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Q&A with Tony Montini, Executive Vice President of Merchandising

Tony Montini“Speed Wins” has been a catch phrase heard since Tony Montini arrived at Rite Aid in 2010. Tony uses the phrase to emphasize that quick, fact-based decision making is profitable for the company. And while this is still a major emphasis, Tony and his team consider innovation to be every bit as important to success as speed. Nowhere is this more apparent than in Rite Aid’s new Wellness store format, which continues to evolve as the company tests new approaches and gathers customer feedback.

@Rite Aid recently caught up with Tony to discuss the evolution of Wellness stores and the important role supplier partners play in driving innovation.

Wellness stores are a big part of what Rite Aid is doing to grow its business and provide a unique shopping experience for its customers. You have said that you’ll never use the word “prototype” when referring to these stores. Why is that?

With a prototype store, you typically build or remodel every store with exactly the same design. That’s not what we are doing. We have some basic premises, like creating better sight lines to the pharmacy and really highlighting the pharmacy as the main aspect of the store. But what we’ve done is to consider these stores as “retail labs.” We’re experimenting and letting consumers drive the evolution of these stores based on their purchase decisions.

Our commitment to innovation demands that we continually refine and develop our Wellness store format. The format is dynamic and responsive rather than static – each iteration of our Wellness store format will build and improve on the last. This commitment to dynamic design means that the Wellness stores we convert at the beginning of the year will be substantially different from the stores we convert at the end of the year.

It seems like a fairly aggressive, labor-intensive process. Why is Rite Aid so willing to invest such time and effort into such a challenging process?

We think our approach to building and remodeling Wellness stores gives us a point of differentiation, especially in terms of customer service. We want to help customers find their way through our store more easily. By helping them to understand the differences of various products within the category and then helping them find the products they want, we assist them in making a better purchase decision. With the physical changes to the store, complemented by the personal customer service that our Wellness Ambassadors provide on the sales floor, we think that’s quite a point of differentiation for us.

How have supplier partners been involved in this process – this evolution of the Wellness store concept?

More and more of our supplier partners are engaged in the process. They now have a good understanding of the direction we want to go and the role they play in the process, and the collaboration is very strong. The collaboration has been more apparent in the health and beauty category, but now our general merchandise and consumables supplier partners are working with us and the result is more innovative ideas. It all comes from consumer data and insight, and asking “what is the consumer telling us and how can we repackage that into something that’s different from what we’re doing in the stores today?”

Monthly front end same store sales continue to move in the right direction. What are some of the keys to maintaining that momentum, especially as Rite Aid cycles through the positive numbers it achieved last year?

It always begins with the basics. We have to make sure that our in-stock levels are where they need to be, that our plan is focused on the right items, that we’re in line with the strongest current trends, and that we’re listening to what consumers tell us every day through their purchase decisions.

Another key opportunity involves continuing to utilize the data we have available to us through thewellness+ program. This will help us understand more about what our customers are looking for so that we can better refine our offerings. To this end, we’ve done some really good collaborative work with our supplier partners. We’re a couple of years into the wellness+ program now, and I think that we now better understand how to use the data and learnings we’ve acquired to be even more strategic and creative in what we are offering to our customers.

I am pleased that many of our key partners are working diligently with us by dedicating resources to better understand our data in addition to the national data. This approach helps us tailor offerings to our customers, who may be slightly different from Walgreens or CVS customers.

Overall, we have a good strategy in place right now, but we can’t sit back. We must continue to refine and change, just like we’re doing with the Wellness stores. Innovation and creativity are just as important as the fundamentals.

What are some of the keys to success in the seasonal business?

Seasonal is a challenging business, but it’s also fun because it creates excitement in the stores. We have to offer a solid foundation of certain seasonal items that the consumer will always be looking for and then current trends and fashion come into play. We have to stay on the cutting edge so that our customers think of Rite Aid as innovative and timely.

As an example, candy plays a huge role in our seasonal business. Again, we have to offer the basic items that customers are always looking for, but also offer new and exciting products. We’ve done a solid job of finding those new items and offering them at a very good price point for our consumers.

Rite Aid recently hired Bob Serafin as its senior director of grocery. Where do you see Rite Aid’s grocery business heading as we move forward?

There are many areas of the country where grocery chains are not prevalent, so there’s an opportunity in those areas. There’s also an opportunity with consumers who live and work in the city – where we may be able to meet their needs for breakfast, lunch, maybe even dinner, and certainly with snacks and beverages. We don’t feel that’s an area to which we’ve been overly committed or had the level of expertise we would have liked in the past.

Our existing team has done a nice job of improving our categories. Hiring Bob Serafin is an indication of our commitment to growing the grocery business and satisfying the intermediate needs of the consumer. We don’t intend to replace the grocery store, but we can meet the needs of consumers who seek a wider selection of items than a convenience store offers. We want consumers to think of shopping at Rite Aid to meet their grocery needs every day, not just once a month.

There’s also an opportunity for expanding our selection of healthy food items under Bob’s guidance. This is a natural fit because we’re a wellness provider.

Any closing words?

I want to thank our supplier partners for their continued support. They’ve been a huge part of the strong progress we’ve made over the past few years. Heading forward, we have very aggressive plans. We invite every supplier partner to challenge us to get better, so that we can all reap the rewards. We can do this by focusing on collaboration, innovation and speed.