Rite Aid closing at least 63 stores

[buckguy]

Not quite sure that it makes as much difference as it sounds like - people in NYC seem to think everything needs to be within a couple blocks of where they live. This person most likely still has more stores to choose from than anyone in any area that is not a huge city.

That's one of the perks of living in a "good" big city. You get to have everything at your doorstep, almost literally. NYC is great for that. Chicago, San Francisco, etc. also great. St. Louis, not so much.

The mindset of these city dwellers needs to change. In the old days when they did have to go to the stores to buy everything, there was such a density of population that there was enough demand to have "everything" within a couple blocks of where they live. Now, thanks to the city dwellers embrace of Amazon and various other delivery services, demand from local stores on their block has fallen and these stores can no longer make it. There has always been theft in big city stores (perhaps not as much as there is now) but the problem now is there are too few paying customers to subsidize this theft. So now they are going to have to settle for needing to go 4 blocks instead of 2 blocks to buy that low margin bag of chips or high margin but still cheap bottle of aspirin, supporting their nearby drug store with a $6 transaction, that they need immediately. Meanwhile they are waiting at home for their order of higher margin OTC products, higher margin beauty products, and dental goods to arrive from Amazon and just cost the drugstore down the block $75+ of sales that week.

I also think these big city retailers did this in a way also in they typically priced big city stores higher than suburb stores and had a lesser selection of products in big city stores (space constraints). So for customers when they can order online and get stuff shipped FREE, a larger selection of items, and lower retail prices, of course the customers will move to online ordering.

You seem to assume that Rite-Aids closing make a big difference in NYC. They don't. I took a look at the number of drug stores in Washington Heights, arguably one of the lower income areas where they've closed stores--there are still a couple Duane Reades and about 10 independents.

Looking at articles on the closures, I also was reminded that before COVID, Walgreen was continuing to open new stores in NYC even after they bought Duane Reade and CVS was undertaking a large expansion at the same time. Both chains have closed stores in the city more recently but proportionately no where near the numbers of Rite Aids. You can walk through Chelsea, where Rite Aid closed two stores and easily pass multiple Duane Reades. The market was overbuilt and it looks like Rite Aid was the loser rather than the two better capitalized chains. It's also worth recalling that even before the consolidation of chains, many places including large metros, one or two chains dominated. NYC is unique in that it still has a large number of indies that have held on through decades of all this which created an even more unusual environment for chains and, again, make it difficult for the weakest to survive. Duane Reade aside, Walgreen has a lot of experience with urban locations in other places like Chicago and CVS has picked-up experience via chains like Peoples which had saturated DC. That reminds me--of the 6 CVS locations within walking distance from me (2 open 24 hours), only 1 has closed and that's because it was consolidated with a store a couple blocks away. The 2 Walgreens (both former Rite Aids) are doing fine, even the one that has CVS within a couple blocks in 2 directions.

As for "expectations", it's not just drug stores where perhaps your opinions are at odds with what's actually happening. There actually are new kinds of retailers entering urban areas. The most notable are new stores that fill the gap between convenience stores and super markets, with varying ranges of prepared food, fresh made items and groceries. These include the Foxtrot chain from Chicago which has entered DC and Boston will enter soon enter NYC. They also have entered Dallas, so they assume they can do denser parts of sprawlburgs. Foxtrot includes delivery and is a relatively upscale operation. DC also has Streets which is a locally grown store similar to Foxtrot---less upscale and w/o delivery---that has been expanding recently and did ok during COVID. Streets has many items where they are competitive with regular chains. In addition, DC has the local Union Kitchen chain which focuses on local products which has multiple city locations. They seem to be doing ok despite labor relations problems. These stores seem to carve out their own niches---one Streets is a couple blocks from Trader Joe's and less than a block from 7-11 and doesn't seem to have had much effect on TJs or 7-11 which predated them.

[storewanderer]

You seem to assume that Rite-Aids closing make a big difference in NYC. They don't. I took a look at the number of drug stores in Washington Heights, arguably one of the lower income areas where they've closed stores--there are still a couple Duane Reades and about 10 independents.

Looking at articles on the closures, I also was reminded that before COVID, Walgreen was continuing to open new stores in NYC even after they bought Duane Reade and CVS was undertaking a large expansion at the same time. Both chains have closed stores in the city more recently but proportionately no where near the numbers of Rite Aids. You can walk through Chelsea, where Rite Aid closed two stores and easily pass multiple Duane Reades. The market was overbuilt and it looks like Rite Aid was the loser rather than the two better capitalized chains. It's also worth recalling that even before the consolidation of chains, many places including large metros, one or two chains dominated. NYC is unique in that it still has a large number of indies that have held on through decades of all this which created an even more unusual environment for chains and, again, make it difficult for the weakest to survive. Duane Reade aside, Walgreen has a lot of experience with urban locations in other places like Chicago and CVS has picked-up experience via chains like Peoples which had saturated DC. That reminds me--of the 6 CVS locations within walking distance from me (2 open 24 hours), only 1 has closed and that's because it was consolidated with a store a couple blocks away. The 2 Walgreens (both former Rite Aids) are doing fine, even the one that has CVS within a couple blocks in 2 directions.

As for "expectations", it's not just drug stores where perhaps your opinions are at odds with what's actually happening. There actually are new kinds of retailers entering urban areas. The most notable are new stores that fill the gap between convenience stores and super markets, with varying ranges of prepared food, fresh made items and groceries. These include the Foxtrot chain from Chicago which has entered DC and Boston will enter soon enter NYC. They also have entered Dallas, so they assume they can do denser parts of sprawlburgs. Foxtrot includes delivery and is a relatively upscale operation. DC also has Streets which is a locally grown store similar to Foxtrot---less upscale and w/o delivery---that has been expanding recently and did ok during COVID. Streets has many items where they are competitive with regular chains. In addition, DC has the local Union Kitchen chain which focuses on local products which has multiple city locations. They seem to be doing ok despite labor relations problems. These stores seem to carve out their own niches---one Streets is a couple blocks from Trader Joe's and less than a block from 7-11 and doesn't seem to have had much effect on TJs or 7-11 which predated them.

You have validated my point right there- before COVID, these drugstore chains were still actively opening new stores in big cities. Now they are closing stores. CVS still has hundreds of store closures planned (recall they announced they will be closing 900 stores over a 3 year period and we are somewhere in the middle of that period now).

Were they saturated? Yes. Rite Aid being the lowest market share chain with the least urban exposure is of course the weakest link and is going to be first to go in these types of environments. Rite Aid wanted to sell a lot more stores to Walgreens in NY than they did but they kept quite a few stores due to FTC concerns. It is possible a lot of these closures were stores they planned to sell but then didn't in order to push the deal through.

Those independent drugstores you refer to are usually small operations primarily pharmacy and OTC items. I know this varies and they are all different but they are not moving even close to the front end assortment and volume of any of the chain drugstores.

Those new concepts like Foxtrot further hurt the drugstores as they eat into the convenience food business the drugstores do. And that convenience food business historically has been a very heavy business for big city drugstores. Have you been to a flagship Walgreens? They dedicated a lot of space to prepared food; even had in-store sushi preparation and a lot of bakery/deli items from local vendors. Of course some of those flagship Walgreens have closed too and others way scaled back the fresh food offer.

[BillyGr]

Were they saturated? Yes. Rite Aid being the lowest market share chain with the least urban exposure is of course the weakest link and is going to be first to go in these types of environments. Rite Aid wanted to sell a lot more stores to Walgreens in NY than they did but they kept quite a few stores due to FTC concerns. It is possible a lot of these closures were stores they planned to sell but then didn't in order to push the deal through.

Those new concepts like Foxtrot further hurt the drugstores as they eat into the convenience food business the drugstores do. And that convenience food business historically has been a very heavy business for big city drugstores. Have you been to a flagship Walgreens? They dedicated a lot of space to prepared food; even had in-store sushi preparation and a lot of bakery/deli items from local vendors. Of course some of those flagship Walgreens have closed too and others way scaled back the fresh food offer.

That makes sense - likely that they kept more stores as Rite Aid in NYC due to the larger volume of stores that Walgreens already had (both their own and the Duane Reade locations).
Particularly when NY (as a whole) went from around 600 to 300ish locations for Rite Aid, but in areas up here around Albany there may be one Rite Aid left out of what was 5 or 6 before (thus a far greater than 50% reduction).

Also makes sense that Walgreens has more history in the foodservice end of things, going way back to their second store in Chicago in the early 1900's - a few of the chains that CVS and Rite Aid took over probably did as well, but the current chains are newer enough that they didn't get into that as much.

[jamcool]

I remember Walgreens had more than a standard soda fountain, offering Friday fish frys and a more substantial menu.

[norcalriteaidclerk]

https://investors.riteaid.com/news/news ... fault.aspx

While their core urban/suburban locations are imploding,the first location of a pet project has opened.I wonder if this is anywhere near their go forward eastern Virginia stores(in or around Richmond and/or the Hampton roads).



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[storewanderer]

Here is a video showing the interior. https://www.whsv.com/video/2022/11/17/r ... aigsville/

This doesn't appear to be the new decor package as seen in ID and near the CEO in VA.

Basically a 7-Eleven sized sales floor, but appears to have some degree of SKU depth in core OTC categories/first aid.

The way they are presenting this it basically sounds like it has no front end employees and just pharmacy employees. I assume there must be someone coded to front end to cashier/stock.

Looks like hours are very limited- open 10-6 M-F and 10-2 Saturday.

It is usually not easy to get pharmacists to rural stores but I am wondering in the current environment if a low volume short hours rural store may actually be something you could recruit to, as there are a lot of burnt out pharmacists who have left urban/suburb stores and this type of work environment is going to be a lot less stressful and fewer hours (and obviously less pay).

Tough to see how much money there is in these small stores, but they should be cheap to operate... will be interesting to see how this works. It is a low cost "expansion" vehicle but I am not sure it will change much. I suppose if nothing else it will help these little towns out.

Rite Aid has very small stores in Kings Beach, CA and had one somewhere in SoCal in Orange County about 7 years ago had a temporary makeshift type store like this (I think that one was since replaced by a full size store), also had one briefly in Carmichael, CA taking over an old independent (also replaced by a full size store) and in Escalon, CA taking over an old independent (also replaced by a full size store) and in Palo Cedro, CA (also replaced by a full size store). So looking at that last paragraph it has not been unusual for Rite Aid to go into very small towns and take over very small stores then replace them with a full size store. This move of going in and opening what is basically like an independent drugstore is quite strange.

[Romr123]

Almost looks like Medicine Shoppe...might well have some legs. Sharing a parking lot w/the IGA...probably a reasonable location. Might suggest they tone down the Papyrus greeting cards...this appears more an American Greetings clientele.

What would an acquisition of RA by Dollar General look like? A bit of a thought experiment, tbh...

[TW-Upstate NY]

but in areas up here around Albany there may be one Rite Aid left out of what was 5 or 6 before (thus a far greater than 50% reduction).

Very true and as a for instance, using my immediate area of Fulton and Montgomery County, Rite Aid at one time had 7 stores between the two and combined the two counties have probably a little over 100,000 people. That has now become just 2 stores-one in Gloversville and one in Amsterdam which leaves only one per county. And of the original 7, two were closed outright and only 3 became Walgreen's.

[storewanderer]

Almost looks like Medicine Shoppe...might well have some legs. Sharing a parking lot w/the IGA...probably a reasonable location. Might suggest they tone down the Papyrus greeting cards...this appears more an American Greetings clientele.

What would an acquisition of RA by Dollar General look like? A bit of a thought experiment, tbh...

The problem is Dollar General's store standards are too weak. They are dirty and nasty stores. Janitorial and maintenance seems to not exist. I don't think you could get a pharmacist to work in one.

I am really hopeful this concept works out for Rite Aid. I am not sure it will. They may even find it viable to convert some full size stores to this format.

One thing where I pause is around Sacramento I've seen Rite Aid do a lot of closures in low income neighborhoods. These stores had foot traffic and were generally long established in their areas. The closures occurred due to the pharmacies having too many low reimbursement government insurance pharmacy customers. CVS and Walgreens in CA decline to accept these insurance plans. I suspect money losing front ends (theft, low volume/too high priced for the neighborhoods/wrong item mix etc.) did not help. These stores that closed were open 8-10 PM daily and pharmacy basically 9-9 weekdays and 10-6 weekends. But these rural towns I am afraid are also going to have a lot of low reimbursement government insurance pharmacy customers. Will just being pharmacy, only being open 44 hours a week, and basically not having front end somehow make this prescription mix work out in rural VA? I guess time will tell.

[norcalriteaidclerk]

Not all of the Sacramento RAD closures have happened in lower affluency areas:of the various closure rounds over the last four years,quite a few were in areas we'd least expect:5712 Folsom was in the 1959-vintage camellia center(the current save Mart has traditionally done high volume regardless of branding,not to mention corti on the adjacent lot)which is basically next door to the fabulous forties neighborhoods (high valued older homes)which makes me wonder if rising maintenance costs associated with this vintage Thrifty from the 'cut rate' era(a fair amount of holdover infrastructure from 1959 including a low vintage ceiling remained intact even after it got a first generation Wellness remodel)played a role in its demise.Elk Grove Florin (RA-1 that remodeled into wellness 2.0,now blasphemously converted into a Dollar tree)was in a still growing area as were a number of closed customer world units(Cameron Park,elk Grove waterman,and Roseville pleasant Grove),none of those closures really made any sense(how has Placerville Fair Lane outlasted Cameron Park is beyond me).I also have to wonder about 1125 Alhambra given that it was historically productive to the point that it was an extended hour location (including 24 hours)for much of it operational existence.For whatever reason,900 Sunrise didn't work out despite being near mature but decent neighborhoods, maybe it was because of stronger supermarket pharmacies at the same intersection not just the long established Bel Air (mid-1980's,pre-raleys merger)but also a 2000-ish Safeway.

It appears that this year that Thanksgiving day hours are varying by locations (official RAD locator lists store hours for that day though pharmacy hours don't appear to be updated yet):stronger performing locations are apparently open 8-7,but certain other locations are only open 8-5(including my store which won't have an open pharmacy that day for the first time in years). While I'm still not calling this a potential bellwether of the future of Sunrise Village, I have noticed that the pharmacy has been maintaining regular hours even as busier locations have temporary adjusted theirs (closing pharmacy an hour early on weekdays but staying open until 7 on weekends, standard pharmacy hours at most locations has long been 9-9 weekdays,9-6 Saturday,and 10-6 Sunday though some strong performers have pharmacy open from 8am-10pm on weekdays though rare in NorCal at least).

I must note that the NorCal non-exempt store-level workforce (myself included) has been working without a CBA for roughly three years,and yes this dispute basically began under almost as soon as the current corporate regime took over before we had a pandemic.

https://www.ufcw8.org/news/rite-aid-app ... agreement/

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