Rite Aid's Wellness+ program could keep retailer in race

WHAT IT MEANS AND WHY IT’S IMPORTANT — It’s interesting how things can change over the course of a year, and the huge growth of Rite Aid’s Wellness+ program provides a good example.

(THE NEWS: Rite Aid finishes tough fiscal year, but Q4 shows improvements. For the full story, click here.)

During a conference call last March, John Standley, the company’s president and COO at the time, called the then-new Wellness+ program the largest marketing expenditure Rite Aid had made in several years. In test markets, he said, more than 50% of front-end sales and 40% of prescriptions were on the card, and it had between 15 million and 20 million members.

Fast forward to this past Thursday, when Standley, now president and CEO, told investors that the program had grown to account for 67% of front-end sales, and 58% of script count with more than 36 million members — more than one-tenth the population of the United States.

It is no news flash that Rite Aid, third largest retail pharmacy chain in the country, has faced major challenges over the past decade. While Walgreens and CVS each have more than 7,000 stores and are expanding, Rite Aid has 4,714 and has been contracting. And, its recently reported fiscal 2011 earnings reflect many of the headwinds the company has battled along the way.

But the expansion of Wellness+ and such new initiatives as the wellness store format that it recently implemented in the Northeast are the kinds of things that could help Rite Aid reverse course. With same-store sales up for the first time all year during its fourth quarter, it is another indication that Wellness+ already has gained traction with Rite Aid customers. The company already expects to reduce losses and increase same-store sales in fiscal year 2012, and while nobody can predict the future, it appears to be on track to accomplish that.