Rite Aid looks to become an Rx oasis inside ‘pharmacy deserts’

In a new pilot, Rite Aid Corp. is opening mini-locations in rural areas in order to serve “pharmacy deserts” and underserved communities. Do you see growth opportunities for Rite Aid or other drug chains serving  consumers in underserved communities?

In a new pilot, Rite Aid Corp. is opening mini-locations in rural areas in order to serve “pharmacy deserts” and underserved communities.

The first location measuring 3,000 square feet opened in mid-November in Craigsville, VA, a town with a population of about 900. Residents previously had to drive to neighboring communities for pharmacy services. Rite Aid’s stores average 11,000 to 15,000 square-foot.

The chain opened a second location measuring approximately 2,400 square feet within a business strip mall center in Greenville, VA. The closest pharmacy was more than seven miles away. A third will soon open in Scottsville, VA.

The smaller stores feature a full-service pharmacy and a retail mix of health and wellness products. A full-time pharmacist and full-time pharmacy technician will be supported by additional part-time technicians floating between two area locations.

Rite Aid said one in ten Americans live more than five miles from the nearest pharmacy, 29 percent of Americans fail to take their medications as prescribed due to cost and underutilization of medications drives $500 billion-plus each year in avoidable medical costs.

Heyward Donigan, Rite Aid’s president and CEO, last April on an earnings call in announcing the program, said, “We believe that supporting these unmet needs presents tremendous opportunity for us, and the price of entry for us is very low.”

She said many startups aimed at helping underserved communities “lack the assets, scale, and customers to meet the full needs of the pharmacy marketplace.”

Rite Aid may encounter similar business challenges that grocers have faced in “food deserts” partly due to the lower purchasing power of residents in many rural markets. It also appears that Rite Aid’s smaller stores do not stock the junk food, cigarettes and beer that are believed to boost traffic and margins for drug stores.

Higher insurance fees and security costs may be required due to real or perceived higher crime rates in some locations. In the third quarter, Rite Aid absorbed a $9 million increase in shrink year over year and last fall said it was considering locking up items in displays in New York City stores.

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