Rite Aid 2012 Annual Report Download - page 6

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increase in same store script volume in the fourth quarter of fiscal 2012. To the extent that the Express
Scripts pharmacy benefit management network continues to exclude other pharmacies from their
network, we have the opportunity to pick up incremental share. We plan to work proactively to ensure
that we attract and retain as many new customers as possible Efforts to do so will include adjusting
pharmacy staffing levels where appropriate, encouraging customers to sign up for wellness +, and
continuing to communicate in print, signage and other advertising channels that we accept Express
Scripts pharmacy benefit management network patients.
Wellness remodels—During fiscal 2012, we introduced our new Wellness format store. These stores
offer expanded clinical pharmacy services and new health and wellness product offerings. They are
staffed with our unique Wellness Ambassadors, who serve as an added customer resource and bridge
from the front end of the stores to the pharmacy. We completed 274 wellness remodels in fiscal 2012
and expect to complete an additional 500 in fiscal 2013. Our customers have responded favorably to
this unique store format and recent sales results in these stores have been encouraging.
Healthcare services—During fiscal 2012, we increased the number of Rite Aid immunizing
pharmacists to 11,000, expanded our immunization services to all of our stores and administered
1.5 million flu shots. In addition to flu shots, we also expanded the scope of our immunization services
to 14 different disease states. Continuing to expand the volume and types of immunizations that we can
perform will be an area of focus for fiscal 2013. In conjunction with Optum Health, last August we
introduced NowClinic Online Care services inside select Rite Aid pharmacies in the greater Detroit
area. These clinics provide on-line access to a physician, who has the ability to diagnose and potentially
write prescriptions for our patients. We have also introduced wellness + for diabetes, the first extension
of our wellness + program to provide discounts on front-end products and resources for diabetes
patients and caregivers. One such resource is ‘‘Diabetes Head2Toe’’, a unique collaboration with Web
MD to provide online tools to help patients manage and live well with diabetes. We are focused on
healthcare-related services because we believe these services will help build loyalty with existing
customers and attract new ones.
Script file purchases—We intend to increase the amount of capital allocated to the purchase of
prescription files from $35.0 million in fiscal 2012 to $50.0 million in fiscal 2013.
Private brands—During fiscal 2011, we began the rollout of a new private brand architecture, which
includes the consolidation of our private brands in three separate tiers. We have converted about 2,900
items to the new architecture and have improved our private brand penetration by 100 basis points
over the prior year. We expect to have approximately 3,000 items in these brands in fiscal 2013. Many
of the new items are in our price fighter brand, Simplify, and we believe customers have found these
products to be of high quality and provide great value.
Customer service—We have put programs in place in store operations to stress the importance of
greeting our customers more frequently and assisting them with their purchases. We made investments
in technology in fiscal 2011 and 2012 that make it easier for our store associates to perform necessary
tasks, such as price changes and backroom inventory management, which will free up their time to
focus on the customer. During fiscal 2012, we increased the amount of dollars spent on training our
store and field associates on customer service skills. We believe this additional focus has helped drive
our same store sales increases in fiscal 2012 and this will continue to be an area of focus for us in fiscal
2013.
We made significant reductions to our SG&A expense over the past few years through better
control of store labor and other controllable costs in the stores, consolidation of our distribution center
network, a centralized indirect procurement function for all non-merchandise purchases and through
initiatives aimed to simplify our processes in the stores and at our Corporate office. We will continue to
focus on controlling costs in fiscal 2013 so that we can maximize the benefits of our sales initiatives.
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