Wellness stores, ambassadors do well for RAD
One of the most visible representations of Rite Aid’s efforts to make a comeback is its Wellness store format. The company first unveiled the format in several test markets in the Northeast last year, gradually expanding it to other states. Today, more than 420 stores have been converted, and the chain hopes to eventually make the format the norm. The company plans to have 780 stores converted by the end of the year.
Rite Aid’s vision for its Wellness stores is apparent upon first stepping through the doors: Lighter colors and lower shelves create a brighter, more open look for the store; updated signage, new ways of arranging SKUs and new sections give it a more modern, stylish look; and the store’s Wellness Ambassadors help make the store and pharmacy more accessible. In a conference call with analysts to announce the chain’s first quarter 2013 earnings in June, president, chairman and CEO John Standley said the Wellness stores have been outperforming Rite Aid’s core stores.
So far, it seems that the Wellness Ambassadors are a major part of what has made the Wellness format successful. The Wellness Ambassadors walk the aisles of the store with iPads, offering assistance to customers, information about various products and directing people to the pharmacy if they need further assistance. In the company’s third quarter 2012 conference call in December 2011, Standley said those stores that had Wellness Ambassadors were doing better than the ones without. As of June, the company had trained about 600 Wellness Ambassadors.
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.
Retail’s undeniable interconnectedness
“It’s actually an illusion that those boxers are separate entities. The separate entities are just the way we choose to perceive them. The boxers, you, me — we’re all part of the same quantum field. Think of the two boxers as ocean waves or currents of air — two tornadoes, say. They appear to be two separate things, but they’re not. Tornadoes are just wind. The wind stirred up in different directions. The fact is nothing is separate. Everything is connected. The shapes we see exist only in our own consciousness.” — John Schwinn (Hal Holbrook), “The Sopranos,” Episode 69: “The Fleshy Part of the Thigh”
As I stood on the top floor of Duane Reade’s new flagship store at 100 Broadway, looking out the enormous windows onto the Canyon of Heroes below, it occurred to me that there was a certain, undeniable interconnectedness between the excitement that was occurring in that store (see page 4) and many of the other stories we have been following at DSN these days.
Take this issue, for instance: the sudden explosion in loyalty card activity among retailers and the emergence of the health-and-wellness guide, who is helping to tie together the front-end of the store with the pharmacy in a way that creates a bona fide customer experience around health and wellness. We have been reporting on these stories as separate events and even trends in themselves, when in fact they are all part of the same giant soup of transformative concepts and best practices that are bumping up against each other in this quantum field we define as retailing. We analyze them as separate events, but in reality they are all connected.
So, Duane Reade opens a second flagship store within a few blocks of the one it opened at 40 Wall St., roughly one year ago. Like so many of Duane Reade’s stores, you can walk from one store to the other in the span of about two minutes. Yet, there is little, if any, cannibalization. They serve different customers. 40 Wall St. is literally across the street from the New York Stock Exchange, and the streets tucked in between it and the South Street Seaport to the East and the Staten Island Ferry to the South are lined with high-end residential properties — it’s a special kind of food desert. There are no supermarkets, but it’s not like anybody living down there is broke either. 100 Broadway serves a mix of local workers and a high volume of tourists.
Those differences play out in the merchandise and offerings in each store. The new store at 100 Broadway doesn’t have the full Look Boutique with any of the high-end services featured at 40 Wall St., like the Essie nail bar or the Ramy brow bar. It also doesn’t have the huge assortment in grocery items that 40 Wall St. has, but it’s testing other in-and-out businesses, like fresh salads, a barista cafe and a soup bar.
This isn’t something new. Duane Reade has been doing this successfully for the past few years as it has reinvented what people have come to expect of the typical drug store shopping experience. It stood that concept on its head and in fairness, was the incubator for Walgreens’ broader “Health and Daily Living Store” concept that it will roll into stores all across America in the months ahead.
The vision that created the Health and Daily Living Store concept was shaped from the learnings from Duane Reade’s loyalty card program. It informs what they put in the stores and allows them to tailor each store to the customers that shop there. Loyalty cards don’t just enable customized offers; they also enable customized shopping experiences — stores merchandised for the customers that shop there.
Sometimes these stories all seem like separate occurrences — a loyalty card over here, a new store opening over there. But standing on the top floor of Duane Reade’s newest store, it’s clear that all of these things are really connected. It’s our minds that draw the lines of distinction.
Rob Eder is the editor in chief of The Drug Store News Group, publishers of Drug Store News, DSN Collaborative Care, and Specialty Pharmacy magazines. You can contact him at firstname.lastname@example.org.