CVS opens smaller format stores as industry sees big shift

CVS Pharmacy is expanding its footprint. But a major focus is on smaller store formats exclusively offering pharmacy services. 

The shift to small-format stores comes as the industry works to rightsize and reduce costs in response to ongoing challenges, including intense competition and shifting consumer preferences.

CVS confirmed to FOX Business that it will open at least a dozen smaller format locations in select communities across the country over the next year. 

The new pharmacies, which will average less than 5,000 square feet, will feature a full-service pharmacy with limited over-the-counter products available for purchase and will be designed to meet the community’s specific pharmacy needs. 

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“By taking a customized approach to our footprint that is focused on the specific needs of the communities we serve, we’re continuing to strategically realign our pharmacy footprint to better support patient and ensure the right geographic coverage,” a CVS spokesperson told FOX Business. 

A look at the inside of a smaller format CVS store. (CVS)

However, the company said it is still opening up traditional CVS Pharmacy locations, which contain a full front store and pharmacy. In addition to the new small-format pharmacies, the company is planning to open nearly 30 CVS Pharmacy locations, including those inside Target stores, this year. 

Emarketer senior analyst Rajiv Leventhal told FOX Business that the retail plus pharmacy business model has been difficult for companies like CVS and Walgreens to successfully operate as people increasingly turn to online channels for household items. 

The growing number of closures at CVS, Rite Aid and Walgreens in recent years highlights how the industry is attempting to right-size itself after rapidly expanding its footprint. CVS has shuttered hundreds of stores and laid off staff in order to re-prioritize its investments and adhere to the changing customer needs. Between 2022 and 2024, it closed 900 stores, and opened 100 new locations. It plans to close an additional 270 in 2025.

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A sign marks the location of a new CVS pharmacy May 5, 2004 in Chicago, Illinois.  (Scott Olson/Getty Images / Getty Images)

In 2023, Rite Aid filed for bankruptcy and launched a store optimization plan, closing 154 locations. Then, in 2024, Walgreens announced plans to close at least 1,200 stores over the next three years in an effort to reduce costs and turn around its operations. Walgreens has not commented on whether this timeline will change now that the company is going private. Last week, Walgreens, once a $100 billion business, agreed to sell to private equity firm Sycamore Partners in a deal valued at 10% of that, about $10 billion.

Leventhal expects this move to accelerate, and potentially increase, the number of store closures. He predicts that major companies like Walgreens and CVS will continue closing many of their stores while focusing more on pharmacy services in the locations they keep open.

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“Consumers are prioritizing price, speed, and convenience above all. Drugstores locking up items to prevent theft further frustrates shoppers and causes many to abandon in-store purchases,” Leventhal said. However, he underscored that CVS’ and Walgreens’ recent retail pharmacy struggles are much more about the front of the store than behind the pharmacy counter. 

“Patients will always need their medications, and CVS and Walgreens rank first and second in US pharmacy size as measured by total prescription revenues,” Leventhal added. 

Leventhal believes the CVS’ new store formats could help the company become less reliant on front-of-store customer traffic. He also suggests this model could empower pharmacists to play a larger role in patients’ healthcare decisions.

“Doubling down on the steadier business—prescription and over-the-counter medications—is a savvy play,” he said.