Rite Aid: Remodeling effort helps focus RAD on overall health

Rite Aid’s efforts to convert the chain to the new Wellness store format have been running smoothly for a couple of years now, but it was this year that the chain reached two key milestones.

In May, the company announced that it had converted a majority of its stores in the Buffalo, N.Y., area to the format, for a total of nearly 100, marking the occasion with an event featuring John Standley, the company’s chairman and CEO, and Ken Martindale, the president and COO, as well as celebrity fitness expert Denise Austin.

And in September, when announcing its second-quarter 2014 earnings, the chain said the Wellness format had passed the 1,000-store mark, with 1,019 stores converted, including 114 converted to the updated Genuine Well Being format, which features a remodeled interior, an expanded product selection and, in some stores, amenities like the Vision Center, a kiosk that allows customers to order prescription glasses and contact lenses and shop for frames using photos of themselves. Genuine Well Being was unveiled at a Lemoyne, Pa., store in October 2012; the chain expects to have 1,200 locations converted to Wellness stores — including Genuine Well Being and the original iteration of the format — by the end of fiscal year 2014. According to the company, a key to the former is that it is replicable in Rite Aid markets across the country. Executives refer to its Wellness stores as an evolving concept versus a standard prototype.

“Two key ways our Wellness store format has evolved are product flow — location and placement of merchandise — and easier way-finding — navigation — throughout the store, both of which enhance the customer experience by creating a shopper-friendly environment,” Martindale told DSN earlier this year.

But the remodeling effort, a major part of the chain’s $400 million capital expenditure program for fiscal year 2014, isn’t just for aesthetics. Early on, sales at the remodeled stores were tracking ahead of the older stores, and as of second quarter 2014, front-end same-store sales were 3.4% higher than non-Wellness stores, while same-store prescription count was 0.9% higher.

The company has cited the Wellness Ambassadors — who walk store aisles with iPads and provide information about products and pharmacy services — as another key reason for the Wellness store format’s success. At the end of second quarter 2014, the company had trained more than 1,700 of them.

The chain’s innovations go beyond store formats. For example, while many of its competitors develop an in-store clinic model, Rite Aid has put its investment in a telehealth model, partnering with NowClinic. Originally introduced at nine stores in Detroit in 2011 and expanded in March 2013 to 58 more stores in the Baltimore, Boston, Philadelphia and Pittsburgh markets, NowClinic allows patients to consult via a secure webcam chat session with a doctor or nurse who can diagnose certain ailments, answer health questions and even write prescriptions. A similar initiative now available at some stores allows customers to chat with pharmacists through an iPad provided by the store’s Wellness Ambassadors. This is all happening at a time of tremendous expansion in telehealth. According to the research firm IHS, 1.8 million patients worldwide will access health-and-wellness care through electronic and video links by 2017, marking a sixfold expansion over a five-year period.

In a broader sense, the new formats and telehealth initiatives are part of an industry-wide trend toward store formats that make smarter use of space and focus on niche aspects of retail pharmacy, with the focus of Rite Aid’s Wellness stores being self-evident.