Rite Aid CEO talks pandemic shifts, why stores still matter

Business

This 2013 photo provided by Rite Aid shows Heyward Donigan. The COVID-19 pandemic swept in some big changes to how drugstores and other retailers do business. Donigan expects some of those changes to become permanent.(Michael L. Mihalo/Rite Aid via AP)

Heyward Donigan became Rite Aid’s CEO months before the coronavirus pandemic brought some big changes to how drugstores operate.

Online sales grew after customers first rushed to stores to stock up on cleaning supplies and then stayed home. Like its rivals, Rite Aid started offering same-day prescription deliveries. The company also partnered with Instacart and DoorDash to deliver other products.

Meanwhile, the drugstore chain dove into a remodeling campaign centered around its pharmacies.

Donigan wants pharmacists to become reliable sources for advice about healthy living. But while company leaders polish Rite Aid’s health care reputation, they still struggle with how to handle tobacco sales.

The 60-year-old Donigan spoke recently with The Associated Press. The conversation has been edited for clarity and length.

Q: With sales shifting online, how will consumer behavior change permanently?

A: Besides our e-commerce growth … we also are seeing significant delivery growth. We’re also rolling out buy online, pick up in store. We’re meeting customers where they are and allowing this diverse set of delivery and pickup options to be a permanent part of our solution.

Q: How do you expect customers to continue using stores?

A: The vast majority of our customers have been and will continue to come into stores. We want people to consult with the pharmacy. Our store remodels center around the pharmacy experience and, of course, people can’t get shots at home. The other important part of our remodel is the beauty area. Our target customers, women between 25 and 49, are looking for an experience and they’re looking for a little bit of a getaway.

Q: Why target that population?

A: Those are people taking care of their children, their pets, their spouses and their parents. I call it buy one, get five free. It’s a very rich target. It’s a growing segment, and these women are really stressed. They want that experience … what we call ‘what you want and what you need.’ What you want, wine. What you need, Tylenol.

Q: With the health emphasis, why are your stores still selling tobacco?

A: We haven’t publicly come out with the full exit strategy for tobacco. We are thinking through right now what’s the right strategy, not just for our customers, but also what’s right from a shareholder and a (company performance) perspective. But more to come on that, I expect.

Q: You have around 2,500 locations. Will we ever see drugstores go through another wave of new store construction like we did several years ago?

A: I think right now all of us are making sure we have the right pharmacies in the right locations and enough capital to support the ones we have. And we’re going to be doing a whole host of different remodels tailored to the local market.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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