Rite Aid’s revamped front end to feature CBD, eschew e-cigs

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Rite Aid’s revamped front end to feature CBD, eschew e-cigs

By David Salazar - 04/11/2019
With its fiscal 2019 behind it, Rite Aid is taking a look at its front-end offerings and pursuing several ways to bolster it, COO Bryan Everett told analysts on the company's earnings call Thursday.

The company’s results showed pharmacy sales gains — which were up 2.1% for Q4 and 1.7% for the year — being offset slightly by declines in front-end sales of 1.9% in Q4 and 1.4% for the year. Efforts the company will make to revamp its front-end offerings — which now are under the purview of Jocelyn Konrad, executive vice president of pharmacy and retail operations — include selling CBD products and no longer selling e-cigarettes and vaping products while also boosting its private-label selection.

Among the front-end efforts is Rite Aid’s entry into a category with large growth potential — CBD products. Everett said stores in Washington and Oregon would begin offering lotions, creams, salves and lip balms that contain the non-psychoactive cannabinoid. With this move, the company joins the ranks of such chains as Bartell Drugs, CVS Pharmacy and Walgreens.

Rite Aid’s entrance into selling the CBD category will take place alongside efforts to build up its private-label positioning in existing categories. Everett said growing the company’s own-brand penetration would be a big area of focus moving forward. He noted that the chain would relaunch its Rite Aid Pharmacy line of OTC products and that it was finalizing a repositioning of its Thrifty Ice Cream brand and expanding it to more states.

“We believe this area presents enormous potential and our go-forward plan includes introducing new items, enhancing our product mix, and additional consideration to how we market and promote these items,” Everett said.

When it comes to phasing out e-cigarette offerings — which will take place over the next 90 days — Everett said the chain was motivated by statistics from the Centers for Disease Control and Prevention statistics highlighting a 78% increase in e-cigarette use among high schoolers.

“While many feel these products are beneficial to those of legal age or trying to quit the use of tobacco, we have made the decision to remove all electronic cigarettes and vaping products from our offering at all Rite Aid Stores,” he said. "In addition, we will continue to rigorously enforce our chain-wide ‘ID-all’ policy that requires identification to purchase any age restricted item. We will also continue evaluating our entire front end offering to ensure that we are meeting both the needs and the expectations of our customers.”

Everett said Rite Aid also would be growing its e-commerce business in the coming fiscal year, with plans to build out its mobile capabilities and expand its self-checkout pilot, noting that more self-check counters would be coming to Rite Aid stores. Home delivery also is an area Everett identified as an opportunity, noting a partnership with Instacart to offer home delivery.

As e-commerce options for Rite Aid shoppers increase, the chain also seems to be working to improve foot traffic in-store with an Amazon partnership that will bring Amazon Lockers to more than 900 stores in the next few months. The lockers offer pick-up and return services for Amazon customers.

“Heading forward, we'll continue to look for new ways to engage with customers both in-store and online to create a seamlessly connected customer experience.”