Traditional pharmacies have a challenging run in today's fiercely competitive pharmacy sector – and perhaps no pharmacy chain has faced more challenges than Rite Aid. With rumors swirling about a Chapter 11 bankruptcy filing and significant store closures on the horizon, the company appears to be reevaluating and recalibrating its operations. Where might the chain look for inspiration for its turnaround? We dive into the visitation data to find out.
Strategic Rightsizing: Prioritizing Success
Current rumors suggest that Rite Aid may close up to 500 stores in the coming years on top of the already significant rightsizing that Rite Aid has undergone in recent years.
Rite Aid has closed about 240 stores since 2021, and the visitation data suggests that these strategic closures have helped it shed underperforming locations while keeping visitation patterns to its remaining stores relatively stable. So, even if overall visits to the chain have plummeted – as the chain operates with a significantly reduced store fleet – open Rite Aid venues are still seeing steady traffic. As the company continues looking for ways to optimize its brick-and-mortar footprint, where might Rite Aid focus its physical presence to maximize its investment?
Rite Aid’s Visit Share In Some States Is Significant
The U.S. retail pharmacy scene is dominated by CVS and Walgreens, both of which operate significantly more stores than Rite Aid – CVS and Walgreens maintain roughly 9,000 venues each, compared to Rite Aid’s 2,100. Consequently, Rite Aid's nationwide share of pharmacy visits is relatively small – 7.7% compared to CVS’s 44.1% and Walgreens’s 48.2% in Q2 2023.
But the company commands a more significant presence in Rite Aid’s largest markets – Pennsylvania, New York, California, and Ohio. In New York and Ohio, Rite Aid’s relative visit share is almost double its nationwide average, while Rite Aid in California receives 18.8% of all visits to the three pharmacy leaders. And in Pennsylvania, where the company is headquartered, Rite Aid’s relative visit share stands at 32.2% – more than four times its nationwide benchmark.
In certain CBSAs in these states, nearly half of all pharmacy visits to the three pharmacy leaders go to the local Rite Aid. Rite Aid’s local strength in these areas may highlight opportunities for growth where the company can focus its investments as it continues to consolidate its store fleet.
Zooming into Rite Aid in Pennsylvania
One state where Rite Aid seems particularly popular is Pennsylvania, where the company was founded and is still headquartered. The state boasts an impressive 435 Rite Aid pharmacy locations, second only to California's 453. Not only does Rite Aid in the state receive almost a third of all visits to Rite Aid, Walgreens, and CVS, but the company’s Pennsylvania venues have also seen a smaller year-over-year (YoY) visit gap when compared to Rite Aid’s nationwide average. This suggests that Pennsylvanians continue to support their local Rite Aid locations, even as the company faces challenges nationwide.
This home state loyalty extends beyond elevated monthly visits – the Pennsylvania Rite Aid locations also saw a higher rate of returning visitors in Q3 2023 when compared to Rite Aid’s nationwide average.
Room For Rightsizing
Rite Aid is keenly aware of the potential for a solid turnaround, focusing not only on rightsizing but also seeking out new opportunities, including small-format stores in areas with no pharmacies. And location intelligence suggests plenty of spots throughout the country where Rite Aid shines bright. As the chain continues to optimize its store fleet and find new opportunities to invest in, will Rite Aid see its fortunes improve?
Visit placer.ai/blog to find out.
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