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Q&A with President and COO John Standley

stadleyWhat does wellness+, our new customer loyalty program, bring to the table and how do you see it changing our business?

wellness+ brings a loyalty factor that we don’t have today. If you look at our pharmacy business, there is a very small percentage of patients who make up the vast majority of our profitability. So one of the big reasons we developed wellness+ was to find a way to make sure we take care of our most loyal patients. Not only will it help us to retain them as well as front-end customers, it will also give those who are not loyal shoppers an incentive to shop more often with us. I think the program will make us much more competitive in today’s marketplace.

What opportunities do you see for Rite Aid in the year ahead?

We focused a lot of our attention in fiscal 2010 [which ends Feb. 27] on reducing our expenses because of significant year-over-year cost increases that were putting pressure on our results. Now that we have our cost structure aligned much better with our sales, fiscal 2011 is really going to be about generating sales.

wellness+ is obviously a huge opportunity and we expect to roll it out chainwide later this year.

Then we have the next phase of our segmentation initiative. In some of our low volume stores, we are testing some really exciting merchandising initiatives that we hope to roll out to other low-volume stores next fiscal year.

We also have the Best Ball Initiative, where our field managers analyze our best performing stores in various categories such as shrink and customer satisfaction and apply those best practices to other stores. It’s beginning to gain momentum and I expect to see some benefit from that in the year ahead.

You have also mentioned the Project Simplification initiative as a top priority for the coming year. What is the purpose of this initiative and why is it so important?

The way our systems and processes work and the way we provide information to the stores can make the job of running a store more difficult than it needs to be. So if we can improve the way we work on inventory, pricing and other tasks, our store associates will have more time to interact with our customers.

The goal of Project Simplification is to make the lives of our front-end and pharmacy associates easier, which would give them more time to build stronger relationships with our customers and patients. And having stronger personal relationships with our customers and patients will help us differentiate Rite Aid from our competitors. If we can alleviate some of the complexities of running a store, I think we’ll make a lot of progress in making Rite Aid a place where all associates love to work and all customers love to shop.