Sammons’ legacy is one of turnaround
When Rite Aid chairman Mary Sammons accepted the Sheldon W. Fantle Lifetime Achievement Award at the National Association of Chain Drug Stores’ Annual Meeting in Scottsdale, Ariz., in May, it was the culmination of a career that had seen Rite Aid emerge from a period of darkness that had lasted more than a decade.
Sammons plans to stay on as chairman of Camp Hill, Pa.-based Rite Aid until the company’s annual meeting in June 2012. But when she does hang up the gloves, she will have a lot to look back on.
Sammons joined Rite Aid as president and COO in December 1999 after a career as president and CEO of Portland, Ore.-based mass merchandiser Fred Meyer, along with former Fred Meyer executives Bob Miller, David Jessick and John Standley.
At that time, Rite Aid already was in trouble. Its stock was in freefall, leading former chairman and CEO Martin Grass, the son of the company’s late founder Alexander Grass, to step down amid major fraud charges.
The chain’s West Coast operation of more than 900 stores, the result of its 1996 acquisition of the Thrifty PayLess chain, was up for sale due to poor performance compared with its East Coast stores, and by the time Sammons was on board at Rite Aid, 32 stores already had been sold to Longs Drug.
But under Sammons and former chairman and CEO Bob Miller, the West Coast stores were taken off the block. Since then, the chain has had its share of troubles, but the leadership of Sammons, Miller and Standley, the latter of whom returned to Rite Aid in 2008 after a successful turnaround of Pathmark Stores, has helped steer the company back into credibility. At press time, the company’s stock was safely above $1, and it had already started narrowing its losses thanks to rising sales and the wellness+ loyalty card program. The 2007 merger with Brooks Eckerd Pharmacy greatly increased Rite Aid’s footprint on the East Coast.
The company again came under pressure to sell off its West Coast stores in 2009. In a conference call with analysts held around the time of CVS’ takeover of the Longs Drug chain, Sammons recognized that the West Coast was an important part of Rite Aid’s business. “[The West Coast] is also a strong contributor to … scale, our ability to really have greater capacity to buy better and do what we do and leverage expenses. We have strong market shares out there. We’ve invested a lot of dollars out there … frankly,” she said.
That thinking paid off: The company recently remodeled one of its stores in Newport Beach, Calif., with its new wellness store format, the first of its kind outside the Northeast. At press time, the wellness stores were trending at between 100 and 200 basis points better than the rest of the stores in the chain.
Under Sammons’ leadership, Rite Aid regained its footing and has already embarked on its renaissance. She’ll have a lot to be proud of next June.
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not to be a wet blanket, but...... Granted, Ms. Sammons inherited a mess, but even after 12 yrs, the company is still bleeding red ink. I can not think of any other CEO, in any company, who lasted this long with such a poor balance sheet. (And, NO......I am NOT a disgruntled former RAD employee.)
Moving beyond sick care — just do it!
One thing that was pretty clear in the research we conducted for the 2011 Retail Clinician Reader Survey is that an increasing number of retail-based health practitioners want the clinics they work for to expand the scope of services beyond acute care. Many readers said the one thing that would make them even more satisfied about the work they do is “moving beyond sick care,” as one reader noted, to more preventive/wellness-oriented services, including chronic disease management programs for diabetes, hypertension and more. One reader even suggested the addition of “on-site X-rays.”
What makes these results more significant is that this data was not derived from multiple-choice questions — these were verbatim responses, the actual words used by our readers.
While retail health care may not be ready for in-store X-ray labs just yet, many retail clinic operators already have begun to move toward expanded services, including smoking-cessation, weight-loss and even fitness programs.
Fitness and nutrition have been core parts of employer-based wellness programs — including the ones Take Care Health Systems operates for such employers as Harrah’s Casinos — even before the news broke in July that Take Care had acquired an ownership position in Core Performance, a company that creates fitness programs.
But now Walgreens/Take Care has the opportunity to look for creative new ways to bring new wellness programs to its stores through its retail clinics, perhaps even as part of a larger weight-loss management program — not unlike Weigh Forward, the new program RediClinic announced in April in conjunction with H-E-B stores. For its part, Lindora, which operates seven clinics in West Coast Rite Aid stores, began as a weight-loss clinic first and evolved into acute care later.
But beyond just improving health outcomes, this also is an opportunity for community pharmacy and retail clinics to build new relationships with customers and patients that keep them coming back, even when they are not necessarily sick. It could help expand the paradigm from sick care to well care and help build community.
What could that mean? For instance, Nike stores, such as the one in Boston, host “running clubs” that keep people connected to the store. It’s not just a place to buy sneakers; the store is a part of their lives.
These kinds of programs don’t just drive customer loyalty; they also make customers rabid fans of your brand. Just think about Nike. People pay big money for Nike apparel just for the chance to be a human billboard to advertise their love of the brand.
So, a fitness club in a drug store or a retail clinic? In the immortal words of Nike, Drug Store News says: “Just do it.”
Want a copy of the 2011 Retail Clinician Reader Survey? Email me at [email protected]
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Back to wellness and adding the ‘plus’
With its latest string of initiatives designed to bring it out of a slump that lasted more than a decade, Rite Aid is aiming for “wellness” to do for it what the lower-case “i” did for Apple.
First, there was the wellness+ loyalty card program. Then, there was the wellness store format, with its team of Wellness Ambassadors. “This new format is all about empowering our customers in their pursuit of wellness,” president and CEO John Standley said in the company’s first quarter 2012 earnings call on June 23.
Overall, Rite Aid is marshalling the “wellness” theme with its eye on the future. The tale of the 4,700-store chain for the last several years has been one of a turnaround. Now it appears the company is beginning to turn the corner.
Really it began under Rite Aid chairman Mary Sammons and former chairman and CEO Bob Miller. After a successful stint at Fred Meyer, Sammons started with Rite Aid as president and COO in December 1999, becoming CEO in 2003 and chairman in 2007, helping to engineer the retail pharmacy chain’s successful turnaround and return to credibility. And after years of belt-tightening and retrenchment, Rite Aid is starting to move forward again.
Everybody loves a good comeback story, about the mighty falling and laying down for a while only to get back on their feet again. As companies ranging from Apple to General Motors have shown, the way for a business to get back on its feet is to create something fresh and new that will bring customers inside and draw “oohs” and “ahs” from investors.
For Rite Aid, that process started in earnest when Sammons brought in John Standley as president and COO in September 2008. Standley originally joined Rite Aid from Fred Meyer at the same time as Sammons. He came in as EVP and CFO and as part of the company’s original recovery team. In August 2005, he left to become CEO and board director of Pathmark Stores, helping to engineer the recovery of that chain, which then was sold to A&P. Standley rejoined Rite Aid in September 2008 and in 2010 became president and CEO.
Under Sammons’ tutelage, Standley has overseen the development of the company’s new “wellness” initiatives. While wellness+ has been the most successful so far, the wellness stores offer the most insightful glimpse into the company’s future, as COO Ken Martindale suggested to Drug Store News during an exclusive tour of a wellness store in Harrisburg, Pa., in June. The stores adopt a number of features that appear to be emerging trends in retail pharmacy, such as lower shelves, a brighter interior and an overall airier and more open look, in addition to innovations like the special shelves for homeopathic treatments and a men’s grooming section near the front of the store.
Then there are the specially trained Wellness Ambassadors, who man the aisles with iPads that enable them to provide customers with information on OTC medications, vitamins and supplements, and assist customers in making decisions based on their symptoms and needs, thus acting as a bridge between the front end and the pharmacy, as Standley put it in the June 23 call.
During first quarter 2011, Rite Aid closed 10 stores and didn’t open any net new stores. On a year-over-year basis, the chain operated 63 net fewer stores. Still, the company plans to allocate $300 million for capital expenditures in fiscal year 2012, including $127 million for remodels and other merchandising initiatives — many of them including elements from the wellness store format.
With the smart leadership of Sammons and Standley, and some fresh new ideas in its bag, it’s safe to say that Rite Aid’s darkest days are behind it. Sammons and Standley brought the chain back to wellness and are now adding the plus.
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