When ShopRite of Ellenville closed, we asked if it was a victim of “The Walmart Effect.”

That economic concept was made famous by a 2006 book of the same name, arguing that low prices that Walmart is able to charge because of their huge scale are a double-edged sword, a short-term benefit to consumers at the expense of competing businesses, workers, and the quality of goods.

In the case of ShopRite, it seemed pretty clear to us that yes, the large grocery store was out-competed by the larger everything store.

Now, as Walgreens of Ellenville shuts its door, we find ourselves asking the question again. Was Walgreens a victim of the Walmart Effect?

The Journal office, we must confess, is split on this one.

Let’s start with the argument for the Walmart Effect.

You may have noticed that the Napanoch Walmart is under renovation. They’re not alone – hundreds are being redesigned in a sweeping “Store of the Future” campaign. Walmart skidded through a bad decade in the 2010s, facing large-scale closures and a lost purpose. But inflation brought a lot of people back to the home of low prices, and they’ve been running with the new cashflow.

A few years ago, Walmart started opening new stores and redesigning existing ones to emphasize the pharmacies, touting a plan to deliver drugs within 30 minutes alongside an aggressive move into specialty pharmaceuticals, trading in expensive drugs that are hard for smaller pharmacies to stock.

Add to that the convenience of being able to get your drugs, groceries, clothes, and even a crossbow without having to move your car, and the argument for Walmart’s role in the demise of Walgreens looks pretty similar to ShopRite’s. Walmart turned the eye of Sauron to pharmacy, and Walgreens, too big to be a service-based operation like Matthew’s but too small to offer the range of options of a Supercenter, was left in the dust.

On the other hand, and here’s where it gets complicated: they built a crazy number of Walgreens.

In 2017, there were 8,100 of them in America. The next year, they immediately opened 1,400 more, plus 600 new lab testing facilities. This came after a major CVS expansion, when 1,800 new CVS pharmacies opened in 2015.

You know how it feels like there’s a pharmacy everywhere you look? It’s true. By the end of 2018, then, there were over 19,000 CVS and Walgreens in America. That’s not counting any other brand – just those two. And it’s a safe bet that store number 18,000 was not in as prime a location as store number 180.

It hasn’t all been ducky since then. In 2022, after videos of brazen shoplifting rings went viral, Walgreens began an anti-theft campaign that saw a ton of merchandise locked up in plastic cases. Like most of their competitors, Walgreens always puts the pharmacy counter in the back, making you walk a gauntlet of snacks, toys, and beauty products to get your meds. All these impulse buys now required an associate to unlock a case. The crackdown backfired so much that the company’s CFO said they had probably “cried too much” about stolen goods.

So, Walgreens leveraged itself with a ton of no-good leases and cut out impulse buys, and then, on top of that, drug manufacturers have been steadily raising the price of, well, just about everything they can. Data from last year shows the price of drugs went up higher than the rate of inflation, and the list price of new drugs was 35% higher than it had been the prior year.

After their big 2018 push, Walgreens has been steadily shedding locations and, after a slight lag, so has CVS. The 500 Walgreens set to close in 2025 will bring their total locations to just shy of what they were in 2017, before their reckless expansion.

So, maybe Walgreens was just a victim of its own corporate mismanagement. But there’s one more angle to consider. Why this Walgreens? Is Ellenville’s going because it can’t meet numbers because of Walmart next door, because the population is poorer than neighboring communities and can’t spend as much, or for some other reason?

What do you think?