Walmart appears ready to quit its cigarette habit
Walmart has decided to ditch selling cigarettes in some of its U.S. stores and reconfigure its front end space in those locations to make room for more self-checkouts and products including candy and grab-and-go foods.
The Wall Street Journal reports that the retailer has been debating for some time whether it should be selling cigarettes. CEO Doug McMillon has asked top executives within the company to figure out how it could end tobacco sales without demanding that it do so cold turkey.
Weaning itself from cigarettes makes sense for the retailer on a number of fronts. The products are a theft risk throughout the supply chain and profits generated by the category are below what other typical front end items such as candy produce.
Walmart, which is pulling cigarettes in select locations in Arkansas, California, Florida and New Mexico, raised the minimum age to 21 to buy cigarettes in its stores in 2019. Congress raised the federal minimum age to 21 later that year. The company also ended the sale of e-cigarettes in 2019, as well.
Target got out of the cigarette and tobacco business in 1996. CVS made the move in 2014.
A 2017 survey by CVS found that its decision to end cigarette sales may have aided many of its customers in quitting the habit. Reuters reports that customers who bought their cigarettes exclusively at the drugstore chain were 38 percent less likely to keep smoking. Cigarette sales in the states where CVS had stores dropped one percent in the eight months following the chain’s exit from the category, according to the report in the American Journal of Public Health.
Sam’s Club may provide a guide for Walmart as it transitions away from cigarettes. The Journal reports that the chain began pulling back from the category in 2018. Tobacco products are now sold in fewer than 40 of the chain’s 600 clubs.
Walmart, like many key competitors from Amazon.com to Walgreens, sees an opportunity to build healthier relationships with customers by promoting health and wellness products and services.
The retailer launched prescription medicine savings as part of its Walmart+ subscription plan. Members pay as little as $0 on select prescription medicines while receiving discounts on 85 percent of the drugs sold in its pharmacies.
Walmart has also opened primary care clinics inside some stores and acquired the telehealth provider WeMD.
- Walmart Stops Selling Cigarettes in Some Stores – The Wall Street Journal
- When CVS stopped selling cigarettes, some customers quit smoking – Reuters
- Will prescription med discounts help Walmart+ gain ground on Amazon Prime? – RetailWire
- Walmart is going all in on 24/7/365 telehealth – RetailWire
DISCUSSION QUESTIONS: Do you expect Walmart to phase out most, if not all, of its cigarette sales over the next five years? Will other big box retailers do the same?