Arthur Vidro
ON CONSUMERISM
The Rite Aid corporation filed for Chapter 11 bankruptcy on October 15.
This means the corporation will try to stay in business. It needs to go through the bankruptcy process so it can avoid paying all its debts in full; it doesn’t have the money to do so. Bankruptcy allows the debts to be discharged by paying off only a portion of the amounts due.
Even so, the company warned on October 18 that by year’s end it may close or sell off another 500 of its stores. And it acknowledged the possibility that even with bankruptcy the corporation might not survive.
Rite Aid is not as large as it used to be. The chain had more than 5,000 stores in 2008. Nowadays it has about 2,100 and might have fewer by year’s end.
Part of Rite Aid’s troubles stems from taking on too much debt. During better times, they bought out the Eckerd Pharmacy and Brooks Pharmacy chains, despite not having the money on hand to do so. They paid $3.4 billion, which included taking on more than $800 million in debt. That’s like putting on your credit card a purchase you can’t afford but for which you’ll eventually have to pay.
And unique to the industry, Rite Aid is facing lawsuits for an alleged role in the opioid crisis.
Over the past six years, Rite Aid has lost nearly $3 billion.
I’m not a huge fan of chain stores, but I’m rooting for Rite Aid to survive. I don’t want the area to lose another pharmacy. The city needs it.
When I moved to Claremont (2009) the city had four pharmacies: Bannon’s, CVS, Rite Aid, and Walmart. Pressure from one of its three Claremont rivals compelled Bannon’s to sell the business. For a while it was shuttered, then the store reopened as a satellite branch of Newport’s Sugar River Pharmacy. Eventually, pressure from a different one of the larger rivals compelled Sugar River to sell its Claremont business.
Bannon’s and then Sugar River were successful pharmacies in Claremont. There was enough business to go around for four pharmacies in the city, though some stores (like some consumers) are never satisfied and always want more.
Without Rite Aid, there would be only two pharmacies remaining. That’s not enough. The workload at the two remaining pharmacies would increase, perhaps leading to mistakes. Almost certainly, customer service would suffer.
Plus, some customers don’t have cars. If you are frail or have difficulty walking, yet live within walking distance of Rite Aid, you might hesitate before walking to CVS – and walking to Walmart would be far too taxing.
Over the summer I made my sole purchase this year from the pharmacy section of Rite Aid. I needed Sulfamethoxazole tablets to battle a foot infection. With no shoe on my foot, I threw the bottle of pills, the receipt, and the store promotion printout into my bag and hurriedly hobbled my way to the exit.
At home I read the promotion: “Save $5 on your next in-store purchase of $15 or more. Valid Today Only.”
What a stupid gimmick. Does Rite Aid expect a customer to get home, unpack, read the promo, then head back to Rite Aid? Of course not. The fact that these promos are given out at the pharmacy register, to injured or sick people eager to get home and begin treatment, shows how ill-conceived these advertisements are.
Rite Aid isn’t asking for my advice, but I’d tell them:
Do away with the promotions on the receipts, the rewards cards, and all other gimmicks. Just lower the prices – for all customers.
If you can afford to sell at a lower price to your rewards card holders, then make that price the new standard price or sale price – for everybody. When word gets around that prices have gone down, consumers will show up.
And take a lesson from Sugar River Pharmacy: Answer the telephone in person.
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