QuickWit Weekly 06.28 – Cheatsheet: Rite Aid & Last Week’s Top Stories

Pharmacy will be one of the next battlegrounds in Retail, and we’re prepping at RetailWit to understand the landscape of Retail Pharmacy. CVS, Walgreens, Rite Aid, Pillpack, ExpressScripts … there are quite a few players in the space and more coming at a rapid clip. Rite Aid caught on our eye this week with their release of their (strong) Q1 results. So, we created this cheatsheet as a guide to Rite Aid.

Revenue: $25B
Store Number: 2,400, 18 States
Associates: 51,000
Store Map:

No. 132 in Fortune 500
Vaccines Administered: 6MM+ since 2020.
Brief History: Rite Aid opened in 1962 in Scranton, PA (strong Office vibes). In 1981, they became the third-largest retail drugstore chain in the country and passed $1B in sales by 1983. Expansion and partnerships came quickly—by the late 1990’s, the company was performing poorly. It’s stock dropped from $30/share to $4.40. Scandals, lawsuits, and poor company performance rocked Rite Aid during the 2000’s and 2010’s.

The late 2010’s saw a turnaround for Rite Aid—a divestiture of a sizable number of stores to Walgreens in 2018, a change in the C-suite, and a new, differentiated strategy for 2020: RxEvolution.
Current Strategy:
- RxEvolution
  - Elevating Role of Pharmacists
    - Pharmacists are one of the most trusted, accessible, yet underutilized healthcare professionals. Physicians may see their patients, at most, a few times a year, while pharmacists typically see patients every other week. Rite Aid aims to have Pharmacists serve as an “everyday clinical touchpoint” and be the “last mile” of healthcare for patients and customers.
    - There is a particular focus on holistic health—a program and campaign called Perfect Fusion—not just medication. Rite Aid had their pharmacists become certified as integrative pharmacy specialists.
    - Jim Peters, COO, has said they are not interested in owning any primary or speciality care clinics. They are sticking to their core competency: pharmacy. Rite Aid looks to serve “as a connector, not as a competitor, to nurses and doctors [who] serve them.”
  - Renewed Focus on Pharmacy Benefit Management (PBM)
    - PBMs manage prescription drug benefits for health insurers. Essentially, they impact drug costs, patient accessibility to medication, and pharmacist payment. Elixir was acquired in Rite Aid’s relaunch of PBM.
    - The firm is laser focused on the mid-market, covering the area that the big three PBM’s (CVS Health, Cigna, UnitedHealth) aren’t focused on. They are the only “pay-agnostic PBM with a large pharmacy footprint.”
    - There is a significant amount of progress in this strategic pillar. From their latest earnings, Rite Aid is building capabilities and innovation (clinical, analytical, telehealth), sharpening Go-to-Market strategies, and investing in streamlining and maximizing operational efforts.
  - Upgrading the Retail and Digital Store Experience
    - The last strategy for Rite Aid is a refresh of their physical and digital experience. The upgrade looks to enable the elevation of the pharmacist, bring the correct assortment to compete with larger or specialty retailers, and shift towards a more modern feel and away from the “tired, traditional drugstore chain experience customers have grown accustomed to experience.”
    - It’s a very customer-first approach. They’ve operationalized on creating seamless, omnichannel experiences, gaining market share, and have launched 50 owned brands, with 300 (!) more planned in FY2022.
- Like most companies, RiteAid is also tackling ESG Initiatives: Thriving Planet, Business, Workplace, and Community. From sustainability (ie. recycling) to DEI, their initiatives focus on ESG & growth for good.

Latest Sales Numbers (Comparable Stores):
- 2.2% increase in total revenue Q1, FY2022.

Latest partnerships, acquisitions, developments:
- Bartell Drugs (October 2020)
- Rite Aid Performance Media with Quotient (October 2020)
- Instacart for delivery (May 2020)
- NarxCare Analytics (October 2019)
- Heyward Donigan selected as CEO (August 2019)
- Digital Transformation with Adobe (June 2019)
- GNC store-within-a-store partnership (March 2019)

Here’s the top stories from last week:

Google delays Chrome’s cookie-blocking privacy plan by nearly 2 years. Providing many a stay of execution, Google announces a delay in it’s privacy plan often called the ‘death of cookies’.

Google believes blocking third-party cookies at this stage is actually bad for people using the web because it drives tracking companies to more covert approaches such as fingerprinting. “Unlike cookies, users cannot clear their fingerprint, and therefore cannot control how their information is collected or used. We don’t think that’s a sustainable long term investment,”

We aren’t exactly sure as to why they have changed their tune, it cannot be just for users… certainly more to come here as we learn the true motives from these companies.

Target Announces Bold New Sustainability Strategy: Target Forward. It includes a plan to have 100% of its store brands be designed to eliminate waste, sourced sustainability, be recyclable, and more. Brian Cornell, CEO, believes sustainability is tied to “business resiliency and growth” and “influences every corner of [Target’s] business.”

Sam’s Club is getting into home improvement business and has sets their sights on grabbing share of the home improvement sector. Heavy hitters, Lowe’s and Home Depot, only account for 30% of the industry. An interesting story to watch unfold given the relatively fragmented market and with inflation / prices for lumber, steel, and the like so high.

McDonald’s first-ever U.S. loyalty program will launch nationwide on July 8 as a way to hold onto the digital customers the companies gained during the pandemic as well as a way to add a personal touch to the customer experience.