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Rite Aid Enters Fiscal 2016 Focused on Growth, Innovation and Creating an Outstanding Experience

After another strong year, more than 1,000 Rite Aid leaders gathered at the company’s Annual Store Operations Meeting in Washington, D.C., to align on how the company will build upon its recent success and continue growing as a retail healthcare company in fiscal 2016.

Rite Aid Chairman and CEO John Standley addresses company leaders at the Annual Store Operations Meeting in Washington, D.C.

Rite Aid Chairman and CEO John Standley addresses company leaders at the Annual Store Operations Meeting in Washington, D.C.

According to Chairman and CEO John Standley, fiscal 2015 was a year of growth and transformation that saw Rite Aid make bold moves to position the company for long-term success. “We said we were going to make some Big Plays and that’s exactly what we did,” Standley told company leaders in attendance.

Standley highlighted several Big Plays from fiscal 2015, including:

  • Laying the foundation to begin building new stores, highlighted by the recent opening of the first net new store the company has built in nearly five years
  • Adding the first RediClinics to Rite Aid stores
  • Expanding the Rite Aid Health Alliance program for patients with chronic health conditions
  • Developing wellness+ with Plenti, an exciting enhancement for wellness+ that launched this spring
  • Strengthening pharmacy services through Vaccine Central and the “Quit for You” smoking cessation program
  • Completing the conversion of all stores to the new drug purchasing and distribution arrangement with McKesson, which Standley said will help fuel Rite Aid’s growth for years to come

Standley said success in these areas has not only contributed to Rite Aid’s continued strong financial performance, but has also positioned the company to make a potentially “game-changing play” through its agreement to acquire EnvisionRx, a leading pharmacy benefit management (PBM) company. (See related article in this issue.)

“When you think about what we’ve done with Health Dialog, Rite Aid Health Alliance and RediClinic, this acquisition represents the next logical step in our efforts to grow as a retail healthcare company,” Standley said.

Four Integral Components for Innovation

For several years, company leaders have emphasized the importance of innovation to Rite Aid’s future success. With competitive pressure mounting and unprecedented changes taking place in technology and healthcare, President and Chief Operating Officer Ken Martindale said the importance of innovation continues to grow.

President and Chief Operating Officer Ken Martindale emphasized the importance of innovation to Rite Aid's long-term success.

President and Chief Operating Officer Ken Martindale emphasized the importance of innovation to Rite Aid’s long-term success.

“We will witness more change in the world of healthcare in the next 10 years than we have seen in the last 200,” Martindale said. “We need to prepare our company for this reality, and we need a blueprint to get us there.”

Martindale laid out this blueprint by outlining four integral components of innovation that were discussed throughout the meeting and are now part of the company’s operational strategy: Rite Aid Health Services, Front End Transformation, a Seamlessly Connected Experience and the Rite Aid Experience.

Rite Aid Health Services

Martindale told company leaders that Rite Aid must continue developing highly personalized, convenient and affordable healthcare options, including those that integrate with local health systems to maximize the coordination of care. This will enhance the patient experience and help create new revenue streams, positioning the company for new healthcare payment models of the future, he added.

These thoughts were echoed by Executive Vice President of Pharmacy Robert Thompson, who said the company has already taken important strategic steps in this area, but that Rite Aid is only at the beginning of this journey.

“We are already seeing proposals from PBMs that will measure a pharmacist’s ability to drive quality health outcomes by achieving compliance and adherence goals as well as solving some specific gaps-in-care issues,” Thompson said. “The era of ‘no outcome means no income’ is really here.”

Front End Transformation

To establish meaningful differentiation, Martindale said Rite Aid, with the support of its supplier partners, must provide consumers with a combination of products, services and experiences that are not commonly found in other retail settings.

“There is no retail company today that is viewed by consumers as being a complete wellness destination, and I believe that this is a position in the marketplace that we can occupy,” he said. With the help of our valued supplier partners, we can transform the front-end business to more closely align with our objective of becoming a retail healthcare company and move closer to that aspirational goal.”

Executive Vice President of Merchandising Tony Montini discusses Rite Aid's front-end transformation.

Executive Vice President of Merchandising Tony Montini discusses Rite Aid’s front-end transformation.

Executive Vice President of Merchandising Tony Montini said the company is already working with its supplier partners to transform its front-end assortment to provide more products and services that are unique to Rite Aid and integrated into healthcare solutions, such as expanded beauty and vitamin offerings, healthier consumable choices, smoking cessation items and durable medical equipment.

Montini emphasized that the front-end transformation must also include unique service experiences provided by at-shelf educational resources, customer interactions with Wellness Ambassadors, Beauty Advisors and Vitamin Advisors as well as the continued evolution of each store’s physical environment, as seen in Rite Aid’s innovative Genuine Wellbeing Wellness store format.

Seamlessly Connected Experience

With advancements in technology dramatically changing the way shoppers engage with retailers, Rite Aid must continue finding ways to provide a unified and seamless brand experience, allowing customers to shop and interact with Rite Aid in an integrated manner across all channels, Martindale said.

According to Senior Vice President of Marketing John Learish, research has found that customers who engage with brands in multiple channels are more valuable than single-channel customers. “The evidence is pretty clear,” Learish said. “The use of digital devices doesn’t just drive digital sales. Digital drives all sales, including those in store.”

That gives Rite Aid good reason to continue integrating its recently enhanced digital offerings – including RiteAid.com, its mobile app, new e-commerce site and targeted marketing capabilities – to further support the in-store experience and further enhance the overall customer experience.

“Our vision is to allow customers to fluidly shop us across channels and touch points, providing them with the ultimate in convenience,” said Senior Vice President of Brand Development and Innovation David Abelman. “Whether our customers are in-store or online, we will win by offering a very compelling value proposition focused on convenience, value, choice and the trust we have established over the years.”