Rite Aid includes private label growth in ‘Store of the Future’ push

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Rite Aid includes private label growth in ‘Store of the Future’ push

By David Salazar - 03/18/2020

Rite Aid is in the middle of what it has dubbed an “RxEvolution.”

At the Camp Hill, Pa.-based retailer’s virtual Analyst Day event on Monday, executives outlined a plan to position its PBM offering as a leader among mid-market plans, expand the role of its 6,400 pharmacists and build a “Store of the Future” that can appeal to younger consumers — which will include some revamped private brands alongside well-known ones.

The company’s “Store of the Future” will feature a lot of new merchandise, meant to attract millennial and Gen X consumers and build the brand’s equity with the demographics. “We aren’t backing away from retail,” Rite Aid president and CEO Heyward Donigan told Store Brands in an exclusive interview Monday. “What we’re doing is focusing on retail that is on-trend and relevant for the customer that we’re going after.”

This involves exiting some categories — electronics, motor oil, clothing and other categories, Donigan said, adding that products within those categories “not only aren’t relevant to those consumers but actually degrade our brand.” What will come instead is the addition of new, trendier merchandise, as well as some needed breathing room in Rite Aid’s planogram. 

“I’m not a retailer by background, but when I joined the company my husband, who’s a retailer, said ‘You better get your private label strategy figured out,’ and I’ve been very focused on it. Our goal is to go from 19% of our sales being own brands to 23%.” Among some of its private label brands is Thrifty Ice Cream, which has been expanding through California. 

Donigan also pointed to its supplement brand as reflecting where the company is trying to go in terms of what it calls its own brand offerings. Others will need to come up to speed. 

“We have some own brands that do not reflect the future of our company — in terms of the packaging and maybe even the brand itself,” Donigan said. “So our new head of merchandise and marketing has been working in earnest to get on that, and we’ve made good progress on completely repackaging a lot of our own brands, including Daylogic. We still have a lot of work to do on paper products, but we did launch our new own brand Alkaline water and it’s really outstanding, I think.” 

She said that with its overall new store strategy, the aim is to bring a refreshed, relaxed atmosphere to the Rite Aid experience. 

“We're not just about getting healthy. We're about getting thriving,” Donigan said. “And thriving is not just about not drinking soda and getting the right medications. It's about having fun. It’s not a clinical experience, it’s a ‘radiating wellness and get thriving’ experience that’s fun and nonjudgmental.”

Refreshed interiors and signage will also bring a new Rite Aid logo, and the chain plans to roll out new exterior signage to all of its stores by the end of the year.

Additionally, the company plans to refresh its digital presence, including its e-commerce website and mobile app. In the opening salvo of its fight to attract younger shoppers, Donigan said Rite Aid would be testing the Store of the Future concept in nine locations nationwide in urban, rural and suburban areas. Additionally, she said the company would be almost completely redoing stores in Norfolk, Va., and a full makeover of all stores in Boise, Idaho — moves Donigan said are based on the population density of target consumers in those markets.