CVS Replaces Cigarette Revenue Loss with Ice Cream Sandwich Revenues

This past weekend, my wife and I did something that we’ve talked about doing for years: taking what ended up being a 26 mile bike ride.  We have a good trail system around, and the end of one of the trails takes you all the way up to a nearby city.  We’ve taken the trail a number of times, but have always turned around.  We thought we’d finally give it a shot, so off we went.

It’s a pretty easy ride in terms of being on flat ground that’s covered in gravel (it’s a converted railroad bed), but it still felt good when we pulled into town.  I’m not normally one to undo the benefits of exercise with treats, but given that it was our first time, we thought we might wander into a nearby CVS and get a small treat.

We both love ice cream so we first wandered over to the freezers to look at their single serve ice cream treats.  I thought I was reading things incorrectly when an ice cream sandwich was $3.29.

Nope.  It was right.

A frozen Twix?  $2.99 as were most items.  The cheapest item, an ice cream sandwich type thing was $1.99.  Yikes.

No ice cream.

I started looking around the store, and I was unable to believe my eyes at the prices of things.

I don’t do much shopping in drugstores, but the everyday price of just about…everything…was crazy.

9 volt batteries for over $2.

Individual candy bars for $1.25.

A ten ounce bag of potato chips for $4.

At this point, I wasn’t looking to actually buy, I just wanted to see the prices.

The calamine lotion test

I decided to check things out from another recent experience that kind of acted as a trigger.  A few weeks ago, my son got bit up really bad by mosquitoes.  They like me, but they love him.  He probably had 50-60 bites on his legs and was complaining about itching.

Given that it was around bedtime, my wife ran out to the nearest store, which happened to be a Walgreens, and brought back a bottle (6 ounces) for $5.69.  I thought that seemed high, but whatever.

My wife mentioned it to her sister, who said that she had also gotten some that week, but had purchased hers at WalMart…and it was $2.19.

Astounding difference

So, while my wife and I were walking around CVS, I figured I’d see what their price was, if they were also 250% or so higher.

As it turns out, they weren’t.  They were over 300% higher.

Their price was $6.99.

My jaw just about hit the floor.

We ended up escaping with what I think was the cheapest items sold in the store, a couple of bags of generic gummy bears/worms.

On my way out, I noticed the area behind the counter that used to house cigarettes, which they just discontinued selling last week.  One of the things always mentioned since CVS announced this decision to stop selling smokes, is that they made over $1 billion in profit from them.

I commented to my wife that they must have decided to look to make up the lost profits by jacking up the prices of everything else.

I suppose there probably are deals to be found in drugstores, but my guess is that you have to take advantage of sales and coupons to actually walk away with any type of savings.  But if you pay full price at the drugstore, prepare to be gouged.

14 thoughts on “CVS Replaces Cigarette Revenue Loss with Ice Cream Sandwich Revenues”

  1. With ya on the costs of things at the drugstore. Might be able to shed some light on the tobacco sales at CVS. I was in the “store biz” in another life and a large “fee” is paid by the tobacco companies for POS placement. Sooo that large display you used to see that held cigarettes overhead was installed by the cig companies and then “rent” was paid quarterly. Fees were also paid for the “temp” displays. These payaments are significant….like $2-3K per quarter per store. But with the new economic reality of tobacco and government regs those fees may/have disappeared. So this was more of a economic decision than a moral one. Most of CVS cig sales were in carton sales and those margins are “paper thin”…meaning the POS incentives were very important. I would challenge the $1B profit…IMHO I think these will be challenging times for drug stores as they try to replace lost profits…while dealing with Obamacare, tobacco legislation and competition from grocery stores and Wal-Mart…thus the $1.29 Snickers bar.

    • Glad we agree on this one 🙂

      That’s interesting to note about the product placement. Seems they were getting more from the shelf space than the product itself. I wonder what will be in the prime ‘behind the counter’ real estate moving forward.

      • I too am glad we agree. The thing about cig sales was …it was a “guaranteed sale”…if I didn’t sell a certain brand or type it could be returned…no questions asked. In addition it required no refrigeration, very little shelf space, had ample sell by dates and was a product folks wanted. As for what will go behind the counter…maybe those candy bars if the price keeps climbing … to reduce shoplifting.

  2. I try my very hardest to stay away from drugstores. The prices are significantly higher and sometimes even double the price. I only go when it’s my absolute last resort.

  3. This is EXACTLY why I do not shop at drugstores for anything (unless I’m absolutely desperate and they are the closest store, like when I was deathly ill in college and it was around the corner vs Walmart being across town). Glad to know I’m not alone in that I was shocked at their high prices!

  4. Drug stores are a lot like shopping at convenience stores / gas stations. Their are a lot of them, they’re easy to find, and you pay a premium for the convenience of not having to find the nearest Walmart/target etc.

    • Until I saw it for myself to know otherwise, I would have guessed that drugstores would have been somewhere in between WalMart/Target and the 7-Eleven type stores. You’re right, though, they are on the same level…and I’d almost wonder if 7-Eleven is cheaper! Maybe a little investigative work is in order.

  5. I definitely try to stay away from drugstores if I can help it and do most of my shopping online. Since I live in NYC, drugstores are sometimes my only option…unless I want to take a long train ride to a big-box retailer and lug everything on the train. Even then, there’s only about 2 Targets in all of New York City!

  6. The price differential is something that is more common across stores than meets the eye. When I was price-shopping last Christmas, I used an app to scan upc codes and compare vs. other stores on a few items. It’s not like prices were just 2% different…more like up to 30%. That adds up!

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