Rite Aid 2011 Annual Report Download - page 6

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 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 intend to increase the amount of dollars spent on training our store
and field associates on customer service skills.
In stock conditions—We are focusing on improving our in-stock conditions for both ad and non-ad
merchandise through improvement in our forecasting processes and the accuracy of our perpetual
inventory system.
Segmentation—We are also continuing to build upon our segmentation strategy and are
experimenting with different store formats that are better tailored to the needs of the particular market
that the store is in. During fiscal 2011, we entered into a ten store pilot with Save-a-Lot, a subsidiary of
SUPERVALU, Inc. The co-branded Save-A-Lot/Rite Aid pilot stores have a full grocery shop including
meat, produce and dairy, traditional drugstore offerings and a full service pharmacy. While we are still
in a pilot phase, early results, especially on the front end sales side, have been encouraging. We are
also piloting a value store format. These stores have lower front end prices, a more focused front end
sku selection, a wall of values and a larger dollar section as well as a full service pharmacy. These
stores are designed to better compete in markets where pricing is the main competitive differentiator.
In March 2011, we opened six new wellness stores. These stores have a new look with a new d´ ecor
package, lower shelf height with a clear view of the pharmacy, wider aisles and brighter lighting. There
are significant changes to our merchandising in these stores, including the addition of an expanded
selection of organic foods, all natural personal care products and homeopathic medicines. These stores
will also have expanded clinical pharmacy services, including diabetes care specialists and medication
therapy management experts.
To support our segmentation initiatives and to make other necessary improvement to our store
base, we plan to complete approximately 500 remodels in fiscal 2012.
We made significant reductions to our SG&A expense in fiscal 2010 and fiscal 2011 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 2012 so that we can maximize the benefits of our sales initiatives.
We have also made significant improvements in our working capital management in fiscal 2010 and
2011 and will continue to control inventory levels through reduction of backroom inventories and
improvements in our ad ordering system and sales forecasting techniques.
Products and Services
Sales of prescription drugs represented approximately 67.8%, 67.9%, and 67.2% of our total sales
in fiscal years 2011, 2010 and 2009, respectively. In fiscal years 2011, 2010 and 2009, prescription drug
sales were $17.0 billion, $17.4 billion, and $17.6 billion, respectively. See ‘‘Item 7 Management’s
Discussion and Analysis of Financial Condition and Results of Operations’’ and our consolidated
financial statements.
We carry a full assortment of non-prescription, or front end products. The types and number of
front end products in each store vary, and selections are based on customer needs and preferences and
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