CVS Banned Tobacco and Missed Projected Sales Loss

CVS Banned Tobacco and Missed Projected Sales Loss

There was once a time when partnering with tobacco was a necessary way for a retailer to bring in extra money, from the corner market to a larger grocery store or pharmacy chain. This time last year, CVS banned tobacco sales from its stores. The move made sense from a branding perspective, as they had been restructuring themselves as a leader in healthcare, not simply a variety drug store.

This change was clear with its acquisition of Omnicare and the move to change its name from CVS Caremark to CVS Health. With all the well-publicized risks of smoking, it was clear the hypocrisy of the rebranding needed to be dealt with to complete the company’s direction and transformation. Confident and proud to cut big tobacco from its stores, CVS was nonetheless aware of the financial risks, expecting a $2 billion loss in sales in 2014.

The company did not lose that amount. In fact, it grew about five times that amount. In 2014, their sales grew to $139.4 billion from roughly $126.8 billion the previous year. The projected year-end sales for 2015 look positive as well, with numbers still in an upswing.

While it would be unfair to attribute this impressive business growth to banning tobacco specifically, the steady expansion of CVS has shown that a cohesive branding and core message is everything. People respond well to companies that have what they stand for right on the table. In this case, it’s health. And let’s face it: Even smokers don’t claim smoking is good for them.

 

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