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For CVS, Social Good Was Not a Factor

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Social Good had nothing to do with CVS’ decision not to sell cigarettes

CVS announced that it will discontinue selling cigarettes by the middle of 2014.

It is tempting to think that social good played a role in this decision. After all, smoking is the number 1 cause of preventable cancer deaths, and by discouraging smoking , CVS is saving lives. Therefore, doesn’t that mean that CVS must have been motivated, at least in part,  by a wish to do the right thing. NOT AT ALL

Do you remember when Walmart decided to stop selling guns in 2006? It provided a lift to the anti-gun crowd as well as those who believe in the fairy tale of Corporate Social Responsibility. Walmart’s stated reason was a desire to focus less on rural areas. And in 2009 economic downturn, guns were put back on the shelves.

CVS has strong business reasons to stop selling cigarettes

  • Tobacco sales revenue continues to decline nationally
  • only 2% of CVS revenue comes from tobacco
  • CVS sees growth as a healthcare provider
  • Healthcare providers don’t sell products that kill people
  • The ACA has provided a bolus of people who will need additional health care, and CVS is beginning to provide medical services right in their stores.
  • First mover advantage by proactively stopping tobacco sales before they need to.

To the last point, the CVS marketing has been brilliant. Every article in the paper and news article carries their new message: “we are now a health care company.” Remember when Don “fired” a tobacco company in Mad Men? the company was going to drop his ad agency, and before they announced it, Don wrote a letter to the NY Times saying they would no longer create ads for tobacco because of the negative health impact. It saved the company.

CVS is a corporation, an entity created to make money for its shareholders. CVS is not capable of any moral volition. In other words, it can’t tell right from wrong any more than a deaf person can hear music. There is nothing wrong with a corporation making money, but we should not mistake a business strategy for a moral decision. In a few years, if the health care strategy tanks and revenue starts to go down,  the smokes will be back at your corner CVS.

In the mean time, clearance sale anyone?

Comments

  1. Dave Todaro says

    Very insightful, Greg. Right on the mark.

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