Rite Aid

Rite Aid reported total sales of USD $16.5 billion in fiscal 2004. As of 2005, its market capitalization was about $2 billion. Rite Aid is a Fortune 500 company.

Its major competitors include CVS and Walgreens.

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History

Alexander Grass founded the Rite Aid chain in Scranton, Pennsylvania, as Thrif D Discount Center. The first store opened in September 1962. Through acquisitions and new stores, Rite Aid quickly expanded into 5 northeast states by 1965. The chain was officially named Rite Aid Corporation in 1968 and made its debut on the American Stock Exchange. It moved to the New York Stock Exchange in 1970.

Growth & Acquisitions

Just ten years after its first store opened, Rite Aid operated 267 locations in 10 states. It was named the third largest drugstore in the United States by 1981; shortly thereafter, 1983 marked a sales milestone of $1 billion. A 420-store acquisition along the east coast expanded Rite Aid's holdings beyond 2,000 locations. Among the companies acquired was Baltimore, Maryland's Read's Drug Store.

Rite Aid acquired twenty-four Hooks Drug stores from Revco in 1994, selling nine of those stores to Perry Drug Stores, a Michigan-based pharmacy chain. One year later, the 224-store Perry chain itself was acquired by Rite Aid.^[1][2] The 1,000-store West Coast chain Thrifty PayLess was later acquired in 1996. The acquisition of Thrifty PayLess included the Northwest-based Bi-Mart membership discount stores, which was sold off in 1998. Acquisitions of Harco, Inc. and K & B Inc. brought Rite Aid into the Gulf Coast area.

Partnership with GNC

General Nutrition Companies (GNC) and Rite Aid formed a partnership in January 1999, bringing GNC mini-stores within the Rite Aid pharmacies. A partnership with drugstore.com in June 1999 allowed customers of Rite Aid to place medical prescription orders online for same-day, in-store pickup.

Company Troubles

  In the fall of 1999, Rite Aid was the subject of several media reports about its aggressive marketing of pharmaceutical products and other consumer-unfriendly practices, including selling date-sensitive products well past the due dates. Rite-Aid is the largest pharmacy chain in California. It has recently been investigated by government regulators in California, Washington, and Oregon. Consumer Complaints Regarding Rite Aid Pharmacy

Rite Aid also had a major accounting scandal that led to the departure (and subsequent jail time) of several top ranking executives, including the CEO. [1] At the time, Rite Aid had just acquired Thrifty Payless Drug and was integrating those into the company. As a result, Leonard Green, who ran the investment firm that had sold those stores to Rite Aid took control of the company and placed Mary Sammons from Fred Meyer in as CEO. Sammons instituted a number of reforms of Rite Aid's business and has returned the company to credibility and profitability.

July 2001, Rite Aid agreed to improve their pharmacy complaint process by implementing a new program to respond to consumer complaints. "Health Plan Agrees to Improve Pharmacy Complaint Process"

July 25, 2004, "Rite Aid to pay $7 Million for Allegedly Submitting False Prescription Claims to Government" Deparment of Justice Press Release

Living More, UAW, Shelley's Pharmacy

Beginning in March 2005, Rite Aid introduced Living More, a seniors' loyalty program; offering 10% off of prescription drugs purchased with cash, generic products, as well as other items. Additional benefits also include discounts on certain days of the week, as well as unadvertised sales on merchandise. This program is very similar to the former Revco program which was called "Senior Shoppers"; Rite Aid attempted to purchase Revco in 1996. This might be attributed to the fact that Revco's former Vice President of Marketing, James Mastrian, now holds the same position at Rite Aid.

Early in 2005, the UAW announced that its members' prescriptions would be filled through mail order. This decision by the union disproportionately affected Rite Aid as it has predominant market strength where the UAW has its highest union density nationally.

In July 2005, Rite Aid completed its acquisition of Shelley's Pharmacy, a chain pharmacy in Philadelphia.

Merger With Eckerd and Brooks

On August 23, 2006, the Wall Street Journal announced that Rite Aid would be buying the Eckerd Pharmacy and Brooks Pharmacy chains (Brooks Eckerd Pharmacy) from the Quebec-based Jean Coutu Group for US$3.4 billion, and merging the two chains into one dominant pharmacy system. The company's shareholders overwhelmingly approved the merger on January 18, 2007.[2] After some store closures and the conversion of the two chains to Rite Aid is complete, the deal will make Rite Aid the dominating drug store retailer in the Eastern U.S., and secures its place as the third largest drug retailer nationwide (behind the faster growing Walgreens and CVS chains).

Similar to what CVS has gone through in Chicagoland after its purchase of Albertson's drug store chains, the deal has left Rite Aid with some locations in close proximity to each other. (Only 23 store locations nationally were sold off to Walgreens, The Medicine Shoppe, or independent owners in order to meet federal regulations.) In many situations, especially Pennsylvania where both chains were dominant and had roots in those states (Rite Aid originated in Scranton, while Eckerd has roots in Western Pennsylvania via Erie for itself and Pittsburgh for converted Thrift Drug locations), there are now two Rite Aids as close as right next door to each other.

Rite Aid had sold some locations to J.C. Penney's Thrift Drug chain in the mid-1990s shortly before J.C. Penney's acquisition of Eckerd, and had also sold all of their Massachusetts stores to Brooks in 1995, bringing some existing Eckerds and Brooks that were once Rite Aids full circle.

Because Eckerd was previously owned by J.C. Penney, Eckerd stores accepted J.C. Penney charge cards. Since the merger, all Rite Aids accept J.C. Penney charge cards.

On December 21, 2007, The New York Times reported that Rite Aid had record breaking losses this year, despite the acquisition of the Brooks and Eckerd chains. [3]

References

1. ^ Rite Aid, Perry grow in Michigan.. Chain Drug Review. Retrieved on 2007-10-07.
2. ^ Fried, Lisa I. (1995-02-20). Perry-Rite Aid consolidation begins. Drug Store News. Retrieved on 2007-10-07.