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.