Rite Aid SWOT and PESTLE Analysis

Strength

1. Strong sales and third largest drugstore in US: Rite Aid in terms of both number of stores and revenue is the third largest drugstore in the US. As of March, 2018 it operates in 19 states across the United States with 2550 stores. In 2018 its two main business segments were Retail Pharmacy and Pharmacy Services. Its retail stores sales comprise of prescription drugs (65.9% of total drugstore sales) and other ‘front-end’ merchandise (34.1% of total drugstore sales). Under its retail pharmacy division it has Rite Aid stores, RediClinic and Health Dialog and in its pharmacy services division it has EnvisionRx and EnvisionRxOptions. Rite Aid has invested right to ensure sustainable economics for filling prescriptions. It has collaborated with its payor partners to explore new options of best management of pharmacy purchases for long term and attain good reimbursement rate access and predictability. During fiscal year 2018, its stores filled 177.4 million prescriptions approximately and served an average of 1.2 million customers per day. Its front-end merchandise includes health and beauty aids, cosmetics, over the counter medications, greeting cards and convenience and regular products. Rite Aid stands at third position after Walgreens Boots Inc. which has 8200 stores in 50 states; and CVS health Corp which has 7800 stores.

2. Focused marketing activities: It has extensive advertising campaigns on digital and focused marketing methods which include radio, television, weekly circulars and direct mails. Its advertising and marketing activities are focused on promotional marketing to get new customers, wellness+ rewards loyalty programs, emphasize private brand products and enhance digital marketing of Rite Aid app, websites and e-commerce. Advertising expenses for fiscal 2018, 2017 and 2016 were $161,826, $181,438 and $191,534, respectively. Through its rigorous advertising campaign it strives to be the first preference of consumers in health and wellness products, information and services.

3. Wellness+ rewards programs: The wellness+ rewards initiative which was started in 2010 is a loyalty program which provides consumers with significant discounts and wellness rewards for being loyal Rite Aid shoppers. It has at present 13 million customers under wellness+ rewards program and 60% of transactions at Rite Aid are executed through wellness+ rewards cards. The program has Gold and Silver tiers. Under Gold tier the consumer can get a discount of up to 20%. However, under its wellness store program, Rite Aid gives 24x7 access to pharmacist, exclusive sale prices and discounts. By 2019 this American pharma giant has plans to complete 132 additional wellness remodels.

4. In-store health stops: Rite Aid's 75 RediClinics of its retail pharmacy segment are the in-store health stops that can help people suffering from minor 30 common medical illnesses, or those people who are in need of physical examinations, immunizations, or health screenings. It represents a way to make your drug-store. Its RediClinic’s clinicians can even write prescriptions. After implementing this in 2014, sales and goodwill have risen for Rite Aid. Due to the acquisition of RediClinic and Health Dialog the Company even had a $76,124 of goodwill in the Retail Pharmacy segment.

Weakness

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Opportunity

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Threat

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Political

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Economic

1. Sustainable economic strategy for prescription filling: Rite Aid has engaged with some of its payor partners into a distribution agreement with McKesson, the largest distributor of pharmaceutical and medical supplies in the USA, which provides purchasing efficiencies and direct-to-store delivery for all its pharmacy products. Hence, low reimbursement rates can be offset. This will give the Company an affordable purchasing cost for long term purchases and will give improved reimbursement rate predictability. The US drugstore chain has further integrated its three subsidiaries and Rite Aid stores network, prescription count and front end sales while controlling costs.

2. Economic conditions may adversely affect the industry, business and results of operations: Consumer expenditure can be reduced due to uncertain economic conditions which can decline its same store sales. A decrease in consumer expenditure can set an industry trend where the Company and its competitors can offer products at low prices or promotional offers thus reducing profits. In addition to this pharmacies have to choose and locate economically feasible suppliers who satisfy their requirements so that they can procure sufficient products on time and in effective manner so that customer confidence is not diminished.

3. Macro-economic factors and impairment cost: The Company monitors recently relocated and new stores for operations and strategic factors such as new competitive entries, regional economics and other local market considerations for determining if an impairment evaluation for them is required. Based on these factors a closure decision of a particular store is made. Rite Aid recorded impairment charges for closed facilities of $3.1 million in fiscal 2018, $2.0 million in fiscal 2017 and $1.0 million in fiscal 2016.

Social

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Technological

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Legal

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Environmental

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