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Another Big Retailer Is Cutting Back On Selling Tobacco Products

The Huffington Post logo The Huffington Post 14/03/2016 Ryan Grenoble

CVS made a major statement in 2014 when it announced it would stop selling all tobacco products. It turns out Costco was already quietly ahead of the pharmacy chain.  

Costco revealed on Monday that it started pulling tobacco products from some of its shelves three or four years ago.

Currently, 189 of Costco's 488 locations still sell tobacco products, a spokesman told The Street, adding that the decision to curtail their availability was more about the company's bottom line than about pushing customers to make healthier choices. 

"Tobacco is a very low margin business, tends to have higher theft and is labor intensive in some cases (due to local municipality regulations)," the spokesman said. "Further, we felt we could better use the space to merchandise other items."

True to the Costco ethos, he said the retailer, which specializes in cutting expenses to sell items in bulk and for low prices, didn't publicize the decision because press releases "are a waste of money." 

CVS's decision to stop selling tobacco products two years ago meant the company lost out on about $2 billion a year.

While the move may have put a dent in the chain's revenue stream, Andrew White, an associate dean at the University of Oxford's Saïd Business School told The Huffington Post in an earlier interview that it ultimately helped improve its credibility with consumers. 

"[CVS] thought hard about what its purpose was, which is health care, and thought there's something wrong if a person goes to collect a prescription for medicine and buys cigarettes at the same time," White said. "They took a $2 billion estimated hit on their revenue, but aligned their organization with purpose."

And it's not just the private sector that's rethinking tobacco availability. State governments are eager to burn the habit, too. Earlier this month, the California Senate passed a bill that would raise the age limit for smoking from 18 to 21.

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