The drugstore retail sector in the United States has faced significant challenges since the onset of the Covid-19 pandemic. Brick-and-mortar retailers have not only battled each other for market share but have also contended with the rapid rise of online pharmaceutical providers, all vying for consumer prescription dollars. The landscape has become increasingly competitive, with traditional pharmacy chains such as CVS, Walgreens, and Rite Aid competing directly against large big-box retailers like Walmart, Target, and Costco, as well as digital disruptors including Amazon and Mark Cuban’s CostPlus Drug Company—which offers discounted prescriptions directly to consumers.

Economic Pressures and Cost Management

Economic headwinds have compounded these competitive pressures. Rising labor costs, increased product prices due to inflation, and higher interest rates on debt obligations have squeezed margins for all retailers. In response, major drugstore chains have undertaken aggressive cost-cutting measures, including the closure of hundreds of underperforming store locations over the past four years. These actions are aimed at eliminating locations that do not make economic sense and focusing resources on more profitable areas.

Store Closures and Strategic Consolidation

CVS, for example, announced in 2021 its plan to close 900 of its nearly 9,900 stores by the end of 2024, targeting roughly 300 closures per year. Walgreens, operating about 8,600 stores—of which 6,000 are profitable—has evaluated 2,000 locations for potential closure and identified 1,200 for shuttering, with 500 set to close in fiscal year 2025. These decisions are informed by a range of factors, including community needs, local market dynamics, population shifts, and the density of stores in a given area. The goal is to maintain access to pharmacy services while optimizing the retail footprint.

Walgreens has also considered the impact of lease expirations and the risk of “dark rent” (paying rent on closed stores), aiming to minimize such financial burdens. Recent reports suggest that Walgreens may close up to one-quarter of its locations as part of ongoing efforts to streamline operations and improve profitability.

Rite Aid’s Bankruptcy and Ongoing Restructuring

Rite Aid’s struggles have been particularly pronounced. The chain filed for Chapter 11 bankruptcy for the first time in October 2023, closing about 800 of its 2,100 stores. In May 2025, Rite Aid filed for bankruptcy protection again, this time as New Rite Aid LLC, and initiated a process to close hundreds more stores. The company has filed multiple notices with the U.S. Bankruptcy Court for the District of New Jersey, seeking approval to close an additional 232 locations and liquidate their assets. This brings the total number of store closures to 704, with many more likely to follow as the company liquidates its assets.

Market Consolidation and the Role of Digital Health

As the industry consolidates, the remaining players—primarily CVS and Walgreens—are positioning themselves to dominate the sector. A core part of this involves the sale of Rite Aid’s pharmacy assets, such as prescription files and customer data, to CVS and Walgreens.  The drugstore chains look to purchase these assets to enhance their market positions, reduce competition, and construct scalable pharmacy networks that would be better suited to handle increasing prescription demand. The shift toward digital health services, including mobile apps and telepharmacy, is also reshaping the sector, making healthcare more accessible and efficient for consumers.

Future Outlook

The U.S. retail pharmacy market is projected to grow steadily, with a compound annual growth rate (CAGR) of 4.01% from 2025 to 2032. This growth is driven by increasing healthcare expenditures, an aging population, and the rising prevalence of chronic diseases. However, the sector’s future will be shaped by ongoing consolidation, digital transformation, and the ability of major players to adapt to changing consumer needs and economic realities. The recent turmoil among traditional drugstore chains underscores the need for innovation and efficiency in the face of evolving competition and economic pressures.