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Sacrificing Profit to Save Lives

September 17th, 2014

CVS, in an effort to better reflect its role as a purveyor of health care products, has announced that it will pull all cigarette and tobacco products from its 7,600 stores nationwide. The decision accompanies a brand name change, from CVS Pharmacy to CVS Health, and is part of a broader strategy to market themselves as retailers sincerely dedicated to the health of their customers.

In order to rectify what many consider hypocrisy in their goals and image as a company (because apparently nicotine habits are unhealthy), CVS has prepared to accept losses of up to $2 billion in sales during the first year of implementation. While this loss of about 3% of their total sales might seem significant, the retailer is banking on long-term benefits outweighing the financial hit in the short-run.

In theory, potential customers who respect the organization’s commitment to ending smoking will show their support with more business. CVS also hopes the cessation of tobacco sales will attract partnerships with other companies who share the objective of a cleaner, healthier society. Especially given the passage and expansion of the Affordable Care Act, CVS has been seeking to expand connections with health-care providers and add to its growing list of 41 partnerships. If all goes according to plan, this demonstration of ideology-before-profit could be just what the doctor (pharmacist?) ordered.

In addition to the name change and elimination of tobacco sales, CVS also recently announced the launch of a nationwide smoking-cessation campaign to promote better overall health in America. In doing so, CVS hopes to increase its presence in the public eye and offer potential customers the ability to interact with, and learn more about, the brand’s ideals and goals.

All of these moves indicate an overhaul in brand management to reinforce consistency within CVS as an organization committed to society’s welfare. As far as having an impact on the community, CVS recently conducted a study published in the policy journal, Health Affairs, and found that tobacco bans at pharmacies in Boston and San Francisco decreased the number of households that purchased cigarettes by 13.3% and 5.5%, respectively.

But if the altruistic defense of society isn’t enough to convince business/economics students concerned with the potential decrease in profits, consider that CVS shares are up 12.5% for the year. Perhaps this is a situation in which blind devotion to the bottom-line blurs perceptions of what is truly in a company’s best interest. Of this, time will be the ultimate judge. In any case, if you’re still craving that nicotine buzz, you’ll have to go to your local convenience store or gas station to get your fix.

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