Rite Aid leverages Wellness in comeback
Everybody loves a comeback story, and it looks as though the pharmacy retail industry has one of its own in the making as Rite Aid’s latest earnings report showed another strong quarter for the Camp Hill, Pa.-based chain, which has been steadily growing its sales and narrowing its losses for several quarters already.
According to the report for first quarter 2013, announced on June 21, the company had sales of $6.5 billion and a loss of $28.1 million, compared with $6.4 billion in sales and a $63.1 million loss in first quarter 2012. Same-store sales for the quarter increased by 2.5%, including a 2.7% boost in front-end comps and a 2.4% increase in pharmacy comps.
One of the key ingredients to Rite Aid’s success has been the Wellness+ loyalty card program, which had 52 million members as of June 21. But while the program has been growing its membership for some time, the recently mended falling out between rival Walgreens and pharmacy benefit manager Express Scripts provided a laboratory of sorts for determining how well Rite Aid can attract new members and retain them.
Much of the increase in pharmacy comps came from Walgreens customers who had moved to Rite Aid, and John Standley — Rite Aid’s president and CEO, who took the additional title of chairman in May following the retirement of former chairman Mary Sammons — told analysts in a call to discuss the first-quarter earnings that Wellness+ penetration among customers who had switched from Walgreens was on par with the broader Wellness+ numbers, meaning that more than two-thirds of customers who had moved their prescriptions over had signed up for the loyalty program.
In September 2011, the company launched Wellness+ for Diabetes, an extension of the loyalty card program designed for diabetes patients and caregivers, which by third quarter 2012 had more than 90,000 people enrolled and attracted more than 200,000 unique visitors to Rite Aid’s section of WebMD, which has partnered with the retailer in the program.
Immunizations have been another strong area for the chain and have turned out to be a major contributor to its pharmacy comps. In the third quarter, it had trained more than 11,000 of its pharmacists to administer vaccines to patients and immunized 1.4 million customers against flu. The retailer expected to immunize a further 1.5 million, for a total of more than double the number of people it immunized in 2010. The company’s efforts won recognition in December, when the American Pharmacists Association gave it the Immunization Champion Award in the national corporation and institution category.
That same month, Rite Aid announced a partnership with OptumHealth to become the first retail pharmacy to provide “virtual clinics” through the launch of NowClinic online care services at select stores in the Detroit area. The program is designed to allow Rite Aid customers to interact in real time with doctors and OptumHealth nurses. Customers use the Internet to have private consultations with doctors about symptoms and obtain guidance, diagnoses and prescriptions for certain medications. Customers also can have conversations with nurses who can provide basic healthcare education, information on common medical problems and identification of appropriate provider options. When announcing Rite Aid’s third-quarter results, Standley said the program had gained traction, and the company was considering expanding it.
Other programs have seen increases as well. The Rite Care Prescription Advisor, an opt-in program announced in April that allows patients to see what their prescription drug adherence looks like, had 300,000 members as of June 21, while the company has 423 Wellness stores in operation, with plans to have 780, or 15% of the store base, operating the format by the end of the year. The company also has trained 600 Wellness Ambassadors — iPad-armed assistants who walk the aisles to help customers who have questions about the store’s products and to direct them to the pharmacy as needed.
Beyond health and wellness, Rite Aid also has been a test bed for new retailing technologies. In December, for example, it made a deal with Chatsworth, Calif.-based Provision Interactive Technologies whereby it would place 3-D holographic kiosks in its stores. The kiosks include a display unit that shows 3-D images “floating in space” without the need for observers to wear 3-D glasses. According to Provision, the kiosks project images that look so real that people feel compelled to reach out and try to touch them. At the time, the company planned to install the displays in 200 stores, with plans to eventually roll them out to the entire chain.
In October 2011, Rite Aid became one of the first retailers to pilot Amazon Locker, a service that allows items purchased through the online retailer to be delivered to a secure, robotic locker for later pickup.