What: Walgreen is closing 1,200 stores.

Why it is important:  It highlights the financial struggles of Walgreens and the broader retail pharmacy industry, driven by online competition and declining prescription drug profits. The store closures reflect a major shift in how traditional pharmacies must adapt to changing consumer behaviors and market pressures.

Walgreens is closing around 1,200 locations by 2027 as it struggles to compete with online retailers and faces declining prescription drug payments. The company, which plans to close 500 stores in the next year alone, is implementing these changes as part of a multi-year optimisation program. While sales increased by 6% in the past quarter, Walgreens reported a USD 3 billion loss due to a writedown of a Chinese pharmaceutical chain and CareCitrix, a home care provider. Retail analysts, like Neil Saunders, see these closures as a sign that the company is trying to correct years of poor store operations and underperformance.

The closures reflect broader challenges within the drugstore industry, as major chains like CVS and Rite Aid also face shrinking profits from filling prescriptions and increased competition from companies like Amazon. On top of prescription struggles, Walgreens and others are being pressured by large retailers such as Target and Dollar General, particularly in rural areas. Walgreens recently slashed prices to attract cost-conscious shoppers but acknowledges that the financial turnaround will take time. However, some analysts see the closures as an admission of past failures in the company’s business strategy.

Walgreens is closing 1,200 stores