Summary
As Rite Aid embarks on its journey of converting the recently acquired Eckerd's stores to its own format, it comes as no surprise that taking the Eckerd brand off the market over the next 16 months will be its first priority. Although brand identity stands for a myriad of store experience synergies created for the consumer(cleanliness, instock, selection, quality of staff, price, et al) that differentiate one player from another within the sector, focus on private label products must be the cornerstone of an overall company brand strategy that garners loyalty through repeat visits. This is key for several reasons: 1)A quick ramp-up of stores in markets like Detroit, DC, LA and Atlanta where competition in store counts and front store sales penetration is heavy. 2)Eckerd stores produced 7% of topline in private label--the prototype Rite Aid, 12.6%. 3)Rite Aid's new brand campaign "With Us It's Personal" will boost the Eckerd stores in markets that had little or no Rite Aid presence.
Analysis
The key to the eventual success of the Eckerd conversion will ultimately be how quickly Rite Aid can convert to their footprint and allow them to market their "brand" as quickly as possible. Their new "Customer World" layout coupled with the superiority they have over Eckerds as visual merchants will be further enhanced and fortified by adding additional private label sku's to the assortment; in fact, Rite Aid's goal for the comng year is to add over 200+ new sku's to the mix which will also support current front end strength categories such as pain relievers, diabetes and weight management, skin care, allergy and heart health. Trusting much of what they do to an already established supplier advisory board, Rite Aid places a very heavy emphasis on vendor partnership and being first-to-market while welcoming feedback and guidance from the supplier partners.
When Rite Aid fully leverages all the benefits from increased private label penetration right down to packaging, features/benefits, price and value proposition and links all this to programs and marketing campaigns that will shape, enhance and fortify the shopping experience for the former Eckerd customer, they will have then figured out as well as reaped the benefit of knowing that the overall store(experience) IS the brand and will move quickly and profitably towards achieving(or as some analysts predict), exceeding the acquisition synergy plan. Keeping the front store customer satisfied is the cake---the icing for Rite Aid will be the pickup of the Rx customer(accounting for 65-70% of total store business) coming back often. If achieved, there will be wide smiles on the faces of Rite Aid executives, shareholders and analysts alike!
