Rite Aid closing at least 63 stores

[storewanderer]

Domination of often large markets by one or two drug store chains is nothing new and predates all the consolidation---Thrifty & SavOn in LA, Walgreen's and Osco in Chicago (with Osco being one of the few true successes of a supermarket-based chain), Duane Reade in NYC, Thrift and Sun in Pittsburgh, People's (a true juggernaut) and Drug Fair in DC, Hook and Hague in Indianapolis, Lane dominated Toledo with the a few outsiders like Gray and Revco having peripheral operations----it's not hard to compile a list. Indies were a bigger factor in the old days but they began to fade in the 70s and even before then had gone for niches ignored by chains like delivery or compounding. A truly robust competitive environment where you had more than two large chains and some successful smaller ones was more of a rarity than you'd imagine. DC had a successful thrid chain in Dart which was owned by the Haft family, but they sold it after it had spawned more profitable ventures like Trak Auto.

Basically, the only difference is instead of having two (or maybe three) different chains in each area, now it's the same two (or three) chains in most areas.
No real difference in the competitiveness, just the names used

Let's say I go and look for promotions at 3 different drugstore chains every week- CVS, Rite Aid, and Walgreens. These chains run slightly different promotion schemes but the general ideas are pretty similar- buy items, earn discounts good on future purchases in various forms (paper coupons good for dollars off any purchase, store credit type thing, some sort of "points" program). Now let's just drop one chain out of the mix. This means fewer promotions. Fewer opportunities to go shop sales.

Now on grocery it is the same thing. I have access within 10 miles to Smiths, Safeway, Raleys, WinCo, Wal Mart, Whole Foods, Trader Joe's, Marketon, Costco, Sam's Club, Grocery Outlet, Smart & Final, and Sprouts. Also largely useless Target and just outright odd Natural Grocers. Lots of choices. All of these places run different deals and promotions. Remove some of them and there will be fewer promotions to pick from, less competition, and for someone who shops around, higher prices will result from less competition.

We are seeing it with pharmacy hours already. If all 3 chains were still in the market, pushing 10 PM pharmacy closing times and 24 hour stores, they would all still be running things that way; increased hours create better pharmacy access for customers and better employment opportunities for individuals in the pharmacy sector. Now we have two major chains who have decided they can flex their muscle on cost cutting so in a number of cases now we have these two chains closing pharmacy at 7 PM and since there are only a couple of chains left they just follow each other. They say it is due to staffing shortages but over in pharmacist threads you can read about pharmacy staff being laid off, hours being cut, new graduates having a tough time getting jobs in major metro areas (still plenty of jobs in rurals), etc.

[BillyGr]

Domination of often large markets by one or two drug store chains is nothing new and predates all the consolidation---Thrifty & SavOn in LA, Walgreen's and Osco in Chicago (with Osco being one of the few true successes of a supermarket-based chain), Duane Reade in NYC, Thrift and Sun in Pittsburgh, People's (a true juggernaut) and Drug Fair in DC, Hook and Hague in Indianapolis, Lane dominated Toledo with the a few outsiders like Gray and Revco having peripheral operations----it's not hard to compile a list. Indies were a bigger factor in the old days but they began to fade in the 70s and even before then had gone for niches ignored by chains like delivery or compounding. A truly robust competitive environment where you had more than two large chains and some successful smaller ones was more of a rarity than you'd imagine. DC had a successful thrid chain in Dart which was owned by the Haft family, but they sold it after it had spawned more profitable ventures like Trak Auto.

Basically, the only difference is instead of having two (or maybe three) different chains in each area, now it's the same two (or three) chains in most areas.
No real difference in the competitiveness, just the names used

Let's say I go and look for promotions at 3 different drugstore chains every week- CVS, Rite Aid, and Walgreens. These chains run slightly different promotion schemes but the general ideas are pretty similar- buy items, earn discounts good on future purchases in various forms (paper coupons good for dollars off any purchase, store credit type thing, some sort of "points" program). Now let's just drop one chain out of the mix. This means fewer promotions. Fewer opportunities to go shop sales.

Now on grocery it is the same thing. I have access within 10 miles to Smiths, Safeway, Raleys, WinCo, Wal Mart, Whole Foods, Trader Joe's, Marketon, Costco, Sam's Club, Grocery Outlet, Smart & Final, and Sprouts. Also largely useless Target and just outright odd Natural Grocers. Lots of choices. All of these places run different deals and promotions. Remove some of them and there will be fewer promotions to pick from, less competition, and for someone who shops around, higher prices will result from less competition.

We are seeing it with pharmacy hours already. If all 3 chains were still in the market, pushing 10 PM pharmacy closing times and 24 hour stores, they would all still be running things that way; increased hours create better pharmacy access for customers and better employment opportunities for individuals in the pharmacy sector. Now we have two major chains who have decided they can flex their muscle on cost cutting so in a number of cases now we have these two chains closing pharmacy at 7 PM and since there are only a couple of chains left they just follow each other. They say it is due to staffing shortages but over in pharmacist threads you can read about pharmacy staff being laid off, hours being cut, new graduates having a tough time getting jobs in major metro areas (still plenty of jobs in rurals), etc.

The problem is, the discussion you replied to wasn't talking about having less chains in any one area.

It was saying that years ago, you had one set of brands in, say Michigan, a different set of brands in Ohio, a third set in New York and so forth.
Now you still have the multiple options in each of those places, just that it's the same brands for all three (CVS, Walgreens and Rite Aid most likely), rather than three completely different sets of brands.

[buckguy]

Basically, the only difference is instead of having two (or maybe three) different chains in each area, now it's the same two (or three) chains in most areas.
No real difference in the competitiveness, just the names used

Let's say I go and look for promotions at 3 different drugstore chains every week- CVS, Rite Aid, and Walgreens. These chains run slightly different promotion schemes but the general ideas are pretty similar- buy items, earn discounts good on future purchases in various forms (paper coupons good for dollars off any purchase, store credit type thing, some sort of "points" program). Now let's just drop one chain out of the mix. This means fewer promotions. Fewer opportunities to go shop sales.

Now on grocery it is the same thing. I have access within 10 miles to Smiths, Safeway, Raleys, WinCo, Wal Mart, Whole Foods, Trader Joe's, Marketon, Costco, Sam's Club, Grocery Outlet, Smart & Final, and Sprouts. Also largely useless Target and just outright odd Natural Grocers. Lots of choices. All of these places run different deals and promotions. Remove some of them and there will be fewer promotions to pick from, less competition, and for someone who shops around, higher prices will result from less competition.

We are seeing it with pharmacy hours already. If all 3 chains were still in the market, pushing 10 PM pharmacy closing times and 24 hour stores, they would all still be running things that way; increased hours create better pharmacy access for customers and better employment opportunities for individuals in the pharmacy sector. Now we have two major chains who have decided they can flex their muscle on cost cutting so in a number of cases now we have these two chains closing pharmacy at 7 PM and since there are only a couple of chains left they just follow each other. They say it is due to staffing shortages but over in pharmacist threads you can read about pharmacy staff being laid off, hours being cut, new graduates having a tough time getting jobs in major metro areas (still plenty of jobs in rurals), etc.

The problem is, the discussion you replied to wasn't talking about having less chains in any one area.

It was saying that years ago, you had one set of brands in, say Michigan, a different set of brands in Ohio, a third set in New York and so forth.
Now you still have the multiple options in each of those places, just that it's the same brands for all three (CVS, Walgreens and Rite Aid most likely), rather than three completely different sets of brands.

The point is more subtle than having one or two national or local chains---it's that the business has been concentrated for decades. The business was more localized, although you had chains like Walgreen's who were major competitors in multiple places (Chicago, SF, New Orleans, Cincinnati, Nashville) Eckerd (the Southeast plus PA and DE if you count the relatives which used to be indeoendent, or Cunningham's (Detroit, Cleveland, South Florida) but you had the consequences still of that. Occasionally, had some innovation---Sav-On trying building supplies of all things or the rise of discounters in teh 50s and 60s, but often that was a local seeing what was new elsewhere. Unless you had a discounter like Revco, you had high prescription markups regardless because that's where the profit used to be and even Revco didn't lead its comeptitirs to cut prices very much.

Concentrated ownership, no matter whether it's CVS or some regional, is never a good thing but markets are always distorted (Adam Smith recognized this more than his popularizers) and you can have cartelization of local competitors, even when there are multiple operators (this happened with super markets).

Store hours may respond to competitive pressure---the recurring cycles of supermarkets going 24 hours, for example, but they also respond to externalities. Pharmacies haven't exactly gone to banker's hours and post-COVID CVS, and Walgreen did go back to 24 hour service in targeted locations in larger metro areas but there's a national shortage of pharmacy techs and some geographic imbalance in pharmacists. They have to figure staffing into the equation, plus all the chains are struggling with being mature businesses where the old profit center (prescriptions) is now the traffic driver. Much of the general merchandise is in categories that are declining (greeting cards) or have lots of competition and H&BA items can be bought in many places (which has been true for a long time)---so they are going to experiment with ways to cut costs. They have to figure out new ways to operate, but it's not like drug stores have been static--fast food killed off their luncheonettes, more recently the internet killed off newstands, discount stores killed off a lot of the odds and ends like radios they used to sell.

Most likely they'll soldier on and the result will look a little different than what we have now and it would happen regardless of whether there were 2 or 3 major competitors. Walmart has continually had to make changes to its model despite its dominance of the market---it's a mature business with lots of institutional investors and a family who like money, so they have no choice, although the operating culture they developed and their lousy relationships with various constituencies (communities, suppliers) aren't helping.

[storewanderer]

The problem is, the discussion you replied to wasn't talking about having less chains in any one area.

It was saying that years ago, you had one set of brands in, say Michigan, a different set of brands in Ohio, a third set in New York and so forth.
Now you still have the multiple options in each of those places, just that it's the same brands for all three (CVS, Walgreens and Rite Aid most likely), rather than three completely different sets of brands.

Yes but the thing is when there are multiple chains the territories tend to "bleed together" a little bit historically.

For instance that one set of brands that was in MI, they'd have a few random locations on the edges of their territory that would bleed into IL or IN or whatever and provide competition to whatever chains were dominant in IL or IN or whatever.

Look at SoCal in the 90's for drugstores. Sav-On and Thrifty were dominant, but Longs and Payless were also present with a much smaller store count throughout the market. Various markets in the south may have had Walgreens, CVS, Rite Aid, and Fred's... now Fred's and Rite Aid are gone in those markets. Competition is competition even if it is few locations.

[buckguy]

Marginal competitors usually don't have much effect unless they force someone to set-up a pricing zone or some other easy fix that has little effect in a region beyond a few stores. A lot of the competition for drug stores has always been other kinds of stores---lots of places sell H&BA. and that's been true for ages---they were big sellers for variety stores and later dicosunt stores; supermarkets added H&BA during WWII because rationing constrained other items they sold. The competition for prescriptions began to come from discount stores in the 60s---KMart being seen as the first big threat and now it's online. Drug store chains often had leased departments in discount stores which is why the CVS-Target hookup struck me as pretty un-novel. If they can't staff prescription departments in a region, they're not going to expand the hours.

[storewanderer]

Marginal competitors usually don't have much effect unless they force someone to set-up a pricing zone or some other easy fix that has little effect in a region beyond a few stores. A lot of the competition for drug stores has always been other kinds of stores---lots of places sell H&BA. and that's been true for ages---they were big sellers for variety stores and later dicosunt stores; supermarkets added H&BA during WWII because rationing constrained other items they sold. The competition for prescriptions began to come from discount stores in the 60s---KMart being seen as the first big threat and now it's online. Drug store chains often had leased departments in discount stores which is why the CVS-Target hookup struck me as pretty un-novel. If they can't staff prescription departments in a region, they're not going to expand the hours.

Marginal competitors have more of an impact in some industries than others. If they are complete zombie stores like Rite Aid has basically become, I don't think they have much of an impact. However as consumers what we don't know is how or if the existence of businesses like Rite Aid somehow helps prescription drug costs during insurance negotiations since it is another chain to negotiate with. Would major pharmacy benefit networks have been able to pull their programs out of CVS, Walgreens, and/or Kroger if Rite Aid wasn't there as an alternate provider who seems to accept all of these programs that the larger chains have pulled out of? I know drug prices are just getting worse and worse but I do wonder if this is where the presence of Rite Aid serves some kind of a function that helps consumers (or pharmacy benefit management company shareholders)...

But let's take a different business type. Let's go with gas station. You have 2 marginal gas stations in an area. Let's say this part of town is historically that part of town where gas always costs .15 more than other parts of town for some reason. Then a nice new Wawa/QuikTrip/Sheetz/whatever opens up nearby. The nice new station decides to price its gas at the new location similar to other parts of town (so .15 below the 2 marginal stations). The 2 marginal stations are in trouble and decide their best course of action is to price gas lower so they work with their supplier to be able to get their price down, and one of them decides okay I am going to price it .04 below the nice new station and take a little margin hit. Next thing you know of course the new station comes down .04. So now you have an area that has gas priced slightly below the other parts of town. But then marginal station #1 is in such a dire financial situation due to loss of store sales it decides to just outright shut down. Meanwhile marginal station #2 decides it is tired and sells to a new owner who decides to use a different approach and price gas .30 higher than elsewhere and count on a few cars pulling in who aren't paying attention to price or don't want to cross the street to the newer station. Meanwhile the newer station turns around and says okay we will just price like marginal station #2 is we will just go .04 below them and be done with it, so we will still be the cheapest around, and before you know it this part of town where gas used to be .15 higher than other parts of town now has gas .30 higher than other parts of town due to how the competitive dynamics went.

[norcalriteaidclerk]

Technically this news story focuses on a pending CVS closure but one of the more recent New Jersey RAD closures was in this very same town(never mind the news source).

https://www.fox29.com/news/south-jersey ... rmacy-open

At one point last week, RAD stock hit an all time low(1.42). However since that sensationalistic seeking alpha piece described in a separate thread dropped dropped,the stock has been regaining lost ground(close to 1.60).Not to mention that debt maturities aren't due until 2025.

I must note that in just over two weeks my tenure with RAD is set to cross the quarter century mark.

[storewanderer]

That NJ situation happens sometimes. I always wonder if there would have been enough business to justify keeping one open after the other closed but things don't shake out. Both chains so happen to make the closure decision at around the same time and the stores both close. In this scenario you would think a smaller chain may take the opportunity to stick around but in this NJ case both are large chains, both have store closure programs, and the timing is just rotten luck for the neighborhood.

In Reno many years ago there was a stretch where two grocery stores closed. This was in maybe 2006. There was a large high foot traffic/high theft/low volume Smiths at Virginia and Moana which was a really dire place, and Smiths "relocated" the store about 8 miles south to South Meadows Parkway (completely different trade area). About 1/2 mile away at Moana and Lakeside was a smaller Scolaris that was oddly located but had historically performed pretty well but business had really dropped off. There were lease rate issues with the landlord so they closed their store there a few months after the Smiths closed, which surprised me, as I thought some extra business from the closed Smiths would help them. The Scolaris had been having issues and did things like convert bakery/deli to a 100% self serve department which was odd, and had been scaling back hours over the years. What is even more funny is these two buildings never re-occupied after the grocery closures.

[storewanderer]

Went to the Rite Aid in South Lake Tahoe. The store seems to have gotten a deep cleaning, finally.

Store is closing at 8 PM on weeknights at 6 PM on weekends (pharmacy similar hours to store). South Lake Tahoe is jam packed on weekends, this store is walking a ton of business with these short hours. The CVS units (3) at South Lake Tahoe are open different hours but all a lot more than Rite Aid- one is 24 hours, one is open until 11 M-Sat and 9 Sun, the other is open until 10 M-Sat and 8 Sun. Rite Aid is basically right between the two non-24 hour CVS units.

But what is amazing to me is the ongoing lack of maintenance to the store. The restrooms have out of order signs posted, it has been this way for close to a year if not longer. The freezers for frozen food/ice cream at the back wall all have out of order signs and no product. The ice cream counter up front is closed and has an out of order sign but appears to still have ice cream in it (???) that appears frozen (??). Freezer issue has been ongoing now for a long time too.

They also seemed to be a lot more staffed this time, with 2 employees on the sales floor and 2 employees at the front end (only needed one). Some prior visits lately I only saw one employee on the entire front end.

[steps]

I didn't realize they closed the DTLA location till I passed by it yesterday. That was probably one of their oldest locations going back to the Thrifty days. It's a great location but It was probably a closed because of high theft. The Walgreens across the street has had big problems with theft when I used to go there.

The CVS a little farther up the street is in a great location too but it's surrounded by homeless. I haven't been there in years but when I did go, security did not play around when someone was stealing.