Transformation on track: Fred’s remains optimistic after new Walgreens-Rite Aid deal
In the aftermath of the announcement that Walgreens would be purchasing more than 2,000 stores from Rite Aid rather than continuing with its initial plan to acquire the chain outright — which removed the need for Fred’s to purchase 855 Rite Aid stores and related assets — the Memphis-based retailer is unfazed.
For Fred’s CEO Mike Bloom, the potential to expand its store base was just one opportunity.
“While the acquisition of additional stores was an opportunity for growth, we always viewed it as a potential outcome that would accelerate our transformation, not define it,” Bloom said the day after the new deal was announced. “This is a disappointing outcome; however, the termination of the transaction has no impact on the company’s transformation strategy or our ability to execute. … We are excited about what we have accomplished and are optimistic about the future.”
Fred’s currently is working its way toward operational profitability after its first-quarter results reflected a $36.5 million net loss, partially due to losses from lease liability impairments and expenses associated with closing 39 stores that were underperforming, the cost of professional and legal advisory for the proposed Rite Aid stores acquisition and other factors.
And though the company also swung to a loss in June, Bloom said that the company is still committed to achieving operational profitability by the end of 2017. Fred’s is looking to achieve this in two areas — its continued healthcare transformation and tweaks to its front-end.
On the healthcare front, Fred’s is seeing the results of continuing to diversify its specialty pharmacy offerings, with June seeing strong sales and script growth. Additionally, the company’s retail pharmacy segment saw a 3.5% increase in comparable sales in June, and in Q1 its retail pharmacy script comparable sales increased 30 basis points. The company’s generics dispensing rate also is on the rise, with it increasing 100 basis points year over year in Q1 to 89.6.
“In retail pharmacy, we continue to see a positive shift to generic, while we consistently experience strong sales and script growth in the specialty pharmacy business.”
Other efforts include a revamped front-end in Fred’s stores. When discussing Q1 results, Bloom noted that new prototype stores performed 4% better than the average in April, and in June he noted that such efforts as introducing beer and wine in certain stores were having a positive impact on sales.
“Our leadership team continues to deliver on its promise to optimize our business model and execute our healthcare strategy,” Bloom said in late June. “We are capitalizing on opportunities to increase prescription comps in retail pharmacy, growing sales in specialty pharmacy and driving traffic into our front store. We also continue to optimize our store fleet, upgrade our talent, technology, supply chain and business processes. Our transformation is on track.”
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Meijer expands store-to-door delivery to 2.5 million Chicagoland shoppers
GRAND RAPIDS, Mich. — Meijer and Shipt announced Thursday they will offer a store-to-door service beginning July 13 to nearly 2.5 million households throughout the Chicagoland suburbs and Rockford. The home delivery service launches as part of an expansion across six states that has so far resulted in more than 250,000 deliveries this year.
"Our goal is to provide store-to-door convenience to as many of our customers as possible," stated Art Sebastian, VP digital shopping Meijer. "We believe that the personalized service that Shipt offers, coupled with the freshness and wide selection our customers love about Meijer, is the perfect meld of online shopping and our brick and mortar locations," he said. "Whether you're too busy or just have difficulty getting around a store, the ability to shop digitally and have it delivered when its most convenient provides a life-changing alternative to the way you've always shopped for our groceries."
Meijer has aggressively rolled out the service since launching in Detroit last September and now offers home delivery throughout Michigan, Indiana, Ohio, Illinois and Wisconsin. The massive greater Chicagoland launch will cover more than 4,500 square miles and include more than 200 zip codes.
Shipt memberships are available for an annual fee of $99 and members have access to free delivery on all orders over $35. For orders under $35, there is a $7 delivery fee.
Using the Shipt smartphone app or placing orders from their computers or tablets, members are able to access more than 55,000 items available at Meijer stores, note any preferences, choose a one-hour delivery window and pay for their order. Fresh produce, meat, dairy, as well as hard-to-carry items like pet food, diapers and cleaning supplies can all be delivered in as litte as one hour after the order has been placed, or up to one day in advance.
To celebrate the launch of Meijer home delivery in Chicago and Rockford, Shipt is offering $25 off the first order to annual members who sign up prior to launch.
Leading up to the launch, Shipt plans to grow their network of shoppers, who are responsible for ensuring complete, accurate fulfillments of each order, and customizing orders to meet member preferences. Shipt plans to hire 10,000 people across the six-state expansion with Meijer this year.