Walgreens Close To Buying Rite Aid

[pseudo3d]

For at least two thirds of the Albertsons/Safeway overlap (SoCal, Arizona, Texas), divesting stores made less sense because of already heavy competition in the area. All of them to some extent or another had Walmart Neighborhood Market and Kroger, and a few more independents already buzzing around.

The Office Depot/Staples and Rite Aid/Walgreens mergers make less sense, because in most cases, there ISN'T a third party at all. Staples was pretty much the last office chain to compete with Office Depot and OfficeMax (unless there's some obscure regional chain), and for Walgreens/Rite Aid, there's primarily just CVS. The three have all digested a wide cornucopia of local names...Eckerd was torn in pieces by CVS and Rite Aid, and CVS also bought the remaining Albertsons drug store division.

[norcalriteaidclerk]

There will be some interesting reprocussions with this merger(if green-lit by the FTC,they could block this a la Staples-Office Depot/Max but they may not have enough grouds to do so):one question is whether the base WAG stores will begin carrying GNC products and/or join the the Plenti program(both associated with RAD stores).Another is whether RAD will still carry American Greetings cards or convert to Hallmark like the base WAG locations,as RAD been uniformly AG since the PayLess Drug legacy stores inherited in the Thrifty PayLess acquisition converted from Hallmark to AG(always carried at Thrifty Drug legacy stores)in the early 2000's.Yet another involves the potential divesture of certain RAD locations to CVS(I expect few existing WAG locations to be shed.):Those affected locations would ditch tobacco sales(a sin cash cow for both RAD and WAG)and(in the case of any divested California locations)ice cream counters in addition to getting a carpeted sales floor on top of possibly trading AG for Hallmark(CVS is mostly Hallmark,though AG is instead offered in former Sav-On/Osco territories0..Lastly,RAD has the highest percentage of unionized stores(such stores are aligned with UFCW including at least 95% of the California locations including the one where I work though the NYC stores may insted be SEIU-represented)of the big three;while WAG is only union in Chicago,SF,and(in case of the Duane Reade locations)NYC.As CVS(the potential biggest acquirer of divested locations)does have unionized stores in SoCal and parts of the Midwest that were inherited prior acquisitions(definitely Revco DSV and Sav-On/Osco if not Arbor Drugs as well);this could be a scenario where not only the Big Two but also a regional chain or two(Kinney Drug in VT and upstate NY,Discount Drug Mart in Ohio)absorbing a number of union stores...

Sorry if this strays OT,but this clearly hits close to home...

[storewanderer]

I'm one who really hopes this merger does not go through, for a variety of reasons.

If Walgreens really does operate Rite Aid as a subsidiary maybe some of these "differences" would stay "different" at least for a while. I guess we have to remember this is no longer Walgreens in control but "Boots" in control.

[submariner]

I'm one who really hopes this merger does not go through, for a variety of reasons.

If Walgreens really does operate Rite Aid as a subsidiary maybe some of these "differences" would stay "different" at least for a while. I guess we have to remember this is no longer Walgreens in control but "Boots" in control.

I'll be visiting a Boots while I'm in the UK for the next 7 days - I forgot my razor and I need more Zyrtec off topic.

[Alpha8472]

From what I can see, this is only going to benefit Walgreens. Walgreens wants to control the drugstore industry across the entire country. They will become the sole drugstore in many cities across the country. Thousands of stores will have to be divested or closed. Who else will those stores be divested to but CVS? This will make CVS and Walgreens the only choice of pharmacy for millions of people in various cities. There are other pharmacies, but Walgreens and CVS will vastly outnumber any other pharmacy chain. The only competition will be Walmart and pharmacies inside of various supermarkets. This is bad for customers as it will lead to higher prices and less competition.

Walgreens hates the unions. They no doubt will close down as many union Rite Aid stores in favor of non-union Walgreens stores where there are both stores close to each other. This is bad for employees as many employees will lose their jobs. Walgreens is notorious for understaffing their stores. Those Rite Aid employees won't find jobs at Walgreens. Walgreens usually only has 1 cashier and 1 employee to stock the store at many locations. The lines are horrible and the service is horrible. Overall, there is going to be quite a lot of unemployment when it comes to drugstore jobs, pharmacists, pharmacy technicians, etc. The last thing we need is a massive wave of unemployment spread across the country.

There are still abandoned Eckerd stores from the last merger of drugstore chains. Walgreens doesn't care about abandoned stores. They can afford to shut down stores and leave them abandoned so that no other chain can come in and open up shop in them. I'm sure they would continue to pay the lease on some closed stores just to keep competition away.

[BillyGr]

but also a regional chain or two(Kinney Drug in VT and upstate NY,Discount Drug Mart in Ohio)absorbing a number of union stores...

The only issue (at least with a chain like Kinney) is that most of the area they operate in may have some stores (Rite Aid most likely) but not many overlapping stores that they would be able to take, primarily since Walgreens has only recently moved into some of these areas.

Unless they decided to get quite a bit larger and spread out into areas where both do exist...?

[arizonaguy]

From what I can see, this is only going to benefit Walgreens. Walgreens wants to control the drugstore industry across the entire country. They will become the sole drugstore in many cities across the country. Thousands of stores will have to be divested or closed. Who else will those stores be divested to but CVS? This will make CVS and Walgreens the only choice of pharmacy for millions of people in various cities. There are other pharmacies, but Walgreens and CVS will vastly outnumber any other pharmacy chain. The only competition will be Walmart and pharmacies inside of various supermarkets. This is bad for customers as it will lead to higher prices and less competition.

Walgreens hates the unions. They no doubt will close down as many union Rite Aid stores in favor of non-union Walgreens stores where there are both stores close to each other. This is bad for employees as many employees will lose their jobs. Walgreens is notorious for understaffing their stores. Those Rite Aid employees won't find jobs at Walgreens. Walgreens usually only has 1 cashier and 1 employee to stock the store at many locations. The lines are horrible and the service is horrible. Overall, there is going to be quite a lot of unemployment when it comes to drugstore jobs, pharmacists, pharmacy technicians, etc. The last thing we need is a massive wave of unemployment spread across the country.

There are still abandoned Eckerd stores from the last merger of drugstore chains. Walgreens doesn't care about abandoned stores. They can afford to shut down stores and leave them abandoned so that no other chain can come in and open up shop in them. I'm sure they would continue to pay the lease on some closed stores just to keep competition away.

The Phoenix area is littered with closed Eckerd, Osco, CVS, and Walgreens stores from various mergers and Walgreens own downsizing.

Walgreens and Rite Aid have such tremendous overlap that this merger seems purely about eliminating a competitor. Nothing more, nothing less. With Target also getting out of the business (by selling to CVS) consumers (and employees) are getting the shaft with this.

[pseudo3d]

If there's one upshot to the Haggen fiasco, it's that it will tell the FTC to be more careful in retail mergers. It's compounded by the fact that just not a lot of competition exists at all in the drug store arena. A compromise would be if Walgreens buys only stores in markets where they do not have a significant presence. Those stores are converted to Walgreens, but in overlapping markets, Walgreens cannot buy stores and they remain with Rite Aid.

[Super S]

The Office Depot/Staples and Rite Aid/Walgreens mergers make less sense, because in most cases, there ISN'T a third party at all. Staples was pretty much the last office chain to compete with Office Depot and OfficeMax (unless there's some obscure regional chain), and for Walgreens/Rite Aid, there's primarily just CVS. The three have all digested a wide cornucopia of local names...Eckerd was torn in pieces by CVS and Rite Aid, and CVS also bought the remaining Albertsons drug store division.

Not only is there not a third party, there are also very few independents remaining that are even close to being serious competitors. I have found that when there is only one major chain remaining in any given category, service and price begin to suffer, but they survive because there are not many direct competitors.

[BillyGr]

The Office Depot/Staples and Rite Aid/Walgreens mergers make less sense, because in most cases, there ISN'T a third party at all. Staples was pretty much the last office chain to compete with Office Depot and OfficeMax (unless there's some obscure regional chain), and for Walgreens/Rite Aid, there's primarily just CVS. The three have all digested a wide cornucopia of local names...Eckerd was torn in pieces by CVS and Rite Aid, and CVS also bought the remaining Albertsons drug store division.

Not only is there not a third party, there are also very few independents remaining that are even close to being serious competitors. I have found that when there is only one major chain remaining in any given category, service and price begin to suffer, but they survive because there are not many direct competitors.

Although there IS a difference. If Staples bought Office Depot/Max there would only be ONE office chain (even if they used 3 names) where if Walgreens bought Rite Aid there would still be TWO chains (Walgreens/Rite Aid as one and CVS as the other). So a bit different in terms of no other competition vs. having two competitors.