CVS SWOT Analysis 2024: A Review of Key Factors for Success

CVS will be done serving over 3000 people by the time you finish reading the first paragraph. With over 9000 stores in almost every city in the USA, CVS holds the “one of the largest retail companies” title. There is more to know about the company, which we will learn in the following sections of the CVS swot analysis.

CVS: Company Overview

With a history dating back to 1963, just six years before the Moon landing, CVS was founded in Lowell, Massachusetts, as Consumer Value Store by Stanley Goldstein, Sidney Goldstein, and Ralph Hoagland. Today, the company operates over 9000 retail locations across the country.

CVS reported total revenue of $322.5B and employed over 300,000 people in 2022. The company aims to help people on their path to better health by providing a wide range of pharmacies and increasing access to affordable healthcare and retail products and services.

Product & Services of CVS
Health Care and Wellness | Prescription Drug Coverage | Health Insurance | Pharmacy

CVS Competitors
Cigna | UnitedHealth Group | Walgreens Boots Alliance | Rite Aid | Pharmerica | Prime Therapeutics | MedImpact

Did You Know?

CVS’s ExtraCare loyalty program has over 70 million active members, approximately one in four people in the US.

Strengths – CVS SWOT Analysis

Accessibility: According to data, CVS has over 9000 stores, and to be precise, 9,614 stores across the USA which prove its accessibility. Besides, They have made several accommodations to ensure accessibility, such as providing braille and large-print prescription labels, offering accessible prescription pickup windows, and providing American Sign Language interpretation for pharmacy consultations.

Strong Portfolio: The company has a strong brand and product portfolio offering a diverse range of health and wellness products, prescription medications, and pharmacy services. It didn’t stop there, as it also expanded its offerings through acquisitions, owning private label brands, including CVS Health and Gold Emblem.

Personalized Offerings: People always want personalized offerings specially catered for them, and in the case of medical and healthcare services, these get more sensitive, and the demand increases. It is the future, and CVS started with its ExtraCare program, providing customized discounts and rewards based on a customer’s purchasing history. Besides, it also includes personalized coupons and recommendations based on a customer’s preferences.

Effective Distribution: With an effective distribution system, CVS can effectively and efficiently deliver products and services to its customers. With their automated system, they have a system that enables suppliers to fill up the empty racks and not to mention a robust e-commerce platform, allowing customers to order products online and receive them via home delivery or in-store pickup.

Loyal Customer Base: Because of accessibility, personalized offerings, and a vast portfolio, CVS had a solid and reliable consumer base of over 80M in 2022. And because of that, CVS ranked 7 in the Health and Wellness segment, with a 77% customer satisfaction score. No wonder 97% of front-store sales come from the ExtraCare program.

Strategic Acquisition: A brand doesn’t have all the great ideas, and in the business world, to expand and survive, acquiring companies is the way. In its portfolio, it has a total number of eighteen companies, and the biggest one so far is the acquisition of the health insurance company Aetna for $70B. And recently, in 2023, they acquired a home healthcare services company named Signify for $8B.

Weaknesses – CVS SWOT Analysis

Increasing Operating Cost: CVS faces growing operating costs, including rising labor costs, higher pharmaceutical prices, and increased expenses related to pandemic protocols. As a result, the operating cost grew by 12.84% in 2022, from $278.918B in 2021 to $314.721B in 2022.

High Turnover Rate: The high turnover rate can lead to increased costs for the company, such as recruitment, training, and productivity losses. And the company is already facing issues because of it, as the employee turnover rate now stands at 14.6, much higher than the average industry standard rate.

No International Presence: We can all agree that there are more than enough stores in the USA alone, but the problem is that no other country has CVS in this era of globalization. The narrow focus may limit the company’s ability to diversify its revenue streams and the growth potential the big competitors now take.

Poor Financials: The company is drowning in short-term and long-term debts, not to mention other poor financial performances. The company’s current ratio, which measures its ability to meet short-term obligations, was 0.94 in 2022, below the industry average of 2.06. Additionally, its debt-to-equity ratio was 0.71 in 2022, almost closer to the industry average.

Opportunities – CVS SWOT Analysis

Market Expansion: The global retail and pharmacy retail industry is on the rise, and the market size was $1.42T and $1,126B in 2022. Most of the market opportunity lies in the Asian market, but CVS can start with Canada and UK as these markets are already matured and easy to adapt to.

Strategic Partnerships & Collaborations: There are opportunities for the company to collaborate with other healthcare providers, insurers, and technology companies to create new business models, offer innovative services, and expand its reach. As a part of the plan, CVS partnered with tech giant Microsoft and launched a ‘digital-first’ strategy in the market.

Offerings Diversification: As an evergreen industry, there are many offerings and diversification opportunities, starting with telemedicine, home health services, medical clinics, specialty pharmacy, medical equipment, and consumer health products. And the company is already beginning to work on those.

Advanced Health-Tech: Adopting the advanced health-techs have the potential to increase access to healthcare and improve customer experience. The company has launched digital health programs, such as the MinuteClinic Video Visit and the CVS Pharmacy app, which allow customers to access healthcare services remotely. Besides, the company has partnered with Teladoc Health to expand its telehealth services.

Sustainable Practices: CVS has implemented several sustainable practices to reduce its environmental impact. The company has set a goal to reduce carbon emissions by 0% by 2048 and implemented energy-efficient lighting and HVAC systems in its stores. CVS also has a recycling program for plastics and other materials and has committed to sourcing sustainable palm oil.

Threats – CVS SWOT Analysis

High Competition: The company faces stiff competition in the retail pharmacy industry, with competitors such as Walgreens, Rite Aid, and Walmart. The biggest competitor, Walgreens, had a 15.5% market share in the industry, while CVS had a 14.8% share in 2022 in the retail sector.

Lawsuits: CVS has been bombarded with several cases recently. The list starts with claims of overbilling Medicare, discriminatory pricing, and allegations of improperly disposing of confidential customer information. Recently, they had to pay $470M for the opioid settlement case.

Counterfeit Medicines: There are two scenarios where counterfeit and harmful medicines are a long-term threat to the company. The fake drugs market now stands at $432B, with around a 20% growth rate. Besides, FDA issued warnings about counterfeit versions of drugs, including Viagra, Cialis, and Levitra, which were found to contain harmful substances, being sold on CVS’s website.

Increasing Price: Raw materials prices have risen for the last few years. And, recently, the prices have increased by 25% to even 100% globally, depending on the category or sector. As a result, as CVS depends on the suppliers, maintaining the price and serving customers with discounts is becoming difficult.

Inflation: Inflation is hitting every industry, especially the retail and healthcare service industry, and as a result, it led to rising costs for the company, including labor, transportation, and raw materials. The price of goods sold for CVS increased by 12% in 2022 compared to the previous year. Additionally, the company has had to increase employee wages to keep up with inflation.

[Bonus Infographic] SWOT Analysis of CVS

Recommendations for CVS

The health and retail industry is changing vastly, so CVS should change by adopting new things with time.

• The company can explore new business segments like telemedicine, medical devices, or health and wellness products.
• The strategic partnerships and collaboration will help the company to expand its market and tap into new sectors.
• The company should focus on innovation and invest in new technologies and services to improve customer experience and drive growth.
• There are rooms to improve in case of employee high turnover rate and poor financials with proper planning.
• CVS should continue to invest in sustainability initiatives to reduce its environmental impact and improve its brand image.

Frequently Asked Questions (FAQs)

Final Words on CVS SWOT Analysis

CVS is a retail pharmacy chain that faces both opportunities and challenges in the healthcare industry. While the company has a strong brand presence and a wide range of products and services, it also needs improvement, such as high debt levels and poor financial ratios. However, CVS has implemented sustainable practices to reduce its environmental impact and has the opportunity to expand into new markets, invest in innovation, and enhance its better customer services.

References

• Wikipedia contributors. (n.d.). CVS Health. Wikipedia.
• Moran, C. D. (2021, December 1). CVS expands spoken prescription app feature chainwide. Grocery Dive.
• Morris, T. W. (2023, February 3). CVS launches beauty and personal care brand. Retail Dive.
• Minemyer, P. (2022, July 13). Consumers seeking personalized, integrated care post-COVID, CVS survey finds. Fierce Healthcare.
• Morris, T. W. (2022, February 11). CVS to spend up to $3B on digital features. Retail Dive.
• Japsen, B. (2018, August 8). CVS MinuteClinic Launches Video Doctor Visits Via Teladoc Platform. Forbes.
• Bushak, L. (2023). Inflation will have the biggest negative impact on pharma industry in 2023: survey. MM+M – Medical Marketing and Media.