Almost anybody in the Toledo area could have told CVS Corp. what its corporate planners apparently have not tumbled to, that the drug store war would result in ruinous losses, closings, layoffs, and eventually even more urban blight.
Many Toledoans remember the Hot `n Now chain of hamburger restaurants that were built and before long abandoned. Haven't any of the chain merchandisers heard of the concept of testing a market before moving dirt and hammering together the cookie-cutter buildings that have turned so many American cities into unappealing look-alikes?
In an announcement on Christmas Eve, CVS said it would close 16 stores in Toledo, Sylvania, Lambertville, Bowling Green, Tiffin, Defiance, and Monroe in January, furloughing between 240 and 320 employees. Many of the Toledo stores are less than five years old, and they were built to compete with Rite Aid Corp., the largest drug store chain in the region; Spartan's Pharm Deep Discount chain, and Walgreen Co. for shares of the $328 million spent annually at drug stores in this area. City officials hope that at least four locations, two in Toledo, one in Sylvania, and one in Lambertville, would be taken over by another firm.
“These are all low-volume locations,” a CVS spokesman in Woonsocket, R.I., commented. Do tell. At various times of the day one would see more clerks than customers in some stores, an indication that head-to-head competition with as many as three or four drug stores at major intersections was not panning out.
Whether companies build their own stores or simply contract for leases in structures put up by developers and investors, the empty buildings are a drag on corporate profits and a real disservice to stockholders as well as to citizens who must drive by these closed structures and mentally compute how long it will take them to become real eyesores.
Outgoing Mayor Carty Finkbeiner took on the drug store chains, with his prediction that half the drug stores built would be vacant in five years and “these big box hulks will be standing at prime locations.” Local real-estate specialists say that consolidation and overbuilding could well result in shakeouts in other markets, such as office supplies and groceries.
The community loses more and more of its smaller mom and pop and middle-sized businesses sales if commodities and services are controlled by chain operations. Typically, the money earned by chains circulates fewer times within the community before winding up in corporate headquarters. A few cities, such as Ithaca, N.Y., have even tried to encourage home-owned businesses by issuing local scrip that is accepted in return for goods and services and keeps money at home longer than is typically the case with chains.
There are no utopian answers to the questions posed by the consolidation of American business. But the closure of a major drug store chain's stores in this region shows that there is something radically wrong with the business models of some large corporations. Generally, when they make a wrong guess, they are free to move away. But it is the local communities that pay the cost in the growth of commercial blight.