CVS Health is to slash about 2,900 employees in a cost-cutting effort to realize some $2 billion in savings through the next several years, the company said Thursday. The company confirmed that the layoffs will largely be in corporate positions, and said front-line positions in stores, pharmacies, and distribution centers will not be affected.
It is reported following the previous layoffs where the company revealed close to 5,000 cuts last year. Additionally, CVS Health closes around 900 stores between 2022 and 2024 to fully streamline its operations.
The spokesperson pointed out the on-going stressors that the industry was under, both regulatory in nature and from changing consumer demands. Analysts say that U.S. drugstore chains are confronted with decreasing reimbursement rates for prescription drugs. Furthermore, store-based sales margins are also under pressure as consumers increasingly shift their shopping to the internet and large retailers such as Walmart, Target, and Costco. Rural area drugstore sales have also been hurt by Dollar General’s growth.
In response to these, CVS Health has been investing in artificial intelligence and robotics as part of the move to increase efficiency and customers’ experience. It is therefore trying to automate all the processes involved as the landscape continues to shift on the side of the retail pharmacy industry.