Walgreens Close To Buying Rite Aid

[BillyGr]

Stefano Pessina, the CEO of the Walgreens Boots Alliance, has stated in a conference call to investors that he expects the merger to go through by the end of 2016 and that only about 500 stores will be closed.

Cushman & Wakefield, a real estate services company, analyzed the situation and states that there are 3,000 Walgreens stores in such close proximity to Rite Aid stores that they should be closed or divested. If the government does not step in and force those stores to be divested it would clearly indicate that someone is being bribed by Walgreens to turn a blind eye to this massive monopoly by Walgreens.

The question is, how is having their stores close to each other creating a monopoly? It would only be a monopoly IF those stores were the ONLY ones in the area - if there is also (for example) a CVS there then having 2 Wal-Aid stores isn't a monopoly.

[storewanderer]

It will also be interesting to see how stores divested are handled. Will they divest stores or will they divest pharmacies only?

When Thrifty and Payless merged in the mid 1990's they had to divest some pharmacies (but not the stores). So in that case what happened was a situation where in Fort Bragg, CA an independent pharmacy operated inside the Thrifty then Rite Aid for years (store finally closed in 2014) then the second Rite Aid up the road (former Payless) was the usual store. Then in Bishop, CA the Thrifty prescription files were sold off to Vons and the store shut down. In Mt. Shasta, CA the Thrifty prescription files were sold off to Rays and the store shut down.

I know of a lot of places where Rite And and Walgreens operate at the same intersection. In a lot of that cases there are often 1-2 others operating pharmacies in very close proximity. I don't really think that creates a monopoly situation.

The towns I described above in the mid 1990's, these were small towns and Thrifty and Payless operated 2 of 2 or 3 pharmacies in town. I think 65% is a magic number and not a good one. If you operate more than 65% of the pharmacies in town get ready to divest something. So many stores sell drugstore like items I cannot really see a monopoly situation created on the merchandise.

[marshd1000]

I am hoping here in Washington, where there are not a lot of CVS/Pharmacy stores that they could pick up some divested stores. Also, it would be nice to see Bartell Drugs expand throughout Washington as a result!

[Super S]

I am hoping here in Washington, where there are not a lot of CVS/Pharmacy stores that they could pick up some divested stores. Also, it would be nice to see Bartell Drugs expand throughout Washington as a result!

CVS suddenly has somewhat of a presence as they take over Target's pharmacy operations. I would rather see a regional competitor like Bartell get them.

[storewanderer]

I hate to be negative but having few/no CVS Stores in WA you are not missing much of anything...

But WA is a very logical expansion for CVS (so is OR). Better than seeing the stores go dark, perhaps. Bartell reminds me a lot of CVS but it really is better merchandised for the most part. I don't really think Bartell could handle the larger format Rite Aids, they seem to go for a low shelf-small store model that really reminds me of CVS. Rite Aid just has such a larger product mix...

[Knight]

It will also be interesting to see how stores divested are handled. Will they divest stores or will they divest pharmacies only?

Drugstores without pharmacies will fold quickly.

[Super S]

It will also be interesting to see how stores divested are handled. Will they divest stores or will they divest pharmacies only?

Drugstores without pharmacies will fold quickly.

Not necessarily. Some of the larger Rite Aid stores (former Thrifty/PayLess units) fill a void in many small towns in the west as a general merchandise store.

[SamSpade]

It will also be interesting to see how stores divested are handled. Will they divest stores or will they divest pharmacies only?

Drugstores without pharmacies will fold quickly.

Not necessarily. Some of the larger Rite Aid stores (former Thrifty/PayLess units) fill a void in many small towns in the west as a general merchandise store.

But couldn't Bi-Mart fill that void (and pharmacy) better? They seem to finally be spending a little money again. New store in Scappoose, Or. Relocation in Lincoln City, Or. to new building. Then again, they tried Montana and failed.

[Super S]

Drugstores without pharmacies will fold quickly.

Not necessarily. Some of the larger Rite Aid stores (former Thrifty/PayLess units) fill a void in many small towns in the west as a general merchandise store.

But couldn't Bi-Mart fill that void (and pharmacy) better? They seem to finally be spending a little money again. New store in Scappoose, Or. Relocation in Lincoln City, Or. to new building. Then again, they tried Montana and failed.

They could in some areas. In fact, there are a few locations where Bi-Mart moved into a former PayLess. Bi-Mart seems to do very well in smaller towns, but seems to be very cautious where they place new stores. Bi-Mart's model is simple enough with basic, no-frills stores that haven't changed much over the years. That's not to say they don't have their issues, among them front end staffing (which varies widely by location) and things such as little upkeep which results in worn-out looking floors (I was recently in the Orchards location, a former PayLess, which has a very tired looking tile floor) and very nasty looking customer restrooms in some of the older stores.

[BillyGr]

It will also be interesting to see how stores divested are handled. Will they divest stores or will they divest pharmacies only?

Drugstores without pharmacies will fold quickly.

It also depends where they are - I'm not sure that Rite Aid or Walgreens (or any of the chains that they have bought) had them, but around here CVS for years had stores in shopping malls without pharmacies (most built that way, although one did have it and then closed the pharmacy when they built a freestanding store nearby). Likely that they did enough business by people stopping in to grab stuff they thought about needing while in the mall already.

Now most of those stores are closed, but that is likely mostly since the malls they were in were ones that went out (dead malls) and a few others from them building stores freestanding nearby.