RAD gets loyal to Wellness+

CAMP HILL, Pa. —A possible cold-flu product sales boost and rumors of projected economic recoveries aside, Rite Aid executives were abuzz last month about the prospects of its new Rite Aid loyalty program—Wellness+—that’s expected to roll out chainwide later in 2010.

The program, currently testing in Buffalo, N.Y.; Greensboro, N.C.; Harrisburg, Pa.; and San Diego, is set to expand nationally by mid-year. “While we’ve been in those markets for only about two months now [since October], I’m pleased to report, our new tiered benefit customer rewards program is doing very well in test,” Mary Sammons, Rite Aid chairman and CEO, told analysts during a Dec. 17, conference call. “We expect to aggressively launch Wellness+ nationally next year, and are excited about the potential it offers our business.”

And the potential is pretty good—where applicable, Rite Aid will have the ability to effectively cross-promote its front-end offerings across its pharmacy patients, effectively boosting in-store conversion. Patients with a significant number of prescriptions will be rewarded with increasing levels of front-end discounts, and heavy front-end customers will be able to take advantage of Rite Aid’s health screenings and consultations for free. Patients who patronize Rite Aid for both their prescriptions and their front-end needs will be able to accumulate the most points in the shortest amount of time.

Participants earn one point per dollar spent on the front-end, and 25 points for every prescription. Those points translate into a one-time, 10%-off shopping pass if cashed in early, or free health screenings and greater discounts if accumulated.

The four test markets included three markets where Rite Aid can offer rewards for both front-end and pharmacy purchases, and one market where the chain can only offer rewards on front-end purchases, John Standley, Rite Aid president and COO, noted.

The chain also will be able to capture demographic data, a factor that could help make future promotions more effective. And if the economy cooperates, Rite Aid may be in full swing promoting their new Wellness+ program, as more Americans feel comfortable spending again.

A significantly promotional consumer has negatively impacted Rite Aid’s front-end comparable sales, analysts have noted. An improving economy, continued growth of Rite Aid’s private-label initiative (15.1% penetration as of the past quarter), a more efficient supply chain and improved inventory control, all coupled with the strong marketing of a loyalty program like Wellness+, could help accelerate Rite Aid’s improvement across its front-end.

In the week leading up to the conference call, almost half of all front-end sales in the four test markets were generated from customers using the Wellness+ card. “In the three markets where [prescriptions] are included [as part of] the program, 41% of scripts filled last week were for customers using the Wellness+ card,” Standley added. “Besides building customer loyalty with our existing customers, Wellness+ will provide valuable customer data and help us attract new front-end and pharmacy customers.”

If you were to extrapolate initial participation across the entire Rite Aid base of stores, there would be 12 million participants within those eight weeks, Standley said, “so it’s really gotten off to a very solid start.”