While drugstores now carry everything from Tylenol and tights to tuna rolls, it’s rare that their offerings are cheaper than the same items at big-box and grocery stores—and that includes the drugs, experts say.
The big three drugstores—Walgreens /quotes/zigman/245520/delayed/quotes/nls/wag WAG -1.22% , CVS /quotes/zigman/169740/delayed/quotes/nls/cvs CVS -0.23% and Rite Aid /quotes/zigman/239690/delayed/quotes/nls/rad RAD +4.65% , which together make up roughly two-thirds of the pharmacy and drugstore market in the U.S.—will have estimated combined revenue of more than $160 billion when final 2013 numbers come in, according to research firm IBISWorld. During the past five years, Walgreens’s revenue has increased at an annualized rate of 4.2% to $72.6 billion, according to estimates by research firm IBISWorld; CVS and Rite Aid have seen annualized growth rates of 5.7% and 0.9%, respectively, according to projections, and revenues of $64.7 billion and $25.4 billion, the report reveals. What’s more, the pharmacy and drugstore industry is expected to grow at an annual rate of 2.8% from 2013 to 2018, compared with its 1.6% annual growth rate from 2008 to 2013.
Click to Play What not to buy at drugstoresCatey Hill reports on the News Hub. Photo: Andrew St. Clair for The Wall Street Journal.
But those cushy revenue numbers may be coming at a great expense to consumers. Indeed, pricing surveys from Consumer Reports and ConsumerWorld.org, as well as MarketWatch price checks, all reveal that drugstore prices can be higher than prices at grocery stores and big box retailers (such as Costco /quotes/zigman/67728/delayed/quotes/nls/cost COST +0.63% , Kmart , Target /quotes/zigman/253872/delayed/quotes/nls/tgt TGT -0.94% and Wal-Mart /quotes/zigman/245476/delayed/quotes/nls/wmt WMT -0.74% ) on many commonly bought items. “Anything and everything can be expensive at the drugstore,” says Sally Greenberg, the executive director of the National Consumers League. “You have to be careful with drugstore shopping,” Greenberg says.
To be sure, drugstore prices vary widely from chain to chain and even at different stores in the same chain, according to an NCL analysis . And drugstores offer some items that are routinely cheaper than at big-box or grocery stores and they give plenty of deals to shoppers. “The rewards programs at the big drugstores are generous, and they often send emails with deals that are among the most usable and generous I see,” says Trae Bodge, senior editor at coupon site RetailMeNot.com. Plus, drugstores are convenient and many offer price-matching if you find the same product at another retailer for less, says Greenberg. A spokesperson for CVS says “we provide our customers with an unbeatable combination of value, selection, service and access” and a spokesperson for Walgreens says that “we focus on ensuring each of our stores is competitive within its trade area” and mentions that buyers can take advantage of its weekly sales and loyalty program. Rite Aid did not respond to a request for comment in time for publication.
But that doesn’t mean drugstores are the place to do much of your shopping.