Since Arbor currently controls 45 percent of the Metro Detroit market, CVS will likely inherit a large share of these consumers. In fact, Metro Detroit consumers spend the fourth-largest amount of money nationwide drugstores, and CVS plans to capitalize on this by opening 150-200 new stores in Michigan. The chains' 1998 revenue is expected to exceed $15 billion and sell approximately 12 percent of all retail prescriptions in the nation. It is quite probable that the acquisition of Arbor will allow CVS to increase its dominance in the drugstore market, a move that could increase prices in the long run. The incorporation of smaller regional chains into large national chains shrinks the market and allows the fewer number of competing companies to raise their prices.
Because of the overbearing nature of the national chains, it is very difficult for small chains to remain competitive. In particular, the technology upgrades often required to compete nationwide are harder for smaller stores to manage. Larger chains also have a better chance than smaller ones of obtaining contracts with health care insurers, especially due to their high number of stores, larger clientele and more readily available services. as a result, regional chains often must turn to nationwide chains to financially survive.
The CVS-Arbor deal will also negatively affect some local Arbor employees, as CVS plans to close Arbor's Troy headquarters. This means that 150 employees will either be relocated to Woonsocket, R.I. - CVS headquarters - or be laid off. CVS claims that no other Arbor employees will be affected by the acquisition. Still, the termination or relocation of any employees, is extremely detrimental to local economies.
While the merger might not cause any immediately noticeable changes, the loss of another regional chain does not bode well for the future of smaller drugstores or their patrons. Customers could find not only increased prices but also less personalized customer service. In addition, this deal could have an adverse effect on some of Arbor's employees. And because CVS will gain control of a substantial part of the Metro Detroit prescription-drug market, prices could increase over time, affecting customers nationwide. In the long run, this deal will probably end up hurting, instead of helping, more people who are simply trying to run their errands.