Rite Aid closing at least 63 stores

[ClownLoach]

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.

That answers my question, but I would not be surprised if the inventory management is making the problems even worse. The automatic replenishment systems used by these chains are so dependent on sales history that even if they are back in stock at the warehouse on all items they would likely fail to generate adequate orders if demand was actually higher.

[babs]

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.

That answers my question, but I would not be surprised if the inventory management is making the problems even worse. The automatic replenishment systems used by these chains are so dependent on sales history that even if they are back in stock at the warehouse on all items they would likely fail to generate adequate orders if demand was actually higher.

When there is no inventory to replenish, the automatic replenishment systems can't do anything. Rite Aid is obviously in trouble. The stores I visit are lack BOTH products and customers.

[storewanderer]

That answers my question, but I would not be surprised if the inventory management is making the problems even worse. The automatic replenishment systems used by these chains are so dependent on sales history that even if they are back in stock at the warehouse on all items they would likely fail to generate adequate orders if demand was actually higher.

Check www.Reddit.com/r/riteaid/new - and look at the posts stores are making about their deliveries. This situation is getting more and more dire.

I just don't think this is the issue that there is product at the warehouse but it isn't being pushed out in proper quantity. I don't think there is much of the out of stock product at the warehouse.

I'm sure you know this but like other stores at Rite Aid they can use their handheld inventory gun and walk around the store and create manual orders of products. Last year when Rite Aid was shorting stores on inventory, some stores figured out they could create manual orders and get product in and fill their store up (I know of one store who did this in November/December- store was fantastic/full at Christmas and made really good sales, since then this trick quit working and the store is a disaster but some parts still well stocked due to the over-ordering they did previously). Now, if a store tries to create manual orders, one of two things happen: 1. The item will show "unavailable" for manual order (warehouse out) which is basically all food, all cleaning products, etc. all unavailable if a store tries to manual order 2. If it accepts the manual order the product may or may not actually show up and I guess lately it is about a 20% success rate on if the product shows up AT ALL (even lower success rate if the quantity you manual order shows up). Rite Aid employees are really trying, to use any tools at their disposal, to get inventory... but it just isn't in the warehouse...

[ClownLoach]

That answers my question, but I would not be surprised if the inventory management is making the problems even worse. The automatic replenishment systems used by these chains are so dependent on sales history that even if they are back in stock at the warehouse on all items they would likely fail to generate adequate orders if demand was actually higher.

Check www.Reddit.com/r/riteaid/new - and look at the posts stores are making about their deliveries. This situation is getting more and more dire.

I just don't think this is the issue that there is product at the warehouse but it isn't being pushed out in proper quantity. I don't think there is much of the out of stock product at the warehouse.

I'm sure you know this but like other stores at Rite Aid they can use their handheld inventory gun and walk around the store and create manual orders of products. Last year when Rite Aid was shorting stores on inventory, some stores figured out they could create manual orders and get product in and fill their store up (I know of one store who did this in November/December- store was fantastic/full at Christmas and made really good sales, since then this trick quit working and the store is a disaster but some parts still well stocked due to the over-ordering they did previously). Now, if a store tries to create manual orders, one of two things happen: 1. The item will show "unavailable" for manual order (warehouse out) which is basically all food, all cleaning products, etc. all unavailable if a store tries to manual order 2. If it accepts the manual order the product may or may not actually show up and I guess lately it is about a 20% success rate on if the product shows up AT ALL (even lower success rate if the quantity you manual order shows up). Rite Aid employees are really trying, to use any tools at their disposal, to get inventory... but it just isn't in the warehouse...

At least they let them make manual orders. Many chains have the ability on the handhelds but they don't actually fulfill them as everything is ordered by algorithm and corporate managed. Warehouse systems like JDA basically do all of the ordering based on whatever parameters they're programmed for; the closest the stores do to maintain accurate system counts the better the systems do to keep the store in stock.

Depending on the company in some cases the manager can scan for what they want. In others they just call the warehouse for manual order items, other companies can call the corporate office or the buyers, in some companies it's call the DM or worse.

But that manual ordering actually could make the problem I describe even worse. So let's say the warehouse that serves 100 stores gets 1000 gizmos and the system decides to allocate 8 per store to leave 200 in the warehouse. But 10 stores decided to order in advance and wanted 50 gizmos each because that's what they used to sell before the long out of stock period. So depending on how it's configured, the system could give the 10 greedy stores their 50 gizmos each, leaving only 500 for the rest. And if the system was still programmed to hold 200 back then each store is going to get 3 instead of 8.

All of this is extremely complicated which is why there are people with degrees in Supply Chain management.

I was just curious as to whether or not their problems are just inability to source their goods (which sounds like most of the problem). At this time it doesn't sound like systems are having any kind of effect.

I just hope for their sakes that if they can somehow get this bankruptcy done and normal supply coming into the warehouses that they don't run into any of the scenarios I have described. All of them would be very detrimental to any kind of turnaround. If they were smart they would disable or ignore manual store orders and let their systems "divide and conquer" so they don't get mountains and molehills issues.

[storewanderer]

At least they let them make manual orders. Many chains have the ability on the handhelds but they don't actually fulfill them as everything is ordered by algorithm and corporate managed. Warehouse systems like JDA basically do all of the ordering based on whatever parameters they're programmed for; the closest the stores do to maintain accurate system counts the better the systems do to keep the store in stock.

Depending on the company in some cases the manager can scan for what they want. In others they just call the warehouse for manual order items, other companies can call the corporate office or the buyers, in some companies it's call the DM or worse.

But that manual ordering actually could make the problem I describe even worse. So let's say the warehouse that serves 100 stores gets 1000 gizmos and the system decides to allocate 8 per store to leave 200 in the warehouse. But 10 stores decided to order in advance and wanted 50 gizmos each because that's what they used to sell before the long out of stock period. So depending on how it's configured, the system could give the 10 greedy stores their 50 gizmos each, leaving only 500 for the rest. And if the system was still programmed to hold 200 back then each store is going to get 3 instead of 8.

All of this is extremely complicated which is why there are people with degrees in Supply Chain management.

I was just curious as to whether or not their problems are just inability to source their goods (which sounds like most of the problem). At this time it doesn't sound like systems are having any kind of effect.

I just hope for their sakes that if they can somehow get this bankruptcy done and normal supply coming into the warehouses that they don't run into any of the scenarios I have described. All of them would be very detrimental to any kind of turnaround. If they were smart they would disable or ignore manual store orders and let their systems "divide and conquer" so they don't get mountains and molehills issues.

I definitely think some of this happened. The other thing the subject store I describe got in trouble with, was they got shipped items from closed stores. So all that "manual ordering" the manager thought was a good idea at the time... some of those items they got in quantity from a couple of closed stores and didn't know it was coming at the time they did the big manual orders, so they ended up with a LOT of excess stock. Luckily this particular store does relatively strong business and did sell the stuff through eventually but it was a mess, their shelves are sort of small/shallow, and they also got a lot of items from closed stores that they do not even carry (as they have smaller facings for various categories in this store).

The other possibility is they completely screwed up the warehouses with all the store closures/warehouse closures... like they didn't order more product for SoCal warehouse when it got shifted the ~80 stores that are left in NorCal when Woodland warehouse closed... then the whole bi-weekly delivery thing they need to have more on hand and they have not added to on hands at these bi-weekly delivery stores (which is all but like 4 stores in NorCal).

[storewanderer]

I wonder where the line is drawn for Rite Aid as "NorCal." Let's just go with Stockton and San Jose north.

If you draw the line there and include Stockton and San Jose, it appears NorCal has about 80 stores left. This is not an insignificant number of stores. If you take the line down not much further to say Modesto and Monterey North it adds more stores and brings the number closer to 100.

I expect they will remain in markets like Fresno and Bakersfield regardless what happens to "NorCal" as there have been rather few closures in those markets. But there have been almost no closures in "north state" (basically entire NorCal region north of Sacramento)... either.

In my view supplying NorCal from SoCal isn't working for them. The stores are a disaster, in stock rate is dismal, customers are giving up and nothing is being done to help the situation.

[Retailuser]

1,649 now according to the website.

[storewanderer]

It has been quiet but in the background the chain seems to be dying.

This is reminding me of the end of Bed Bath and Beyond. What is odd is BBB was a straight line "DOWN" whereas Rite Aid really did look like it was "coming back" and headed toward emerging back in late January/early February.

Obviously hope I am wrong about this...

[Retailuser]

1,643 now according to the website.

[reymann]

Rite Aid would be wise to try to dump and pump NorCal and Oregon at this point due to inventory issues. CVS would be their best bet to divest as many as possible and close the overlaps.