BUST: No Cure for Rite Aid’s Ills?
Sometimes businesses, like people, simply don’t respond to health “treatment.” Rite Aid may, sadly, be among those brands. Founded in 1962 (under the name “Thrift D Discount Center”), they were once the third-largest drugstore chain in the U.S., operating 1,200 locations.
The category of health and wellness itself is still going strong, but in 2023, Rite Aid submitted its first bankruptcy filing. They recently submitted their second filing and closed more than 100 stores in Pennsylvania (where the closures are concentrated), California, New York, Washington, New Jersey, Maryland, Vermont, Connecticut, Delaware, New Hampshire, Idaho, and Ohio.
The company never fully rebounded from a huge financial settlement around an opioid-related lawsuit.
But these financial pressures were compounded by massive changes in the drugstore category itself. Consumers today are frequenting both online pharmacies and drugstores within other stores like grocery chains.
CVS has responded to shifts in consumer behavior by locating pharmacies adjacent to big-box stores like Target. They also bought and rebranded some closed Rite Aid locations. But CVS has also realized that a brick-and-mortar-only strategy is unsustainable. In fact, they earmarked $20M for the development of better technology, including online alternatives.
The reality is that as we enter the phygital world (the theme of our recent Street Fight LIVE 2025), every brand must ask itself:
- Do consumers buy what I’m selling in person or online? (This can often be driven by speed, as we know.)
- How many storefronts do we really need as a brand?
- Where should those locations be?
- How much space do we need to operate a profitable location?
- What technologies can reduce operating costs and deliver better marketing and customer service?
To formulate some of those answers for your own business, subscribe to our newsletter to stay informed (and reduce your chances of ending up as a BUST in this column).
