Rite Aid to Emphasize Private Label

NEW YORK — When it comes to boosting front-end productivity, Rite Aid has its eyes on private label.

Company president and chief operating officer Mary Sammons, speaking at a retail conference sponsored by Goldman Sachs Wednesday, said developing private brands "allows us to save customers money — 25 percent — but also allows us to improve gross profit by more than that 25 percent. That is important when you have to be competitive."

Private brands, she said, "also have a key role — they help us differentiate assortments in classifications. Our goal is to get that brand accepted as the preferred brand." And beauty is no exception. Last year, Rite Aid introduced three bath-and-body collections, each geared at a different age group. This spring, it added a salon-type hair care line and a spa brand.

Pharmacy accounts for 62 percent of Rite Aid’s revenue. However, expanding the front end is important, noted Sammons, "because it delivers a higher margin." The chain will continue to stress a core marketing message of value and service, said Sammons.

To tighten operations, the company is also emphasizing the use of technology at the front end, and is investing more heavily in category management and making better use of its data warehouse, said Sammons. The intent is to funnel the money saved into promotions designed to increase the market basket. "The value of selling one more item is extraordinary," said Sammons. To do that, Rite Aid is planning more cross-category merchandising programs and will continue to highlight certain products — like Rite Aid brands — in its circulars and within stores centered on a quality message.

Rite Aid also plans to better target ethnic consumers through the use of electronics and will continue to run community events like its Health & Beauty Expo, which began two years ago.