Rite Aid 2016 Annual Report Download - page 9

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We have expanded wellness+ in recent years by launching both wellness+ for diabetes and
wellness65+ for seniors. In fiscal 2016, we significantly enhanced our program by partnering with other
highly respected brands such as AT&T, ExxonMobil, Macy’s, Nationwide, Direct Energy, Hulu and
American Express to launch Plenti, the first coalition loyalty program in the U.S.
Plenti, which at Rite Aid has been incorporated into wellness+ to create wellness+ with Plenti,
allows consumers to earn and use points across a range of well-known brands in different industries.
Through wellness+ with Plenti, our customers can use one card and earn two kinds of points.
Members continue to earn wellness+ points toward various benefits at Rite Aid including discounts of
up to 20% off storewide, exclusive sale prices and 24/7 access to a pharmacist. When the enhanced
program launched in May, +UP Rewards became Plenti points. Members are now able to earn Plenti
points whenever they make qualifying purchases at Rite Aid and all other Plenti partners. Plenti points
offer the same savings as +UP Rewards and provide even more value to customers since they can be
used for savings at Rite Aid as well as certain other Plenti partners including AT&T, ExxonMobil,
Macy’s, Nationwide, Direct Energy, Hulu and American Express. Customers have at least two years to
use their Plenti points.
We experienced strong membership growth in fiscal 2016, with 26.5 million customers enrolled in
wellness+ with Plenti and millions more enrolled by our partners throughout the coalition. In addition,
57% of transactions at Rite Aid now involve a wellness+ with Plenti card. We’ve also been highly
successful in converting our gold and silver wellness+ members—our most loyal and valuable
customers—to the enhanced program. As of the end of fiscal 2016, 98% of gold members and 93% of
silver members were enrolled in wellness+ with Plenti.
Wellness Store Remodels—In fiscal 2016, we continued to strengthen Rite Aid as a wellness
destination by completing additional Wellness store remodels. As a result, our total number of Wellness
stores reached 2,042 by the end of the fiscal year, which means that nearly 45% of all Rite Aid stores
are now Wellness stores. We also constructed our first net-new Wellness store—our first net new store
in five years—as we continue building up our real estate pipeline for additional net new stores and
relocations heading forward.
In addition to improved interior design, expanded clinical pharmacy services, innovative
merchandising and new wellness product offerings, Wellness 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 350 additional Wellness remodels in fiscal 2017 along with 50 relocations and
net new store openings. We believe these efforts represent a cost-effective way to strengthen our store
base, grow sales and offer our customers an engaging wellness experience.
Prescription File Purchases—In fiscal 2016, we increased the amount of capital spent on the
purchase of prescription files to $128.6 million, up from $112.6 million in fiscal 2015. We have allocated
$125 million of our fiscal 2017 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. This drug purchasing and distribution arrangement is generating lower product
costs, working capital benefits and improved in-stock positions that are in line with our expectations.
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