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Albertsons and Rite Aid merger: What merger could mean for your local store

Albertsons Companies is laying out its future if shareholders approve a merger with Rite Aid.

During a four-hour long presentation to Wall Street analysts, the company talked about how it plans to weave the two companies together – and how it thinks the combination will benefit customers and shareholders.

The Stats

Together, the two chains will have 4,866 total stores, with 4,327 total pharmacy counters. They will serve 40 million customers each week and employee 336,000 people. Albertsons says it will be first or second in terms of the prescription market in two-thirds of the markets it serves.

They will generate $83 billion in revenue and make a profit (adjusted EBIDTA – a Wall Street jargon term for ‘earnings before interest, depreciation, taxes and amortization) of $3.4 billion.

In Boise, Albertsons/Rite Aid will be the number one pharmacy provider when ranked on number of stores. The company says it will be ranked number one in the Intermountain Region, which includes Boise, for grocery sales.

Changes at Rite Aid

One of the key ideas from the merger will be to revamp the “front of store” operations at Rite Aid locations to integrate ideas and best practices from Albertsons stores.

The chain will “improve and expand” Rite Aid’s fresh food offerings – with items like yogurt, fruit cups and sandwiches.  It also plans to bring the store label brand program Albertsons acquired when it purchased Safeway to Rite Aid.

“Albertsons can leverage its strong fresh and own brands grocery items at Rite Aid by offering various products such as branded fruits and veggies, cheeses, meats, dairy, and dry grocery, bottled waters and sodas,” the company said in its presentation.

They also say they will look at the layouts of Rite Aid stores and “reviewing plans to expand grocery, fresh and liquor sections in Rite Aid.”

Albertsons says it will apply its “full, fresh, friendly, fast & clean” operating model to the Rite Aid stores – focusing on customer service and well-merchandised stores.

Albertsons recent acquisition of Plated brings the chance to bring ready-to-prepare mealkits to Rite Aid stores and hopes to Plated approved in national health plans so “doctors can prescribe” the solution to patients.

Updates coming to Albertsons Companies stores

During the presentation, the companies said they plan to roll out the Rite Aid brand in nearly all stores owned by Albertsons regardless of the grocery brand (i.e. Albertsons, Safeway, Vons etc.). They said the will look for a “network effect” by increasing traffic in stores and basket size by rebranding the pharmacies as Rite Aid.”  Plans don’t include renaming the Jewel-Osco pharmacies which are centered on the greater Chicago area.

“Albertsons has private label (health and beauty) products… but can benefit from Rite Aid’s private label health and beauty offering,”  the company wrote.  Rite Aid products like nail care, first aid, lotions and OTC drugs could start being offered in Albertsons stores as well.

More in-store health clinics could come to Albertons stores in the future as well.

The combined company plans to “expand and enhance clinic operations for the combined company by utilizing existing well-invested, built-out space in Albertsons stores and leveraging Rite Aid’s experience and expertise in operating RediClinic.

Both chains

In Boise, Albertsons runs a minimal loyalty program focused on gas rewards – but at other stores across the country, it operates a more traditional loyalty program.  The company says it will combine this program with Rite Aid’s “wellness+” program and roll this out shortly after closing.

The companies also plan to accelerate e-commerce options:

  • Expand Drive Up & Go options
  • Fully integrate Instacart availability
  • Currently trialing Grubhub, could expand to other food delivery apps like Uber Eats
  • Building multiple online storefronts (like an O Organics online store)