Turnaround at Rite Aid gains some momentum

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NEW YORK — Rite Aid Corp. executives this month highlighted factors pointing to a continued turnaround at the chain, from loyalty program growth to lower-volume store ­improvements.

The retailer is poised to build on three straight quarters of growth in same-store sales and adjusted EBITDA, the executives suggested at the Imperial Capital Global Opportunities Conference here. Representing the chain were president and chief executive officer John Standley, chief financial officer and chief administrative officer Frank Vitrano, and treasurer and group vice president for strategy and investor relations Matt Schroeder.

Also, executives recently told suppliers that the number of Rite Aid stores that can compete with CVS/pharmacy and Walgreen Co. units has increased dramatically.

The loyalty program — wellness+ — empowers members by delivering health benefits, value and convenience, and it has increasingly emphasized pharmacy-related benefits and rewards. It provides monetary and experiential benefits through a personalized experience delivered across multiple media channels.

Enrollment in the customer loyalty program has reached approximately 44 million. Almost seven in 10 members (68%) shop the front end, with about a quarter (24%) shopping the front end and pharmacy, and just 8% shopping the pharmacy only.

More intensive shoppers reach the Gold+ and Silver+ levels of the program, and 90% of them shop both the front end and pharmacy. Half of them shop Rite Aid every week.
The average wellness+ member’s purchase totals $37.78, which is 35% more than the average nonmember’s $28. Gold+ and Silver+ members’ average baskets are $63.95 and $43.47, respectively.

Most recently, the program has been expanded with wellness+ for diabetes offering exclusive resources and savings to people with diabetes and their ­caregivers.

Elsewhere on the health care front, Rite Aid is offering immunizations in all stores, with pharmacists giving shots for 14 diseases. The company’s goal for flu doses this fiscal year is 1.5 million, up from 675,000 in fiscal 2011.

At the end of the second quarter the retailer had rolled out 40 “wellness store” units. The format makes health care its hallmark while taking customer engagement to a new level through personal service, interactive technology and a variety of shopping conveniences.

Heading the list of innovations is what Rite Aid calls the “wellness ambassador,” an iPad-toting adviser who roves aisles and provides customers with information on over-the-counter medications, vitamins and supplements. The outlets also feature his/her category segmentation, new and expanded front end categories, and maximized pharmacy visibility. And the retailer has NowClinics in nine stores.

To improve stores with lower volume the chain now has 51 “value stores” designed to boost productivity by combining new merchandising with a modified distribution model. Elements include the “Wall of Values.”

The company is also continuing to find efficiencies with project simplification. Key front-end process improvements include such point-of-sale system enhancements as an automated coupon match and item substitution. Other improvements have come in signing and labeling, and maintaining product freshness.

Key pharmacy process improvements include NexGen; inventory management and replenishment; scheduling/workforce management; and audits, checklists and forms for compliance.

The goals of the efforts in the front end and pharmacy are to make stores easier to operate, boost associate satisfaction and bolster customer service.

Helping to enhance the customer experience is a better store brand offering. Private label products have been repackaged and given more promotional support. The chain now stocks Thrifty ice cream, Pharm­Assure health products and pure spring beauty items in the premium private label tier. It has Pantry, Home, Renewal, tugaboos and Rite Aid Pharmacy at the national brand equivalent level, and the Simplify brand at the value tier. Fresh and exciting labels are designed to foster a connection with consumers.

In the service area, the “GET” initiative reminds employees to greet, engage and thank each customer. Pharmacies’ guarantee of prescriptions in 15 minutes is one of the chain’s most important services, the executives said.


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