Has Rite Aid found the right prescription for growth?

Discussion
Photo: Rite Aid
Oct 15, 2020
George Anderson

Rite Aid looks like it might be getting on a mini roll after years of struggling to compete in a retail drugstore market dominated by CVS and Walgreens.

The Camp Hill, PA-based chain saw its same-store sales increase 3.5 percent in the second quarter as its front-end performance jumped 6.1 percent and its pharmacy numbers rose 2.3 percent. The same-store gain marked the third straight quarter in which Rite Aid has moved that metric in a positive direction.

At the company’s analyst day in March, president and CEO Heyward Donegan introduced Rite Aid’s “RXEvolution” strategy that includes unlocking the power of the chain’s pharmacists and “revitalizing” the shopper experience in stores and online. Rite Aid would succeed, she said, by helping “our customers not just get healthy, but get thriving.”

The latest example of RXEvolution is the news that Rite Aid has opened two pilot locations in its home state to test its “store of the future” strategy, according to a PennLive report. The company already has plans to remodel seven additional locations with the same layout.

The prototypes feature more natural lighting than the typical Rite Aid and lower end caps to enable shoppers to see the entire store when they enter. The retailer has also made use of spotlights in the middle of the store to draw visual attention inward.

Rite Aid has given the pharmacies in the stores a more modern feel and reworked the space to provide more direct access to pharmacists. Techs are being used in more ways to help free up time for pharmacists to engage with customers.

Rite Aid has revamped the beauty section in the new stores. Positioned near the entrance, the new departments feature employee beauty ambassadors to answer customer questions and consult on purchases.

The core customer for Rite Aid is seen as a woman between the ages of 25 and 49, and this shows up in other changes made to the front of the store, like an expanded selection of healthier snacks.

Erik Keptner, the chain’s chief merchandising and marketing officer, said the changes being made by Rite Aid are more than just aesthetics.

“We’re changing work processes for our people so we’re trying to move some of the shelf spacing activities off of peak customers hours so that our associates can better serve the customer,” he told PennLive.

DISCUSSION QUESTIONS: Do you think Rite Aid has begun putting itself in a better position to be successful this year? What will it take to continue building on this start and take it to the next level?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"The transformation that has been occurring across Rite Aid is definitely better positioning it for continued growth. "
"I love that Rite Aid is giving customers more direct access to pharmacists and that techs are freeing up pharmacists’ time so they can engage more with shoppers."
"Rite Aid’s competitors assumed the company was stuck in a downward spiral. Recent activity has proved otherwise; it remains viable and committed to growth."

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9 Comments on "Has Rite Aid found the right prescription for growth?"


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Neil Saunders
BrainTrust

Rite Aid is performing well right now, especially compared to CVS and, to a certain extent Walgreens. Some of this is down to the investment in stores and a better customer proposition. It is also a function of some good locations, particularly in more rural areas, where Rite Aid can capitalize on being a convenient location for top-up shopping – this has been particularly beneficial during the pandemic.

It is worth digging into the numbers a bit because Rite Aid is up against some softer prior year numbers which are flattering retail growth. It also excludes tobacco sales from the headline numbers which, if included, would bring down growth a bit. That said, there is no denying that Rite Aid is moving in the right direction and is showing some creativity and flair that is so often missing from drugstore retail.

Dave Wendland
BrainTrust

The transformation that has been occurring across Rite Aid is definitely better positioning it for continued growth. Despite setbacks due to COVID-19, keeping its commitment to delivering a better experience — both in-store and online — has certainly contributed to Rite Aid’s performance. This, coupled with its recent acquisition of Bartell Drugs, indicates to me that the company is carving out a fairly nice path in a highly competitive retail pharmacy/health market.

Jeff Weidauer
BrainTrust

Rite Aid’s competitors assumed the company was stuck in a downward spiral. Recent activity has proved otherwise; it remains viable and committed to growth. Once CVS and the Big W begin to react we will see how well those changes resonate over the long term.

Gene Detroyer
BrainTrust

Competing with Walgreens and CVS is no small task and Rite Aid has never been up to it. However I do like the strategy of RXEvolution. It is an area that can appeal to many shoppers and one where their pharmacists can be better than the competition.

Brandon Rael
BrainTrust

Rite Aid is taking the necessary steps to disrupt themselves, as they are in a highly competitive and congested pharmacy and health playing field. The key competitive differentiator in this space is the service and experience component, especially in-store.

The company is in a unique financial position, with their record revenues and profitability, to unleash the power of their pharmacists in what they are calling the RXEvolution strategy. Over 80 percent of Rite Aid’s revenues are generated from their pharmacy and related pharmacy services/products. By having the pharmacists walk the redesigned and modernized salesfloor as brand ambassadors, they can help drive stronger customer relationships and additional revenue streams.

We should expect that CVS and Walgreens are in the process, or will be taking on similar initiatives, especially as the Millennial mom, Rite Aid’s target consumer, has a choice.

Richard J. George, Ph.D.
BrainTrust

Rite Aid has always been the tertiary player in this business behind the two big players, namely CVS and Walgreens. The enhancement of the pharmacist’s role could be a difference maker. Plus the focus on its target customer (a woman between the ages of 25 and 49) with accompanying marketing and merchandising that appeals to this significant core group could also be a key differentiator.

Heidi Sax
BrainTrust

I love that Rite Aid is giving customers more direct access to pharmacists and that techs are freeing up pharmacists’ time so they can engage more with shoppers. This could be a game-changer.

Patricia Vekich Waldron
Staff

Rite Aid has been in distant third place for years. These changes will go a long way to making them more attractive to consumers who have a choice.

Roy White
BrainTrust

Although we’ve all been through several resets of Rite Aid over the years, the initial results of this iteration look good. Current Rite Aid results are much better than CVS’s, for example. But there are caveats. For example, the sheer number of stores and dollar sales of CVS and Walgreens tends to swamp competitors; indeed that was one of the reasons Bartell sold out to Rite Aid. CVS and Walgreens units are more productive in sales dollars. CVS has a much more robust pharmacy services segment. At the same time, another loss is predicted by Rite Aid for the current fiscal year.

So, while Rite Aid’s restructure — especially promoting the interaction of the pharmacist with the patient, and the store make-over especially in beauty and the rebranding — is extremely positive, the chain has a long way to go before it achieves full recovery.

wpDiscuz
Braintrust
"The transformation that has been occurring across Rite Aid is definitely better positioning it for continued growth. "
"I love that Rite Aid is giving customers more direct access to pharmacists and that techs are freeing up pharmacists’ time so they can engage more with shoppers."
"Rite Aid’s competitors assumed the company was stuck in a downward spiral. Recent activity has proved otherwise; it remains viable and committed to growth."

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