Rite Aid finds its niche 'well'

Success of Wellness stores, Wellness+ drive strong performance

Rite Aid announced Wednesday that it has converted nearly all its stores in the Buffalo, N.Y., area to the Wellness store format, breaking the news with an event in the nearby village of Williamsville that included president, chairman and CEO John Standley, COO Ken Martindale and fitness expert Denise Austin.

Just as writers find their voices, Rite Aid has paved its road with wellness. Evidence of that was clear when it announced its latest earnings last month, raking in a $123.1 million profit for the fourth quarter and a $118.1 million profit for the fiscal year, its first profitable year since 2007.

As Drug Store News stated when it profiled the company in the December 2012 issue, Rite Aid "gets well," its business is improving, but it also has shown an understanding of wellness. As Standley put it, the company's goal is to become a "true neighborhood destination for health and wellness."

Behind those numbers are the more than 800 Wellness stores themselves, whose front-end comps exceed those of non-Wellness stores by more than 3%, according to the company. That is thanks not just to their improved decor and product selections, but the Wellness Ambassadors, specially trained staff members armed with iPads who provide information on health and wellness products and pharmacy services. When the Wellness format was in its early stages, Standley noted that those stores staffed with Wellness Ambassadors showed stronger results than those without. As of the end of the fourth quarter, the company had 1,300 Wellness Ambassadors trained, and it plans to remodel 400 stores in fiscal year 2014.

Wellness+ is the other big factor. The number of members who actively use the program - meaning they have used the cards at least twice in the past 26 weeks — now exceeds 25 million, accounting for 79% of front-end sales and 68% of prescriptions filled, with particularly strong showings from those members who achieve Gold and Silver status. That program has helped the company retain at least three-quarters of the pharmacy scripts that it gained from last year's dispute between Walgreens and pharmacy benefit manager Express Scripts. A large portion of the chain's pharmacy customers — and just about all of its best customers — are poly-chronic patients, those with multiple chronic conditions, Who tend to be elderly patients.

What this all means is that Rite Aid has found its niche. And at a time when retail pharmacy chains around the country are looking to distinguish themselves with services, product selections and target demographics, finding one's niche is of critical importance.

 

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