Immunizations, Wellness+, a shot in the arm
Rite Aid is a better company today than it was yesterday. And it will be a better company tomorrow than it is today. “I feel very good about where our retail business is,” John Standley, Rite Aid president and COO, told analysts in March during a conference call. “I am confident we are going to continue to make great progress here with our retail business.”
Standley will assume CEO responsibilities from present CEO and chairman Mary Sammons in June. Sammons will remain at Rite Aid as chairman. “[Standley] brings the right combination of operational knowledge, hands-on management and financial orientation to successfully lead our company for the future,” Sammons said.
Headquarters: Camp Hill, Pa.2009 sales: $25.7 billion*% change vs. 2008: -2.4%No. of stores: 4,780No. of stores with Rx: 4,780Avg. store size: 12,400 sq. ft.Rx sales: $17.5 billion% of sales from Rx: 67.9%Sales per store: $5.4 million
* For fiscal 2010, ended Feb. 27Source: Company reports, Drug Store News
The immediate future already is taking shape, and Rite Aid has begun to position itself to best optimize opportunities in the coming year. Rite Aid starts out fiscal 2011 with a strong liquidity position and less debt than it carried in the past year. And going forward, Rite Aid’s brass feel they have identified the right mix of initiatives to foster the most growth. The company plans to increase the number of Rite Aid immunizing pharmacists from 2,000 to 6,000 this year, as well as launch its highly touted Wellness+ program this summer. And Rite Aid’s store segmentation strategy is expected to continue paying dividends through fiscal 2011, executives noted.
Rite Aid’s plans to triple the number of immunizing pharmacists across its store base is expected to give the chain a strong presence in most of its major markets during the influenza season. It’s a trend that’s being replicated across retail pharmacies, especially as flu shots aren’t the only inoculations that can be delivered. Other immunizations include shingles, tetanus, hepatitis A and B, pneumococcal, MMR (measles, mumps and rubella) and Varicella (chicken pox).
Wellness+, which has been piloted across four test markets since October 2009 and is expected to launch chainwide this summer, represents the largest marketing expenditure that Rite Aid “has made in several years,” Standley said, and should go a long way toward improving both front-end and back-bench productivity. “Over 50% of front-end sales and 40% of prescriptions in the test markets are now on the card, and consumer research tells us the program has been very well-received,” Standley said. “If we extrapolate enrollment from the test markets to the entire chain, we should expect we will have in a range of 15 to 20 million members enrolled at the program’s maturity.”
Capturing prescription loyalty may prove more crucial today with the recent passing of healthcare reform, Sammons noted. While the additional 32 million covered Americans still may be a few years out, the $250 prescription-drug voucher for Medicare recipients and the allowance of students as old as 26 to remain on their parents’ healthcare policies represents incremental, albeit small, growth opportunities this year.
Segmentation, where Rite Aid identifies distinct marketing opportunities and merchandising synergies across either low-volume or high-volume stores, also is expected to play a significant role in Rite Aid’s fiscal 2011. “From a merchandising perspective, we will be working on the low-volume stores, urban stores and health-and-wellness stores,” Standley said. “From a segmentation sales growth perspective, Wellness+ will really help us attack those stores where we are under-penetrated on either the front end or the pharmacy.”
One of the greater challenges facing Rite Aid today is improving same-store sales results. “We believe the company’s underinvestment in [capital expenditure] and cost-cutting is beginning to pressure results,” said Credit Suisse analyst Ed Kelly in a research note published earlier this year.
Rite Aid may begin realizing those same-store sales improvements later this year with greater implementation of its segmentation strategy. “Segmentation is one of our top priorities, and [Bryan Shirtliff] will play a key role as we expand some of our pilot programs into broader market areas,” remarked Ken Martindale, senior EVP merchandising, marketing and logistics. Bryan Shirtliff earlier this year was named to the new position of SVP business development for Rite Aid, and in that capacity has been charged with optimizing Rite Aid’s store segmentation strategy and developing new front-of-store initiatives.
Another initiative Rite Aid identified for fiscal 2011 is a major overhaul of its private-label positioning through category branding: Rite Aid Pharmacy will be prevalent on health products; Renewal will represent beauty products; Pantry for food and consumables; Home for household goods; and Tuga-boos for baby.
“All of our existing private brand products, with few exceptions, will be migrated over time to these new brands with new, more contemporary packaging,” Standley said. “This new brand architecture, combined with strong promotional support, good price positioning and continued development of new items, will help us grow private-brand sales and meet the needs of today’s consumer.”
The retailer currently enjoys a 15.3% penetration in private label.
Schnucks’ O’Brien to serve on Department of Agriculture advisory committee
ST. LOUIS An executive from Schnuck Markets will serve on an advisory committee of the Department of Agriculture, Schnucks said this week.
Agriculture secretary Tom Vilsack announced that Schnucks VP produce and floral Mike O’Brien would be one of 25 people appointed to a two-year term on the USDA’s Fruit and Vegetable Industry Advisory Committee. O’Brien is also vice chairman of the Produce Marketing Association.
“I am honred to represent Schnuck Markets and the retail produce industry as a member of this committee,” O’Brien said. “I am looking forward to the opportunity to contribute and to make a difference for families across the nation.”
The committee, originally chartered in 2001, advises the secretary of agriculture on industry issues related to fruits and vegetables.
Gilead commences phase 3 trial for single-tablet HIV treatment
FOSTER CITY, Calif. Gilead Sciences has started a late-stage clinical trial of an investigational 4-in-1 treatment for HIV, the drug maker said.
Gilead announced the initiation of a phase 3 trial of its “Quad” HIV drug, a single-tablet treatment that combines elvitegravir, cobicistat, emtricitabine and tenofovir disoproxil fumarate. The study will compare the Quad regimen with the standard of care among adults with HIV-1 who have not taken antiretroviral treatments. The company is also investigating cobicistat as a standalone boosting agent for antiretroviral drugs.
“We are pleased to announce that the Quad phase 3 clinical program is underway,” Gilead EVP research and development and chief scientific officer Norbert Bischofberger said. “Efficacy and safety results from the phase 2 study suggest that the Quad may represent an important new option for patients with HIV.”