2020 Pharmacy Innovator of the Year: Rite Aid’s RxEvolutionary new approach
Rite Aid is going in a new direction.
After two scrapped acquisitions and various C-suite changes in the past five years, the company is ready to carve out a space for itself in the retail pharmacy and pharmacy services spaces with a new approach to how it uses its pharmacists, a new store format and an overhauled merchandising strategy. It is also looking to establish a stronger e-commerce and omnichannel offering — all alongside a rebranded PBM that is looking to position itself as a mid-market leader.
In exclusive conversations with Drug Store News, executives from the Camp Hill, Pa.-based chain made clear that the entire rollout of their new strategy, titled RxEvolution — no small feat in a regular year, but downright audacious during a global pandemic — is designed to strengthen the company’s position among patients and consumers. It will also build bridges with any organizations looking for a PBM partner that is not also owned by an insurer. In addition, it puts the pharmacist, whose role is being expanded with Rite Aid’s new approach to be more consultative and more able to engage with patients who need assistance with OTC product or with clinical services, at the center of this transformation.
For all of these reasons, Drug Store News has named Rite Aid its 2020 Pharmacy Innovator of the Year.
Heyward Donigan, who was named CEO in August 2019, and COO Jim Peters, who joined a month after Donigan’s appointment, have made the company’s turnaround an imperative, and, as Donigan put it, ushered in a “significant end-to-end change” at the retailer, which operates more than 2,400 stores in 17 states.
With a growth target demographic in mind — Gen X and millennial women, who comprise roughly a third of the population — and a small army of pharmacists and pharmacy techs, as well as a PBM, at their disposal, the two executives hit the ground running.
“Our vision was not to incrementally change Rite Aid,” Peters said. “We knew that we had an opportunity and, frankly, a mandate to demonstrably and significantly change what Rite Aid meant to the community, our shareholders and the broader healthcare value chain. For us, the RxEvolution is at the heart of how we plan to do that.”
“We have the ability to be extremely nimble, very focused in our communities, and we’re really excited about our markets and our ability to move faster.”
Know Thy Customer — and Meet Them Online
The theory with Rite Aid’s RxEvolution is it is not enough to change how the pharmacist spends their time to enable customer interactions. There also has to be a mix of merchandise that is relevant to the typical Rite Aid shopper and the company’s target growth demographic.
“We’re building an experience that speaks to a whole net new customer base for us,” Peters said. “Millennial and Gen X women are taking care of not only themselves but also their children, their aging parents, their spouses and their pets. These women are a significant portion of our current drug store shopper across the industry, and we realized that we needed to have a strategy that was underpinned by a number of components that allow us to win.”
While unlocking the pharmacy’s value is part of that, so is revitalizing the retail and digital experience for Rite Aid’s customers. It starts with a merchandising overhaul, led by chief merchandising and marketing officer Erik Keptner, who joined the company in May 2019. The company assessed categories that were slow turning or not relevant to the consumers — including motor oil, clothing and electronics — and deleted them from their merchandise mix. On the other hand, Rite Aid also is bolstering its offerings in better-for-you consumables, trendy skin care and the aforementioned pharmacist-assisted OTC mix, as well as adding some air to the planogram and trying to inject some fun into the shopping experience while supporting holistic health and well-being.