In developing new markets, several hurdles loom in the drug chain's path:
CVS's (CVS) need for prime sites to compete with Walgreen (WAG) is already driving up real-estate costs.
Walgreen is mostly filling in existing markets with new stores--but CVS has to spend more to break into new markets. At such new locations, it takes longer to turn a profit.
CORNERING THE MARKET
Only 39% of CVS stores are at lucrative street-corner locations, vs. 69% for Walgreen. CVS aims to have 80% corner stores by 2006.