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Walgreens was founded in 1873 and grew its drugstore empire through early innovations in store design and product offerings. As of August 2020, Walgreens operates more than 9,000 locations in the U.S. with a total revenue of $139.5 billion and a 19% share of the prescription drug market.

CVS was founded 90 years later in 1963, but the company made up for lost time by acquiring every pharmacy-related business it gained permission to buy. CVS now operates more than 9,900 locations in the U.S. with a total revenue of $268.7 billion and a prescription drug market share of nearly 25%. 

You may be thinking the American independent pharmacy is dead in the water, but you’d be wrong. According to a March 2020 report by the Pharmaceutical Care Management Association (PCMA), “between 2010 and 2019, the number of independent pharmacies increased by more than 2,600 stores (12.9%), whereas chains lost around 80 stores (0.2%) on average.”

So what’s really happening with large chain pharmacies? 

CVS: Health provider, pharmacy benefits manager, insurance company, and pharmacy

The CVS brand timeline is chock-full of acquisitions. 

In the 1990s and early aughts, the CVS modus operandi was to enter new U.S. markets by buying mid-sized regional chains like Peoples Drug in the mid-Atlantic and Eckerd in the south. CVS even acquired their way into the digital age with the purchase of online pharmacy Soma.com for $30 million in 1999.

Then, in 2006, CVS made what might be its most significant business decision: acquire Minneapolis-based MinuteClinic, the largest provider of retail clinics in the U.S. Now with 1,100 locations in 33 states, MinuteClinic makes CVS a major player in the healthcare provider space with common services such as vaccinations, physicals, STI testing and treatment, contraception, smoking cessation, and TB testing.

The following year in 2007, CVS completed another major acquisition outside its core drugstore offering: CareMark, an integrated pharmacy benefits management company. After the acquisition, the company changed its name to CVS CareMark, although it rebranded to “CVS Health” in 2014 “to reflect its broader health care commitment and its expertise in driving the innovations needed to shape the future of health.”

Pharmacy benefits management companies, or PBMs, act as middlemen between pharmacies, insurers, and drug companies. PBMs are controversial because there’s evidence they inflate prescription costs for consumers while decreasing profit margins for pharmacies with clawbacks. 

CVS had already launched PharmaCare, its own pharmacy benefits management arm, in 1994, but the 2007 acquisition of CareMark was a clear indication that CVS was far more interested in controlling the pharmaceutical supply chain than simply selling prescriptions through its drugstores. 

The final nail in this conflict-of-interest coffin was the 2018 acquisition of Aetna, a healthcare insurance company, for $69 billion. 

Now with the forthcoming expansion of MinuteClinic, CVS is a healthcare provider, a payer, and a pharmacy. Shady business practices aside, CVS is a healthcare powerhouse that has acquired its way to the top of the profit-making machine that is the U.S. healthcare system—which may just leave room for independent pharmacies to focus on prescriptions and everyday household items. 

But before CVS could broaden its healthcare aspirations, the retail and pharmacy arm of the company committed to some of the most effective pricing strategies in the history of pricing strategies. Keep reading to find out how CVS pharmacy grew through weekly sales, fanatic couponing, and sophisticated loyalty programs—and how that growth is fueling the future of CVS as a healthcare giant. 

CVS’ brand timeline

Compare the CVS brand timeline to the Walgreens brand timeline here.

1963: Brothers Stanley and Sidney Goldstein and partner Ralph Hoagland open Consumer Value Stores’ first location in Lowell, Massachusetts. The store sells discount health and beauty products.

1964: CVS operates 17 stores.

1967: CVS opens its first pharmacy departments in Warwick and Cumberland, Rhode Island.

Melville Corporation ownership

1969: The Goldsteins sell CVS to Melville Corporation to grow the company beyond its 40 stores and $20 million in revenue. Stanley Goldstein remains in key leadership positions until 1999. 

1972: CVS acquires 84 Clinton Drug and Discount stores and doubles in size.

1985: CVS reaches $1 billion in annual sales.

1990–1998: CVS begins a slew of pharmacy acquisitions, including Peoples Drug, Rix Dunnington, Revco, and Arbor Drugs.

1994: CVS launches PharmaCare, the company’s first pharmacy benefit management arm.

Post-Melville Corporation restructure

1996: Melville Corporation restructures to focus only on CVS, which becomes a standalone company on the New York Stock Exchange. 

1997: CVS completes the largest acquisition in U.S. retail pharmacy history: 2,500+ Revco stores.

1999: CVS acquires Soma.com, an online pharmacy, to launch CVS.com.

2001: CVS launches the first national pharmacy loyalty card program, the ExtraCare card.

2004: CVS buys 1,268 Eckerd drug stores and Eckerd Health Services from J. C. Penney.

Healthcare ventures

2006: CVS acquires MinuteClinic, the largest provider of retail health clinics in the U.S.

2007: CVS completes its acquisition of CareMark, an integrated pharmacy benefits management company. The new company is called CVS Caremark Corporation.

2008: A long history of mocking the length of CVS receipts begins with the formation of Facebook group “One Million Strong Against Unnecessarily Long CVS Receipts”.

2011: CVS Caremark surpasses $100 billion in revenue.

2011: CVS launches its Beauty Club, a profitable extension of the ExtraCare loyalty program. 

2012: CVS Caremark receives 59% of Rhode Island's tax credits.

2014: CVS Caremark becomes CVS Health to communicate the company’s broad focus on healthcare.

2015: CVS Health acquires Omnicare, a pharmacy services provider to long-term care facilities. The company also acquires Target’s 1,600+ pharmacies and clinics.

2018: CVS Health acquires Aetna, a healthcare insurance company, for $69 billion.

2020: CVS Health conducts more than 15 million COVID tests across 4,800 locations. CVS starts administering vaccines the following year.

2021: CVS announces the closure of 900 stores (9% of 9,900 retail pharmacy locations) over three years to focus on retail clinics.

CVS early market research tactics: Stalking storefronts

CVS was founded in 1963 by brothers Stanley and Sidney Goldstein, who grew up in the small town of Woonsocket, Rhode Island, where CVS still has its headquarters.

Entrepreneurship was a Golstein family affair—Stanley and Sidney’s father Israel sold bags and other paper products to grocery stores in the area. The Goldsteins were forced to expand the business, then named Mark Steven, to include health and beauty products when other wholesalers began selling paper products to grocery stores in the 1950s. 

Stanley Goldstein had come and gone from the business several times to serve in the army then try to make it as a stockbroker in Providence. When Stanley’s brother Larry died in a plane crash in 1962, Sid Goldstein begged Stanley to help him run the business. 

But grocery wholesalers also began selling health and beauty products, and the brothers decided enough was enough—it was time to stop relying on grocery stores and start something new. Along with Mark Steven executive Ralph Hoagland, originally from Procter & Gamble, the brothers started the market research process from scratch, considering everything from nursing homes to roller-skating parks. 

The business came full circle when Hoagland mentioned White Cross, a store in McKeesport, Pennsylvania that sold health and beauty products at a discount, all on their own. To investigate whether or not a standalone business, without grocery stores, could be viable, Hoagland made a trip to McKeesport … and basically stalked the store.

Hoagland stood outside White Cross for hours counting how many people walked by versus how many people went in. He peeked inside the storefront window and spied on the cash registers to gather numbers on each purchase. Hoagland then used these numbers to analyze sales, which at a glance looked promising. 

Based on Hoagland’s scrappy market research, the three partners decided to open the first CVS: Consumer Value Stores.

CVS marketing is synonymous with sales, coupons, and rewards

The first CVS opened in the low-income area of Lowell. Hoagland’s early market research/stalking uncovered the importance of bargain prices and a large selection of brands to make sure customers could get what they wanted for cheap. 

Pricing strategies have persisted throughout the company’s history, and little has changed except the channels through which CVS says to their customer, “Here’s where you’ll find the lowest price for that everyday household item.” 

Weekly sales, coupon flyers, and rewards have always been CVS staples. Throughout the 80s and 90s, as CVS acquired more mid-sized drugstore chains, the company churned out weekly sale advertisements that mirrored offers found in coupon flyers. 

CVS sale commercial, 1987

CVS holiday sale commercial, 1990

CVS sale commercial, 1992

While the first coupon campaign in history can be traced back to Coca-Cola in the late 1800s, you’ll hardly find another brand more dedicated to weekly coupon flyers than CVS. In 1997, 83% of Americans were using coupons, and CVS reaped in the benefits—that same year CVS completed the purchase of more than 2,500 Revco stores, the largest acquisition in U.S. retail pharmacy history.

As the 20th century faded, however, early internet advancements would give CVS the most powerful marketing tool in recent memory: integrated customer data. 

CVS didn’t create their digital age—they acquired it

In 1999, just as Walgreens acquired Drugstore.com to kickstart their online presence, CVS acquired Soma.com, an online pharmacy with its own traffic, data, and customers. While you can find evidence of a basic CVS website from 1997, Soma.com is what triggered online sales for the company just as people began to feel comfortable making credit card purchases via desktop computers. 

Soma.com was the first major website to sell prescription drugs online. Created by entrepreneur Tom Pigott, Soma.com bet on online prescription sales as a norm, which was a huge leap in 1999. Luckily the risk paid off, and CVS purchased Soma.com for $30 million while keeping Pigott on staff as president of CVS.com. Pigott was 30 years old at the time of the acquisition.

When Walgreens heard about CVS’ first foray into online sales, they put on a brave face: In an article by the Wall Street Journal, spokeswoman Debby Fry Wilson said that CVS’ big move would "bring more customers to the whole category and create more opportunities for everyone. Once customers are sold on the concept, changing providers is just a click of the mouse."

We now know Fry Wilson was right.

Coupons and customer data: A cult following in the making

It’s no accident that CVS launched the first national pharmacy loyalty card program two years after their online store. Two years may have been the perfect amount of time to gather enough website-driven customer data to assess the validity of a loyalty program.

Launched in February 2001, CVS’ ExtraCare program has become the star of the CVS marketing show. When CVS began planning the program, they projected it would generate 14 million subscribers—instead it created 25 million cardholders in its first year.  

That same year the loyalty card was used in nearly 50% of CVS transactions, and the company noticed that cardholders spent more money than non-cardholders. Meanwhile, CVS was sharing relevant customer data with suppliers, who could help CVS tailor customized deals based on purchase history. 

Personalized coupons were at the heart of the ExtraCare program from the beginning. People who opted into the program received mailings with coupons that reflected preferences and purchase history. Think Amazon’s recommendation algorithm, but analog and in your physical mailbox. 

To add to the excitement, CVS later installed coupon centers at each location. ExtraCare cardholders can still scan their cards and receive a notoriously long printout of all their custom coupons. With coupon centers, CVS connected their loyalty program to an in-store experience that made people want to come back. 

But the crown jewel of the CVS ExtraCare loyalty program is BeautyClub. Launched in January 2011, BeautyClub allows members to earn things like gifts, extra discounts, and cash back rewards on a wide variety of beauty products. Vendors pay CVS to participate in the program, which CVS says is worth it because of its exclusivity and curation power. 

Whether you’re a member of BeautyClub or not, CVS’ personalized couponing through the ExtraCare program has created a movement that borders on cult following. ExtraCare has expanded so much over the years that options to save are seemingly endless, and coupon influencers have swooped in to help people maximize ways to save. 

Like a code that requires decryption, you can find thousands of blog posts and YouTube videos on how to pay almost nothing for your CVS purchases. When CVS adds a new way to save, they’re adding gamification components that fuel communities of people who love “winning” the program.  

And in the midst of all those savings, ExtraCare gave us all something extra to talk about: receipts that are just too damn long. 

CVS receipts: Why are they the height of a small child?

If you’re a CVS ExtraCare member, you’ll understand this meme immediately:

It’s something every legacy brand dreams of: to be memed. To be memed is to be relevant, and no other everyday drugstore item has been memed more than the CVS receipt. 

CVS receipts are long because they’re also coupons. When you purchase even just one item from a CVS and use your ExtraCare card, your receipt doubles as a coupon book that triples as a rewards status update. In essence, a CVS receipt is the company’s most important communication touchpoint with customers after they’ve purchased something. 

But the thing is, CVS receipts are long because they’re also advertisements for other rewards programs, customer surveys, and explainers about how the entire CVS rewards ecosystem works. The amount of information on a CVS receipt has grown to such excess that Jimmy Kimmel (jokingly) asked President Obama to fix the issue as part of public policy.

The CVS receipt discourse is, of course, a dream come true for CVS, particularly due to its longevity. More than four years after Kimmel’s empty crusade against CVS receipts, budget fashion creator Amber Scholl (3.48M YouTube subscribers) made an entire dress out of CVS receipts. Her video describing the process has 1.1M views as of this writing. 

Not all CVS receipt discourse is so lighthearted, however. In 2018, Green America started the “Skip the Slip, CVS” campaign to encourage CVS to reduce the amount of paper it uses for its receipts. CVS responded by saying customers can opt-out of receiving paper receipts by signing up for digital receipts through the app, although a CVS representative acknowledged the instructions weren’t particularly clear. 

Fast forward four years and people are still talking about the length of a CVS receipt. If you ever want to find out what people are saying, constantly, head over to the r/cvsreceipts subreddit for an endless amusement scroll that’s probably about the length of a CVS receipt. 

CVS’ future: All in on controlling the healthcare supply chain

Starting in spring 2022, CVS will begin the process of shutting down 900 stores, which amounts to 9% of its locations. If you’ve been to a CVS recently, this may not surprise you—CVS has acknowledged that many of its stores are rundown and poorly maintained, and they’re taking the next three years to shutter locations that are doing poorly. 

But CVS isn’t just closing what’s not working—they’re also making big moves to expand beyond their core pharmacy and retail offerings. CVS will redesign retail locations to focus on offering healthcare in two ways: primary care services and an “enhanced version of HealthHUB locations” focused on “everyday health and wellness needs.”

As a response to pandemic demand for virtual health solutions, CVS is also laying the groundwork for telehealth offerings as part of its healthcare provider expansion. You can probably feel confident that expanded telehealth will connect to CVS’ online store, ExtraCare rewards, and apps that make it easier to connect with a healthcare provider through your phone.  

While CVS hasn’t disclosed which locations will close in the coming years, they did reveal some influential factors: market potential, shifts in population caused by the pandemic, location density, and—most interestingly—the number of Aetna and CVS Caremark customers in the area.

Of course, the CVS pivot to healthcare isn’t a recent announcement at all—it’s been years in the making, starting with the acquisition of MinuteClinic in 2006 (provider), Aetna in 2018 (payer), and CareMark in 2007 (PBM). The next three years is simply the result of all key acquisitions coming together to form the final manifestation of a business that owns its supply chain. 

What’s next—a pharmaceutical company acquisition? It’s the only slice of uncharted territory left for CVS. Perhaps in 2025 we can expect another announcement: a COVID vaccine for the latest variant, produced by CVS. 

If you’re an urban-dwelling American and you need to stop by the pharmacy on your way home, odds are you’ll be hitting up a CVS or a Walgreens.