Rite Aid 2015 Annual Report Download - page 8

stores reached 1,634 by the end of the fiscal year, which means that more than a third of all Rite Aid
stores are now Wellness stores.
In addition to improved interior design, expanded clinical pharmacy services, innovative
merchandising and new wellness product offerings, these stores are staffed with our unique Wellness
Ambassadors, who serve as a bridge from the front-end of our stores to the pharmacy and provide an
added level of customer service. Our customers have responded favorably to this unique store format.
Our Wellness stores are outperforming the rest of our chain in terms of both front-end same store
sales and same store prescription count growth.
We plan to complete 400 additional Wellness remodels in fiscal 2016. We believe these remodels
are a cost-effective way to strengthen our store base, grow sales and offer our customers an engaging
wellness experience. As we continue our store remodeling efforts, we will also begin setting the stage to
complete store relocations and build net new stores over the next few years, allowing us to further
expand the reach of our Wellness store format.
Prescription File Purchases—In fiscal 2015, we increased the amount of capital spent on the
purchase of prescription files to $112.6 million, up from $87.4 million in fiscal 2014.We have allocated
$100 million of our fiscal 2016 capital expenditures budget for prescription file buys as they typically
deliver a strong return on investment.
Drug Purchasing and Distribution Efficiencies—In February 2014, we announced an expanded
agreement with our long-time partner McKesson for pharmaceutical purchasing and distribution. As
part of this five-year agreement, McKesson has assumed responsibility for purchasing all brand and
generic medications we dispense in our stores as well as delivering those medications to our nearly
4,600 store locations. We expect that this partnership will leverage the scale of both companies to
deliver greater purchasing and distribution efficiencies, ensure the highest levels of service for our
customers and generate additional cash flow to further fuel our long-term growth. In fiscal 2015, we
completed the conversion of our stores and distribution centers to the new delivery process. By the end
of our third fiscal quarter, the new arrangement was generating working capital benefits and improved
in-stock positions that were in line with our expectations.
Private Brands—In fiscal 2011, we began to roll out our new private brand architecture, which
included the consolidation of our private brands into three separate tiers. The initiative included
enhanced package designs for our private brand items and the introduction of our price-fighter brand,
Simplify. We now have approximately 3,500 private brand items and our private brand penetration has
increased from 16% in fiscal 2011 to 18.5% as of the end of fiscal 2015. In fiscal 2016, we will continue
to aggressively promote our private brands, which offer great value to our customers and strong
margins for Rite Aid, through specific promotional programs and the introduction of new private brand
items. We also plan to explore ways to further enhance our offering in order to create a world-class
private brand.
Enhanced Digital Offerings—As we continue working hard to improve the customer experience in
our nearly 4,600 stores, we’re also focused on providing enhanced digital resources that better reflect
our brand of health and wellness. In addition to our new and improved www.riteaid.com website, we
continue to enhance our mobile app with quarterly updates while engaging with customers on social
media sites like Facebook and Twitter. In fiscal 2015, we also rolled out an enhanced e-commerce site
that provides online shoppers with easier navigation and full integration with our wellness+ customer
loyalty program.
Customer Service—We have put several store programs in place to improve the customer service
experience, including the addition of Wellness Ambassadors to more stores and our chain-wide
emphasis on greeting our customers more frequently and assisting them with purchases. We have also
made investments in technology to make it easier for our store associates to perform necessary tasks
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