CVS Health has revealed plans to lay off 2,900 employees, representing roughly 1% of its total workforce, as part of a broader strategy to reduce operational costs by $2 billion. The company, known for its extensive network of drugstores, attributed the job cuts to economic pressures such as inflation and shifting consumer spending habits.

The layoffs will primarily affect corporate positions, leaving front-line employees in stores, pharmacies, and distribution centers unaffected. CVS assured that those losing their jobs would receive severance pay, benefits, and access to outplacement services to assist with the transition.

A spokesperson for CVS emphasized the importance of staying competitive in a challenging market environment. “It is critical that we remain competitive and operate at peak performance,” the company noted, citing ongoing disruptions, regulatory changes, and evolving customer needs as key factors behind the decision.

The company’s financial performance has been impacted by a decline in non-prescription sales. CVS recently reported a 4% drop in same-store sales for these items, driven by inflation and consumer cutbacks. Competitor Walgreens has faced similar struggles, with plans to close a significant number of its locations.

While CVS’s layoff announcement is significant, it comes amid broader concerns in the retail and pharmacy sectors as inflation continues to weigh on household budgets. Earlier this year, data released showed that the cost of food has risen over 25% over the course of the past four years. The rising cost of living has pushed many consumers to reduce their purchases of non-essential goods, further complicating the financial outlook for large retailers like CVS.