Oakland Target closure could limit pharmacy access for many locals

OAKLAND, Calif. (KGO) -- Target announced on Tuesday that is closing three Bay Area stores: one in San Francisco, Pittsburg and Oakland.

The Target near downtown Oakland at 27th Street and Broadway is set to close by mid-October.

"I'm sad. What about the seniors? I do home care and (my client) lives right here," says Helen Walton, pointing to an apartment complex near the Target store. "I take care of all her business, her prescriptions, everything here."

Walton says filling the prescriptions will be the hard part because there are not many other options within walking distance. A sign posted inside the store directs customers to visit the CVS pharmacy located one mile away.

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Target claims that retail theft is the main reason behind the decision to close the stores.

"Target tries to operate on pretty low margins. And if theft is a big problem in a neighborhood, that could be the difference between a profit and a loss," explains Robert Chapman Wood, Professor of Management at San Jose State University.

He says discount drugstores are facing other pressures as well.

"The pharmacy business has been going through changes, which are not very transparent to ordinary people. A lot of pharmaceutical fulfillment is being done by pharmacy benefit managers, usually controlled by the insurance company," he says.

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According to Professor Wood, that means insurance companies are filing prescriptions by mail, which could prove to be more profitable. He doesn't know how that may be impacting the Target-CVS Pharmacy partnership, but he believes it is putting pressure on large discount drugstores.

"The drugstore part of the drugstore has traditionally been a high margin area. And to the extent that those are under pressure, the insurance companies trying to do the fulfillment themselves, that could be a big problem for the drugstore business," says Wood.

"We live in corporate America. So ultimately, everything is driven by a profit motive, and not everything is driven by the social motive," says Professor Balaraman Rajan. He teaches business and economics at Cal State East Bay.

Professor Rajan says Target can't be faulted for closing stores, since it is primary responsibility is to stakeholders. He adds, but in a city like Oakland, which is facing rising crime and increasing store closures, the pressure falls on the city to do more. Such as managing the decreasing number of pharmacies.

"The city can take action so that it is more welcoming to these corporates, more welcoming to these retailers. Because, ultimately, if there are no facilities out there, you won't have a thriving population there. It is all connected," says Rajan.

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