Grocery stores have rarelyviewed pharmacies as profit-drivers, but rather as an amenity thatwill make customers more likely to choose them

The pharmacy business is increasingly consolidated, both in terms ofownership and location. Simply put, the total number of pharmaciesis declining, driven largely by a decline in the number of grocerystores with pharmacies.

For the first time in recent memory, the number of grocerypharmacies decreased in 2017, from 9,344 to 9,026.

Numerous factors are driving the decline. An increasing numberof customers are getting prescriptions by mail from services suchas Amazon's PillPack. Others are simply gettinglonger-term supplies that don't require them to refill everymonth.

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But perhaps the most important factor is the consolidation ofthe pharmacy industry. Walgreens and CVS accounted for more than 40percent of all prescription revenue in 2018, according to datacollected by Drug Channels Institute.

The retail giants are able to negotiate better deals withinsurers and pharmacy benefit managers. This allows them to offercustomers lower prices than neighborhood competitors.

Grocery stores have rarely viewed pharmacies as profit-drivers,but rather as an amenity that will make customers more likely tochoose them for groceries. The same is largely true of conveniencestores.

However, the numbers have apparently shifted enough that grocersno longer think it's worth it to continue with the pharmacybusiness. From their perspective, at least they're only losing outto convenience stores, rather than competing grocers.

"There is the benefit of having a pharmacy relative to thegrocery-sale lift and the convenience factor of having both in thestore, but the economics do not work," Keith Knopf, chief executiveof Raley's, tells the Wall Street Journal.

Even the giants are consolidating, shedding underperformingpharmacies. The Wall Street Journal reports that Walgreens and CVShave either closed or are in the process of closing 300 storesthroughout the country in recent years.

Read more: 

• Coming soon? Pharmacy kiosks offering prescriptiondrugs
• Consumers may hate drug costs, but they like theirpharmacies
• To compete with Amazon, CVS dips a toe into theonline retail business