Pedestrians walk past a CVS store in Chicago in February 2012.(Photo: M. Spencer Green, AP)
Tampa, Florida - Bold and risky -- that's how marketing experts describe CVS' recent decision to stop selling tobacco products. The company said it maintains a strong commitment to health, so strong it is willing to lose $2 billion in sales.
But, sources say with risks comes possible big pay-off in the marketplace.
So, will this be seen as a pioneering move, or will it cause a plunge in profits? The decision by CVS to stop tobacco sales was a shock to many. But, experts tell us it could be the smartest move ever.
The change will take place later this year on October 1st.
"They'll be seen as a leader. Like, 20 to 30 years from now, they will be seen as starting the movement," said USF marketing professor Dipayan Biswas.
Biswas said the company wants to capitalize on the trend of healthy living. CVS officials have said publicly that they know people are eating and living smarter these days. Also, experts say, CVS wants to possibly knock Walgreens out of what analysts call "the number one spot" by being bold. Experts maintain Walgreens has the largest number of stores.
"If you want to be number one, you have to do something different. They have not been doing anything different to get to number one. So, maybe this will be it," said Professor Biswas. "CVS is ahead of the trend. A lot of people are going to applaud them for that and maybe [they'll] gain new customers."
Experts also say CVS may not need to worry all that much about profits, and here's why -- U.S. smoking rates have gone from 42 percent in 1965 down to 18 percent in 2012.
The statistics illustrate that people are obviously smoking less than they were fifty years ago, and the numbers are predicted to continue to drop.
"Ending the sale of cigarettes and tobacco products at CVS/pharmacy is the right thing for us to do for our customers and our company to help people on their path to better health," Larry J. Merlo, president and CEO of CVS Caremark, said in a statement. "Put simply, the sale of tobacco products is inconsistent with our purpose."
Right now, CVS Caremark is considered the largest pharmacy in the United States. This is based on total prescription revenue, according to the corporation.
The company operates more than 7,600 CVS/pharmacy stores around the country. They also run more than 800 MinuteClinics, which are clinics inside the pharmacies.
Most smokers say they don't feel alienated. They will just have to go somewhere else to buy cigarettes. "They have a right to sell whatever they want to or not, so I just won't go there," said one longtime smoker.