Walmart, the world’s largest retailer, has decided to stop selling cigarettes in some of its stores, according to the Wall Street Journal, which first broke the news.
Selected stores in California, Florida, New Mexico, and Arkansas, where the company is headquartered, will discontinue the sale of tobacco products and repurpose the shelf space for more efficient use. According to the company, this could come in the form of more self-checkouts or grab-and-go food options, which garner more revenue than cigarettes.
The Walmart corporation is not stopping all tobacco sales at this time. However, as the company has moved to align more closely with the healthcare industry, tobacco sales have become counterintuitive. The company hopes to bring its “low price” concept to health services such as urgent care, x-rays, basic dental cleanings, blood work, and more, according to Fortune magazine.
As Walmart shifts to becoming a more health-conscious corporation, some of its executives are reportedly not in favor of limiting tobacco and cigarette sales. The Wall Street Journal reported that those opposed feel Walmart is assuming the position of a moral dictator, as cigarettes are a legal product that consumers have the right to buy if they so choose.
Bloomberg reports that Altria, one of the largest tobacco manufacturers in the country, has weighed in on the subject, stating that retailers have the right to choose whether they wish to sell tobacco products.
According to the CDC’s latest data, cigarette smoking is responsible for the deaths of one in five people.
Politicians have weighed in with their opinions, as well. In 2019, six Democratic senators sent a letter to Walmart and other major retailers, urging them to stop selling all forms of tobacco products.
That same year, Walmart banned the sale of vapes and electronic cigarettes, noting complex regulations, and the Federal government changed the legal buying age of vapes and other tobacco products to 21.
Walmart is not the first chain store to move towards tobacco-free sales; Target eliminated cigarette sales in 1996 and CVS followed suit in 2014.
CVS did experience an initial profit loss of 7-8% per share after dropping tobacco products. However, they recouped the loss quickly by focusing on offering healthcare-based products and services. Walmart plans to implement a similar market strategy.
Sam’s Club, Walmart’s warehouse-based store, gradually began phasing out tobacco products in 2018. Currently, less than 40 of its approximately 600 stores sell tobacco products. Plans for Walmart to follow in a phase-out continued throughout the pandemic.
However, the Federal Trade Commission reported the nation experienced an increase in cigarette sales for the first time in 20 years during the COVID crisis, edging up slightly over 1% from 202.9 billion cigarettes sold in 2019 to 203.7 billion in 2020.
Walmart has more than 5,000 stores and boasted a hefty $572.8 billion in revenue last year, per the company’s fourth-quarter earnings release.
Despite its large footprint in the market, Walmart is not a major retailer of tobacco products. Financial services company Goldman Sachs estimates that Walmart cigarette sales represent less than 5% of cigarette industry volume, Winsight Grocery Business reports.
According to data released by the National Library of Medicine, 69% of cigarette purchases are made at gas stations and convenience stores while grocery stores and supermarkets accounted for 14% and discount tobacco stores came in at a mere 9%.