Albertsons, Rite Aid cooking up a distinctive food, health competitor

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Albertsons, Rite Aid cooking up a distinctive food, health competitor

By Michael Johnsen - 05/15/2018
Following the completion of the merger between Rite Aid and Albertsons, the Camp Hill, Pa.-based drug store chain will maintain its brand identity within Albertsons' locations. Many of the 1,777 in-store supermaket pharmacies operated by Albertsons soon will fly the red, white and blue retail pharmacy logo most closely associated with the "With Us It's Personal" slogan, officials from both Albertsons and Rite Aid shared with investors in a special meeting held Tuesday.

"We're going to be a differentiated leader in the food, health and wellness offering," John Standley, CEO of the combined Albertsons/Rite Aid. "We have a huge of resources and capabilities in the health/wellness/food space to really differentiate ourselves in the marketplace. We're all going to take all of those resources, all of those capabilities, and we're going to empower [our shoppers, our patients] to take care of themselves, their families and the community they live in with leading food and wellness offerings."

Taken together, Albertsons/Rite Aid is a $81.4 billion company for the fiscal year ended Feb. 24, 2018, and is projecting to grow that base to $83 billion this fiscal year.

That full gamut of food and healthcare offerings includes everything from Plated to the PBM Envision Rx, from Health Dialog to RediClinic. It includes a loyalty program that reaches a collective 26 million shoppers with an approximate 520 million personalized deals each week.

The two banners will have plenty of opportunities to cross-promote, as more than 6 million households patronizing Rite Aid live within five miles of an Albertsons banner and more than 10 million households shopping an Albertsons banner live within five miles of a Rite Aid.

That's exactly how Albertsons/Rite Aid executives see all of this coming together. A hectic millennial mom starts with a meal prepared from scratch, utilizing the convenience associated with the meal kit service Plated, for example. That same shopper can confer on incorporating the freshest of ingredients into her meal planning with Albertsons' in-store food experts in the meat, deli or bakery departments as she waits for a prescription to be filled by her Rite Aid pharmacist.

For those managing polychronic conditions, a consultation with a Health Dialog-trained health coach may be in order, who can help her or family members lose weight, exercise more or quit smoking. As a reward for incorporating that healthier lifestyle, they can buy one of the many own brand beauty products available through either venue, Albertsons or Rite Aid, all the while using their loyalty card to generate better deals on future trips.

That model is scalable, whether it's by adding more Rite Aid pharmacies into existing Albertsons supermarket banners or building more free-standing pharmacies. "As I look at the markets we're in," Standley said. "One growth area for us comes in two pieces. There are still 500-plus Albertsons stores without a pharmacy, 200 of which are in California. We have an opportunity to grow pharmacy by looking at some of those locations and seeing how they fit in the network. A market like Philadelphia is another great example, there are a lot of Acme's that don't have pharmacies. Putting that in with the Rite Aid stores can make a ton of sense. The second piece of the puzzle is, if you go to a market like Chicagoland, where we have a great pharmacy brand in our supermarkets, do we have the opportunity to grow freestanding drug stores in that marketplace with a well-established brand."

Alternatively, Standley added, once Albertsons/Rite Aid builds the Rite Aid brand identity in markets like Arizona or Texas, it may beckon an opportunity to expand the freestanding retail pharmacy banner there.