easily walk next door to either a CVS or Walgreens and take advantage of their services.
Additionally, according to the ‘Nash Equilibrium’, if either CVS or Walgreens decides to change its strategy and not locate close to the other, it would end up losing a lot of market share and reduce its profits.
Do CVS And Walgreens Have The Same Owners?
No, CVS and Walgreens do not have the same owners. CVS Health owns CVS whereas Walgreens comes under the holding company Walgreens Boots Alliance.
Which Chain Started First?
Walgreens was founded 120 years ago (in 1901) in Chicago, Illinois, U.S. CVS was founded 57 years ago (in 1963) in Lowell, Massachusetts, U.S.
Therefore, we can see that Walgreens started first (a lot earlier than CVS).
Is CVS Or Walgreens The More Profitable Store?
As of November 2019, CVS reported a net income of about $1.5 billion during its 3rd quarter, whereas Walgreens had net earnings of $677 million during its 4th quarter.
This shows clearly that CVS is the more profitable of the two stores.
Which Chain Has More Stores In Total?
Walgreens has close to 18,750 stores all over the world, with 9,200+ stores in the U.S. alone. CVS, on the other hand, has 9,900 traditional retail stores in the U.S.
Which Chain Fills More Prescriptions?
In the 3rd quarter of 2019, CVS filled more than 352 million prescriptions, whereas Walgreens filled 283 million prescriptions in the 4th quarter of the same year.
Conclusion: Why Are CVS and Walgreens Always Together?
CVS and Walgreens are always located together because of Hotelling’s law, which says businesses selling similar products cluster together to maximize their market share. Locating together also helps each benefit from the other store’s advertising since customers would inevitably visit the same location.