Rite Aid to Close 145 Stores
Rite Aid plans to close a total of 145 “unprofitable” stores as part of its optimization efforts. The drug store chain announced it was closing an initial 63 stores in December, and is looking to save in administrative and labor costs and make improvements across payroll and the supply chain, with total savings expected to reach $170 million in 2023. The store closings come in response to significant challenges Rite Aid faced due to the pandemic, including supply chain pressures that influenced inventory and sales, shifting store traffic due to increased work-from-home trends, and a tightening labor market.
Total Retail's Take: Rite Aid is following in competitor CVS' footsteps in announcing a downsizing of its store fleet. The pharmacy chain is, like many other traditional brick-and-mortar retailers, seeking to cut costs while also shifting more of its business to digital channels. As such, Rite Aid will invest over $300 million in capital over the next three years to enhance its digital experience and modernize its tech stack to support its retail stores and pharmacies, improve back-office productivity, and grow its digital business. As for its physical store presence, it's not going away, but it will look different. Rite Aid is prioritizing the development of small-format stores focused primarily on pharmacy offerings, particularly in areas of the country where access to pharmacy is limited. 2022 will continue to be a period of transition for Rite Aid as it looks to stabilize the business and position it for future growth.
