Rite Aid closing at least 63 stores

[storewanderer]

For some reason the GNC.com website is now selling a bunch of Rite Aid brand vitamins.

This may not seem unusual since GNC has had a contract to supply Rite Aid brand vitamins for decades now. But this is very recent the GNC.com sells Rite Aid vitamins.

Also most/all of these are "out of stock" at Rite Aid.com for shipping orders (some stores have them for pick ups).

However the thing I find strange is they are selling these in single count units or "12 packs" and they are all selling at clearance/reduced prices.

Rite Aid is also out of stock on many of these exact SKUs of Rite Aid vitamins at many (but not all) of their stores, but the stores that do have inventory, a lot of it expires in less than 1 year so I think it is old stock.

Why would GNC do this instead of distribute the vitamins to Rite Aid so Rite Aid can be in stock on these items...?

Unless GNC simply produced too many of these items (particularly with less stores to sell them now than when they were being produced, for the items that have short life left), and they are all in that category of shorter dates, so Rite Aid doesn't want them shipped to stores, only to have them expire before they can sell them, even if that means empty spots in the stores?

This is possible. The whole thing is just strange. We will see what plays out in the coming months. I had a bad feeling for Rite Aid.

[mburb1981]

New closure list released today. Four stores total, one each in New York (117th and Frederick Douglass Boulevard in Harlem, Manhattan), Pennsylvania (Cecil B. Moore and Broad in North Philadelphia), Virginia (downtown Virginia Beach), and New Jersey (Sewell).

[storewanderer]

New closure list released today. Four stores total, one each in New York (117th and Frederick Douglass Boulevard in Harlem, Manhattan), Pennsylvania (Cecil B. Moore and Broad in North Philadelphia), Virginia (downtown Virginia Beach), and New Jersey (Sewell).

All quiet out west for now............

[storewanderer]

In stock condition is getting worse and worse for this chain. I don't know what they are doing or how they will possibly even get their stores restocked again at this point.

One store I have gone into a few times lately on Marconi in Sacramento- I'm not even sure if this store has a 40% in stock rate on merchandise. The store doesn't seem overly busy but has a decent steady trickle of customers. Enough that the 1 cashier up front is kept busy most/all of the time. The other interesting thing is customers do still seem to be buying merchandise in the store so it appears that despite such empty shelves that customers are still finding at least some of what they went in for.

A couple other stores on Sacramento perimeters/outlying areas I am watching are emptying out more and more each week and are drifting to 60% in stock (were closer to 80% in stock a month ago). A couple others are still oddly somewhat well stocked somehow, not sure why. Probably still 80% in stock rate at those two; one seems fairly busy, the other seems slow and I am surprised it hasn't closed but they closed another store near it and did keep the prescriptions vs. sell to the CVS or Walgreens in the middle, so must be trying to keep that particular location open.

It also appears the private label Rite Aid brand is falling apart. These items do not seem to be getting replenished much.

I am wondering if McKesson is trying very hard to do whatever they can to keep Rite Aid going since Rite Aid is still a large customer for them... because if the pharmacy was having the merchandise in stock issues the self serve area has, this chain would be gone already.

[ClownLoach]

In stock condition is getting worse and worse for this chain. I don't know what they are doing or how they will possibly even get their stores restocked again at this point.

One store I have gone into a few times lately on Marconi in Sacramento- I'm not even sure if this store has a 40% in stock rate on merchandise. The store doesn't seem overly busy but has a decent steady trickle of customers. Enough that the 1 cashier up front is kept busy most/all of the time. The other interesting thing is customers do still seem to be buying merchandise in the store so it appears that despite such empty shelves that customers are still finding at least some of what they went in for.

A couple other stores on Sacramento perimeters/outlying areas I am watching are emptying out more and more each week and are drifting to 60% in stock (were closer to 80% in stock a month ago). A couple others are still oddly somewhat well stocked somehow, not sure why. Probably still 80% in stock rate at those two; one seems fairly busy, the other seems slow and I am surprised it hasn't closed but they closed another store near it and did keep the prescriptions vs. sell to the CVS or Walgreens in the middle, so must be trying to keep that particular location open.

It also appears the private label Rite Aid brand is falling apart. These items do not seem to be getting replenished much.

I am wondering if McKesson is trying very hard to do whatever they can to keep Rite Aid going since Rite Aid is still a large customer for them... because if the pharmacy was having the merchandise in stock issues the self serve area has, this chain would be gone already.

Odd question. Any chance some of this problem is related to wildly bad forecasting and logistics planning?

I ask this because I've seen the aftermath of even one store in an underserved area closing, then the next closest store becomes overwhelmed with customers and the in stock rate plummets.

You mentioned Rite Aid is trying to stock these stores on biweekly trucks. The combination of customer loyalty and preferences to avoid the CVS/Walgreens bad service duopoly with bad inventory forecasting and logistics would create this exact scenario of empty shelves.

How do these stores look after they receive a truck? I think that is the only way to understand what is going on. If they are mostly full after a truck than this is entirely an internal problem at Rite Aid's inventory forecasting department at HQ. If they truly aren't getting the product because the vendor isn't shipping that would be different.

If they use JDA or similar industry standard software to plan their replenishment it usually bases shipments on average sales over an interval and historical sales. For example the system sees that the recent average sales of Tylenol are 24 bottles a week and they come in packs of 3 so it orders 9 packs for the next truck. Suddenly the trucks are now spaced out but configuration isn't updated to recognize this. So the system sees all 27 sold units and says "gosh, sales are up on Tylenol, let's look at historical average for this week. History shows typically 24. So obviously this is a fluke so the system sends 10 packs just to be safe. Of course all ten packs sell and the shelf is empty for a week but the decade of sales history still says this is a fluke and the system next time orders 11 packs. You can see how this madness would lead to empty shelves because of the system bias towards keeping the overstock to a minimum and not allowing a store to deplete the distribution center. There are upgrades available to these systems to capture "lost sales" and recognize the sales period as ending when the count goes to zero on hand then calculate entirely on daily average sales, but conservative programming and forecasting will not allow for the system to go from the historical shipment of 9 packs a week to say 18 immediately. Furthermore in most cases inaccurate system counts will invalid the programming, so if say someone stole a couple of bottles and nobody scans the shelf to zero out the count then the system will just keep thinking the item is there but not selling and lower the average meaning less are shipped on the next order the system builds.

In some of these Rite Aid markets where say 6 out of 7 stores closed, if the remaining location got only a third of the customers that would mean their business tripled at the same time their deliveries were cut in half. They would need to receive 6X their normal orders just to stay afloat. If they were smart the corporate inventory forecasters would have immediately ordered mass waves of product to pack the shelves, but instead they depended on transferring goods manually and further messing up whatever intelligence their systems have.

I just can't help but wonder if this is entirely self inflicted by the biweekly truck program and bad forecasting, causing full warehouses and empty shelves.

[reymann]

With the low inventory at Rite Aid, customers are now flocking to Target & Walmart to find the stuff they can't get there. CVS & Walgreens don't exactly have good reputations in some these areas where RA has been dropping the ball.

[ClownLoach]

With the low inventory at Rite Aid, customers are now flocking to Target & Walmart to find the stuff they can't get there. CVS & Walgreens don't exactly have good reputations in some these areas where RA has been dropping the ball.

The irony is that these singular remaining stores might be delivering massive sales increases over last year, causing the execs to be satisfied despite the fact that if they managed supply chain properly they could double, triple, or quadruple those comp numbers. They fail to recognize that their victory is a monumental failure.

[storewanderer]

Odd question. Any chance some of this problem is related to wildly bad forecasting and logistics planning?

I ask this because I've seen the aftermath of even one store in an underserved area closing, then the next closest store becomes overwhelmed with customers and the in stock rate plummets.

You mentioned Rite Aid is trying to stock these stores on biweekly trucks. The combination of customer loyalty and preferences to avoid the CVS/Walgreens bad service duopoly with bad inventory forecasting and logistics would create this exact scenario of empty shelves.

How do these stores look after they receive a truck? I think that is the only way to understand what is going on. If they are mostly full after a truck than this is entirely an internal problem at Rite Aid's inventory forecasting department at HQ. If they truly aren't getting the product because the vendor isn't shipping that would be different.

If they use JDA or similar industry standard software to plan their replenishment it usually bases shipments on average sales over an interval and historical sales. For example the system sees that the recent average sales of Tylenol are 24 bottles a week and they come in packs of 3 so it orders 9 packs for the next truck. Suddenly the trucks are now spaced out but configuration isn't updated to recognize this. So the system sees all 27 sold units and says "gosh, sales are up on Tylenol, let's look at historical average for this week. History shows typically 24. So obviously this is a fluke so the system sends 10 packs just to be safe. Of course all ten packs sell and the shelf is empty for a week but the decade of sales history still says this is a fluke and the system next time orders 11 packs. You can see how this madness would lead to empty shelves because of the system bias towards keeping the overstock to a minimum and not allowing a store to deplete the distribution center. There are upgrades available to these systems to capture "lost sales" and recognize the sales period as ending when the count goes to zero on hand then calculate entirely on daily average sales, but conservative programming and forecasting will not allow for the system to go from the historical shipment of 9 packs a week to say 18 immediately. Furthermore in most cases inaccurate system counts will invalid the programming, so if say someone stole a couple of bottles and nobody scans the shelf to zero out the count then the system will just keep thinking the item is there but not selling and lower the average meaning less are shipped on the next order the system builds.

In some of these Rite Aid markets where say 6 out of 7 stores closed, if the remaining location got only a third of the customers that would mean their business tripled at the same time their deliveries were cut in half. They would need to receive 6X their normal orders just to stay afloat. If they were smart the corporate inventory forecasters would have immediately ordered mass waves of product to pack the shelves, but instead they depended on transferring goods manually and further messing up whatever intelligence their systems have.

I just can't help but wonder if this is entirely self inflicted by the biweekly truck program and bad forecasting, causing full warehouses and empty shelves.

The warehouses are not full by any stretch. According to various posts on Reddit the warehouses are not close to full, the warehouse employees are only working 3-4 days a week, truck drivers are not getting as many loads as before... it sounds like stores getting 10 pallet type deliveries the past week and current week are getting a bunch of cases of water and a bunch of plastic totes only filled with a few items (so mostly air).

I definitely see better traffic at the stores that are still open... there is some customer loyalty to this chain. And despite the mess, the layoffs of Assistant Managers in CA, layoffs of hourly employees in CA, I still keep finding good spirited, helpful, friendly employees in these stores...

[HCal]

Odd question. Any chance some of this problem is related to wildly bad forecasting and logistics planning?

I ask this because I've seen the aftermath of even one store in an underserved area closing, then the next closest store becomes overwhelmed with customers and the in stock rate plummets.

Based on my observations, no. The remaining stores are nowhere near "overwhelmed with customers". They are barely getting a trickle, and some of the customers are under the impression that the store is also going to close.

Rite Aid doesn't sell anything unique, and I don't think they have any customer loyalty left except with respect to Thrifty ice cream. In many case, there is another store in the same shopping center that sells most of what Rite Aid does. If someone doesn't like CVS/Walgreens, then there is Target, Walmart, Albertsons, Ralphs, etc., etc., etc.

[storewanderer]

Odd question. Any chance some of this problem is related to wildly bad forecasting and logistics planning?

I ask this because I've seen the aftermath of even one store in an underserved area closing, then the next closest store becomes overwhelmed with customers and the in stock rate plummets.

Based on my observations, no. The remaining stores are nowhere near "overwhelmed with customers". They are barely getting a trickle, and some of the customers are under the impression that the store is also going to close.

Rite Aid doesn't sell anything unique, and I don't think they have any customer loyalty left except with respect to Thrifty ice cream. In many case, there is another store in the same shopping center that sells most of what Rite Aid does. If someone doesn't like CVS/Walgreens, then there is Target, Walmart, Albertsons, Ralphs, etc., etc., etc.

The remaining stores aren't "overwhelmed" but one store I am watching closely, for instance, in the past, it only had say 3-4 customers inside at once, but then they closed another nearby Rite Aid which was busier and kept the prescriptions and moved them to this store they kept- now this store they kept seems to have a customer count closer to 7-10 customers at a given time. But this is one of the better stocked looking stores.

Customers and employees in the stores open are very much questioning if the stores are about to close. It is so dire/so obvious there is no hiding it and this isn't 2020 where you could blame it on "supply chain issues"... and at this point I don't even know how they can restock/recover so many stores that have so little inventory. I'm not even sure how their logistics system or the store teams could handle the massive restocking effort that is needed. Not to mention the huge cash outlay to obtain the inventory...

It felt like they were restocking in February from the isolated specific vendor related shortages that started early in the bankruptcy, and perhaps on their way out of bankruptcy. But they've really let the situation deteriorate since then. At this point it isn't specific vendors whose items are out of stock it is entire product categories missing now.