This is not a trade recommendation.
I don't not own eigther. In my view, a large part of their business are sunsetting business, and their business model need to be updated. But, how? is a billion dollar question.
Any drug stores have two business: the front end and the pharmacy business.
All drug store's pharmacy is located at the back end of the store. Why? they want get the drug shopper into the store and traffic all the way through the store to the backend. That is an effective and efficient way of selling groceries to customers.
Therefore, there is a front end business and the pharmacy business.
This model used to be very powerful, because pharmacy is like a magnet attracking people into the house and sell them other things.
But things has changed. They can not grow or even maintain their frontend business.
The frontend bussinss is just a grocery/supermarket. Everybody knows it is very 卷的 business. They can not compete with other grocery store/supermarket/online stores。
To solve this problem. they both deploy a new strategy to allure customers.
CVS bought a PBM (a third part drug benefi company) company a while ago. They think the new business could help them get more customers into the store.
WBA deploy a different strategy. The open a beauty store at the frontend of the frontend business. They thought the lower priced beauty product could help them attract more customers.
Several years has passed. Looks like, the both are struggling to growth their frontend business. Between the two, CVS is doing relatively better because of its PBM business; while WBA 's beauty strategy is not a success in many perspective.
In short, their business model may need updated, but how. How to grow their front end business.
I do not hold either stocks.
