CVS and Free Advertising

This week it was released that CVS stores will be phasing out their sales of tobacco products in all of their stores. 9 months from now the health and wellness chain store will be completely tobacco free. While this has been heralded as a huge plus for anti-tobacco groups and  health specialists it has others seeing it as something more. 

CVS/pharmacy will stop selling cigarettes and all tobacco products at its more than 7,600 stores nationwide by October 1, 2014

Jeffrey A Tucker CEO of Liberty.me and publisher of Laissez Faire Books had  this to say on his Facebook page,"I think I'm figuring out this CVS/tobacco thing. The company has enjoyed days and days of spectacular press for deciding to remove it from the stores. They are being heralded for being daring and progressive, putting health in front of profits. You can't pay for that kind of attention/advertising. It is huge for a company devoted to health. Meanwhile the thing doesn't actually happen for another 9 months, so they enjoy 9 months of non-stop 24/7 cigarette sales, and it could be that in some places, people will be stocking up. (Note that Walgreens has a sale on cigs just to keep up.) I would love to see the sales figures. Finally, when they are gone, they have new and precious shelf space. The whole thing seems to be working out. Good for CVS! " 


Now comes the market effects. Will CVS lose a number of customers that had previously bought their tobacco products at their stores? Probably. Will it gain new customers? Few if any in my opinion. But as Mr. Tucker has pointed out it clears space on the shelves for other merchandise, possibly products that consumers cannot get at any competing stores, exclusive CVS products. They can use the money they had been using to purchase these tobacco products for resale to invest in better technology, more products, lowering their costs and in return lowering their prices, or more employees to meet their customers wants and needs. 


Advertising isn't cheap, but when you make media headlines, you can also gain huge exposure. This news has had an affect on CVS/CareMark's biggest competitors too, they are running sales on cigarettes and other tobacco products.


As President and CEO Larry Merlo stated in an official CVS  press release, "Ending the sale of cigarettes and tobacco products at CVS/pharmacy is simply the right thing to do for the good of our customers and our company. The sale of tobacco products is inconsistent with our purpose – helping people on their path to better health.

As the delivery of health care evolves with an emphasis on better health outcomes, reducing chronic disease and controlling costs, CVS Caremark is playing an expanded role through our 26,000 pharmacists and nurse practitioners. By removing tobacco products from our retail shelves, we will better serve our patients, clients and health care providers while positioning CVS Caremark for future growth as a health care company. Cigarettes and tobacco products have no place in a setting where health care is delivered. This is the right thing to do."

In my opinion this is a great message the company is promoting and at the same time is able to capitalize on it's release. This goes as an example of businesses making decisions instead of following mandates, they really can run themselves. 

To see the official statement click here.