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A leaner, greener ‘new Rite Aid’ unveiled at J.P. Morgan conference

BY Michael Johnsen

Rite Aid today unveiled the “new Rite Aid,” a small but nimble, bicoastal regional chain that executives told the 36th Annual J.P. Morgan Healthcare Conference on Wednesday will have the same buying power over the next 10 years of its one-time suitor Walgreens Boots Alliance. Though the chain has recently become deleveraged due to the 1,932 stores sold to Walgreens, company leaders said they have plans to invest that new-found financial flexibility into the front-end experience of its remaining 2,569 stores, 63% of which already represent the better-performing Wellness store format.

Leading the charge is Kermit Crawford, Rite Aid president and COO, an experienced retail pharmacy executive who over the past several months has become more familiar with the talent pool at Rite Aid.

“Our biggest strength is really our people,” he said. “A hardworking, dedicated and passionate group of people that really want to build this ‘New Rite Aid.’”

Crawford’s all-star team includes Bryan Everett, COO of Rite Aid Stores; Jocelyn Konrad, executive vice president pharmacy; Derek Griffith, executive vice president store operations; David Abelman, executive vice president marketing; Bill Jackson, senior vice president supply chain; and Bill Renz, senior vice president merchandising.

The new Rite Aid will have operations across 19 states, most notably in California, Pennsylvania and Michigan.

“The store base that we’re left with is very strong,” John Standley, Rite Aid chairman and CEO said Wednesday. “We’re going to have higher front-end sales [and] higher pharmacy sales per-store than the old company. We end up with a great asset base when we’re done with this transaction and we’re excited about where we can go moving forward.”

Standley said that Rite Aid’s net debt will fall from $6.7 billion as of Dec. 2 to $2.9 billion following the completion of store sales to Walgreens. Also following the deal, Rite Aid’s average per-store total sales will climb from $5,725 to $6,227 and the average per-store weekly scripts filled will grow from 1,252 to 1,342.

In his presentation to J.P. Morgan, Crawford outlined six key initiatives that will help redefine Rite Aid’s front-end shopping experience, including:

  • Immunizations. “We’re having a very successful flu season program,” Crawford said. “We’re going to be up 9% year-over-year.”;
  • Wellness stores. “We’re really excited about the Wellness store innovations,” he said, “Our front-end comps are coming in at 176 basis points and Rx 240 basis points, over the rest of our chain.”;
  • Wellness + loyalty program. “We have over 20 million active members in our program as of the end of December,” he said. “The data that we’re getting from these loyalty programs is helping us to understand who [our shopper] is and why she is shopping our stores.”;
  • Localized product assortment. “We have a tremendous opportunity when it comes to localizing our product assortment,” he said. “We’re going to make our stores more tailored … to the communities that we serve, adding things like DME to certain select markets.”;
  • Private label. “We have six brands today, over 4,000 items. We’re doing over $1 billion in sales,” he said. “We have a tremendous opportunity to differentiate our front-end offering through these private brand products. We know we have the quality and the standards in place. It’s a matter of driving this business much greater than we have in the past.”; and
  • Omnichannel. “Our best customers are heavily engaged in our app and our website,” he said. “Our online marketing is being targeted and segmented based on this [loyalty] data that we’re getting.”

Across the back bench, the new Rite Aid will gain access to the WBAD generic purchasing option once the transfer of 50% of the 1,932 stores to Walgreens has been completed. “This is huge,” Crawford said. “One of the concerns we’ve heard is ‘You’re a smaller company, are you going to be able to buy as well?’ This gives us the confidence that we will be able to buy our generic purchasing at a very competitive rate.”

Beyond a competitive generics purchasing position, Rite Aid will be counting on its PBM EnvisionRx, along with the 22 million lives covered, to serve as a significant point of difference in the markets Rite Aid serves. “EnvisionRx will serve as a growth engine for our entire company,” Crawford said. “[It’s] a full-service PBM platform with all capabilities in-house with a comprehensive suite of offerings that will be offered both as a bundle and an ‘a la carte.'”

Crawford added EnvisionRx is the gateway to a stronger presence in specialty, where today Rite Aid is managing approximately 5,000 patients. “We have to be a player in that specialty business,” he said. “We have access to the limited distribution drugs, all of the injections, infusions, oral and biologicals and a tremendous cost-savings program around managing waste and improving outcomes and adherence. One of the assets we have is Health Dialog. Health Dialog has the analytics, the research and predictive modeling that we think can differentiate our EnvisionRx offering and help us better manage these high-cost patients.”

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Supervalu’s Q3 shows results of acquisitions on wholesale business

BY David Salazar

Grocery retailer and wholesaler Supervalu has shared the results from its fiscal 2018 third-quarter, which included a boon to its wholesale business in the form of its Unified Grocers acquisition, even as retail sales declined. The Minneapolis-based company’s total continuing operations saw net sales of $3.94 billion — up 31% from $3 billion in the same period last year.

Supervalu’s retail division netted $1.02 billion in sales, down 4.1% from last year’s $1.06 billion, which the company attributed to a 3.5% dip in same-store sales and store closings, offset by new and acquired store sales. The company’s retail operating loss was $6 million for the quarter, a number that included $3 million in costs related to store closures. Supervalu’s third-quarter operating loss was well below the loss it posted in the same period last year, when it reported $14 million.

The impact of retail losses on Supervalu’s bottom line was buoyed somewhat by its wholesale division’s performance. The wholesale business posted $2.89 billion in net sales, an increase of 52% over the prior period, which the company said was driven by the Unified Grocers acquisition, as well as new customer sales and increased sales to existing customers. Operating earnings were down slightly from last year, coming in at $48 million after being adjusted for $2 million of merger and integration costs. In the prior third quarter, Supervalu’s wholesale division brought in $52 million in operating earnings.

“With the influx of significant new business in certain distribution centers, we experienced a larger-than-anticipated increase in expenses, but we're encouraged by the work we are doing to address those costs and believe they are manageable going forward,” Supervalu president and CEO Mark Gross said. “We remain committed to investing in our wholesale business to drive future growth.”

On the corporate side, Supervalu saw fees earned of $33 billion from services agreements, and its new corporate operating loss was $1 million — which included $3 million of merger and integration cost. This is compared with net corporate operating earnings of $4 million last year.

With the Unified Grocers acquisition completed in Q3, the company set its sights on its Associated Grocers acquisition, closing it early in its fourth quarter.

“We're pleased to have completed our acquisition of AG Florida early in the fourth quarter,” Gross said. “The work done in the third quarter concluded with this deal which, combined with the acquisition of Unified Grocers earlier this fiscal year, demonstrates our commitment to the strategic growth of our Wholesale business. Furthermore, we're extremely pleased with the integration work at Unified and the progress made in that market.”

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RLA Collective a finalist for 2018 Innovation SABRE Awards three times over

BY Michael Johnsen

RLA Collective, an OTC/healthcare-focused integrated marketing agency, made the 2018 Innovation SABRE Awards shortlist for three programs in digital/marketing: “Best in Digital Marketing/Advertising” for an integrated media campaign with Vetoquinol USA; “Best Use of Video Networks” utilizing Facebook LIVE to showcase pet care advice from Tomlyn's resident veterinarians; and “Best in Brand Narratives” for a unique video testimonial influencer campaign, “VSL#3: The Journey Back," (featured above) the company announced last week.

 
Hosted by the Holmes Report, the 2018 Innovation SABRE Awards recognize marketing campaigns that demonstrate the highest levels of strategic planning, creativity and business results that explore the collision of content, media, technology and more.

[quote-from-article] “For RLA Collective, being a finalist in these digital categories – especially among some of the biggest industry players and brands — acknowledges our strategy, creativity and success in utilizing the latest digital platforms for efficient brand marketing,” stated Alyson O’Mahoney, president of the Pleasantville, N.Y.-based marketing firm.

With a record number of entries and competition this year, the Innovation SABRE Awards are judged by senior executives in the communications and marketing industries. “We are thrilled to be recognized as finalists among some of the most innovative large and small players, including JetBlue, Blue Cross, GE and Procter & Gamble,” commented Robin Russo, CEO RLA Collective. “As OTC health and wellness specialists for humans and pets, we not only understand how to bring about success in a highly regulated industry, we set very high standards for ourselves to develop digital strategies that integrate with a brand’s overarching sales and marketing objectives.”

The RLA team was especially honored to be a finalist in the overarching “Best in Digital Marketing/Advertising” campaign category for Vetoquinol’s Zylkene pet health supplement brand. “We took a specific sales objective and applied integrated digital tactics – from AI-driven digital advertising, to influencer/content partnerships to reach that objective,” explained O’Mahoney, who has been developing RLA’s expertise in digital marketing innovation.

“We took home a SABRE Award last year for the Colief Infant Digestive Aid digital campaign, ‘Answering a Mom’s Cry for Help,’ and are incredibly proud to receive three finalist nominations this year,” adds Russo.   

 

The SABRE Award winners will be announced on Feb. 13, 2018 at the InterContinental Hotel in New York.
 

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