retail news in context, analysis with attitude

Bloomberg Businessweek reports that the decision CVS Caremark to ban tobacco sales from its stores, reasoning that as a health care provider it could no longer be in the business of selling an addictive carcinogenic product, looks to cost the company $2 billion in annual sales.

According to the story, "Executives confirmed that eye-popping estimate after a little prodding on an earnings call. In the second quarter, the company said, sales at the front end of CVS stores where the cigarettes have been kept dropped 0.4 percent. Some stores are still in the cigarette-selling business. The self-imposed deadline to remove all tobacco products doesn’t come until October, so the modest drop in sales up front last quarter might come from stores that have stopped replenishing inventory.

"CVS isn’t just facing lost revenue from the sales of cigarettes—it’s losing money on all the other stuff that those smokers might have bought. Plus, CVS has locked itself out of an emerging business. The company didn’t stock e-cigarettes at the time of its tobacco-free announcement and said it will wait for guidance from the Food and Drug Administration before making a decision about selling them."
KC's View:
I have a strong bias here, as I've explained often in the past, but I think that CVS made exactly the right marketing and long-term business decision in banning tobacco sales - it is being very clear and very consistent about its mission and values.

Besides … For what shall it profit a man, if he shall gain the whole world, and lose his own soul? (Mark 8:36)