BUST: The Wrong Time for Rite Aid
Bankruptcies and store closings have hit the retail world hard this year. Bed Bath & Beyond was the most notable, and Christmas Tree Shops and Jenny Craig are among the other retail brands that closed doors in 2023. Rite Aid is the latest MULO (multi-location) brand to suffer the impact of retail shrinkage. Although the health and wellness category is booming, Rite Aid has faced fierce competition and crippling debt.
In addition to many senior management changes, Rite Aid has been dealing with a Department of Justice (DOJ) filing that alleges the brand knowingly filled bogus prescriptions for drugs, including opioids.
Drugstores today also face fierce competition from in-store pharmacies at grocery stores and at MULO retail locations like Target and Walmart.
In 2020, the company revealed a bold plan to become the “store of the future,” competing with CVS and Walgreens (which recently lost its CEO rather suddenly, so we’ll be watching for news on that front). But, based on current facts, the MULO brand may ultimately become “the store of the past.”
At its peak, brand represented 40 percent of all pharmaceutical sales and had as many as 5,000 stores.
The U.S. pharmacy market is currently valued at more than $500B, but the Rite Aid story shows that even with huge opportunity, stiff competition, legal and management challenges, and consumer preference can turn a previously healthy brand into one on life support.
