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Those among us who yearn for the good old days — and there remain many who fondly recall a simpler time in chain drug retailing — must surely have a second thought or two about Rite Aid, in the wake of that venerable retailer’s fight for survival.
Once upon a not-so-distant time, Rite Aid, along with Walgreens and CVS, formed the golden triumvirate of chain drug retailing. As they went, we believed, so went the industry. The remainder, the so-called local drug chains, were just along for the ride.
What happened? What went wrong? How did a serious player become an also-ran, a dispensable entity whose inevitable passing will be mourned, if not terribly missed — and not very long remembered?
The Rite Aid story is the stuff that lends itself to over-long books about the problems that exist in American business, the lust to increase size, to gain momentum, to become more important, to be somebody they were never meant to be.
The reality is far simpler — and far more lamentable.
In truth, four factors have contributed to Rite Aid’s demise, factors that continue to challenge the players that the Pennsylvania (we think) drug chain will almost certainly leave behind.
The first is management — or, more appropriately, lack of management. Once upon a time, one of Rite Aid’s strengths was the caliber of its management. The people at the top — especially the founding Grass family — knew how to manage and build a business. That has not been the case for a very long time. More than that, Harrisburg, once the home of Rite Aid, is no longer its base of operations. Where is that base today? Hard to know.
Second is the unending quest to grow. Rite Aid was never content to be No. 3 on the chain drug ladder. It sought the top position — by opening and acquiring stores, entering new markets, buying new empires. Face it: There is always a limit to growth, especially when that attempt to grow follows no strategy, no plan, no logical progression.
Third, manage debt. The immediate cause of Rite Aid’s almost inevitable downfall is the size of its debt. It appears that the drug chain owes more to everyone — or almost everyone. As many businesses already know, debt is the enemy of good management. It’s a lesson Rite Aid apparently never learned.
Finally, as many industry observers know, a store is the vessel that supports and encourages growth — or, at the least, it is supposed to. Looking briefly again at Walgreens and CVS, their stores represent a plan, a program and a route to gain size and impact. That’s not the case with Rite Aid — and hasn’t been for quite some time. Why shop a Rite Aid? Too many shoppers have searched in vain for an answer.
And so Rite Aid, once among mass retailing’s darlings, is poised to go the way of all superfluous retailers. The hope here is that the drug chain, or what will remain of it after the inevitable blood bath, will survive in some recognizable form.
The fear is that it will not.
