by Michael L. Goetting, R.Ph.
As a former Rite Aid employee, I can vouch that Rite Aid is an evil force in my humble opinion. However, the anecdotal tales in the Go Inside article could have happened at poorly run outlet at any chain store. Rude employees are a danger in any business, and the ongoing labor shortage in the Pharmacy sector magnifies this problem. I could even attempt to explain the pricing on the antihistamine product, but the purpose is not to defend Rite Aid. The fact remains that these events did occur in Rite Aid stores.
This story reflects the real problem at Rite Aid.
The Lane Drug Company
The Lane Drug Company, a chain of 114 drug stores based in Toledo, Ohio, employed many happy workers. Known for decent prices, great selection, wonderful service, and great sales promotions, customers loved Lane’s. Sheldon W. “Bud” Fantle, President and CEO, led Lane’s through a highly successful period, and in 1976, Lane’s acquired the much larger People’s Drug Stores, based in Washington, DC. Since Lane’s was the smaller company, it was positioned as a division of People’s, and Mr. Fantle went to Washington to revitalize the whole of People’s. In the mid-1980’s, a major investor sold People’s to Imasco, Ltd., of Canada. In attempts to streamline operations, Imasco fired Mr. Fantle in 1987, and Lane’s took the People’s name in 1988. Many changes were for the better, because the stores were remodeled in bright, eye catching colors with computer aided layout design, and many of the innovations pioneered by Lane’s at that time are just catching on today.
Unfortunately, Imasco soon tired of People’s, and decided to sell the chain off division by division. On April 11, 1989, a day that shall forever live in infamy, The Lane Drug Company was sold to Rite Aid. This time, more changed than just the name.
The Three Big Lies
At a meeting with the employees just before the acquisition, a Rite Aid spokesman was on hand to calm their fears. Employees were assured that Rite Aid was there to continue running the successful chain of stores, and not to expect any big changes. Rite Aid would not close stores. There would be no lay-offs. There would be no salary cuts.
On the day of the acquisition, the store in Rossford, OH, closed. At least a dozen more Greater Toledo area stores followed within a few years. The Distribution Center on Waggoner Boulevard in Toledo was closed.
Distribution Center employees were terminated with the closing. Furthermore, there were huge cuts in store staffing. Under Lane’s management, the Parkway Plaza location had a weekly budget of 320 hours of hourly staff, in addition to Pharmacists and Management personnel. Rite Aid had cut that number to 80 hours before closing the store entirely in 1991. Other stores saw similar cuts.
About six months after the acquisition, Rite Aid decided to shorten business hours from 88 hours per week to 80 hours. Pharmacists, who were considered salaried personnel, were abruptly informed that their pay rate would be cut to reflect the reduction in hours worked. Despite protests that the value of a salaried employee is measured by the work that is done, and not the number of hours worked, the salaries were cut.
Rite Aid inherited a beautiful, newly remodeled group of stores. In short order, Rite Aid remodeled these stores with gaudy 1970’s-era styling and layout, similar to the look Lane’s had abandoned about 15 years earlier. Over a decade later, newer Rite Aid stores closely resemble the look and design Lane’s pioneered in 1988.
Rite Aid prescription pricing was another sore spot. While Lane’s had been known for competitive pricing, Rite Aid soon became a punch line in reference to high prices. Moreover, Rite Aid advertising policies were sorely deficient. Rite Aid ran half to three-quarter page ads buried in the Monday paper. This was a very ineffective strategy, and Rite Aid might as well have saved their money and not advertised at all. Again, in recent years, Rite Aid has begun to advertise on Sundays with full color, tabloid style ads. Lane’s had pioneered this strategy in the 1970’s.
Rite Aid refused to accept many third party prescription plans, due to “substandard reimbursement”. While the motives for this position were noble in the face of margin squeezing by insurance companies, it only accomplished alienating a base of loyal customers. As a result, the volume of the Parkway Plaza pharmacy sank about 40%. Pharmacy staff was able to retain almost all cash customers through price matching, superior service, and reliability, but could to nothing to save the business of customers whose insurance card was no longer honored.
All In the Family
Sadly, Lanes’ fate is not unique. Rite Aid obtained their current size by acquiring smaller chains and independents, rather than by their own acumen. Other chains sharing the Rite Aid fate include Perry Drug Stores of Michigan, and even another Lane Drug in New York State.
About the time of the Lane’s acquisition, Martin Grass’ brother acquired another People’s division, Haag Drug, of Indianapolis. (Martin Grass, son of Rite Aid founder Alex Grass, resigned as CEO in the late 1990’s as Rite Aid neared bankruptcy.) Although the younger Mr. Grass wisely renamed Haag’s “Reliable Drugs”, he quickly ran that chain into the ground, and Rite Aid soon acquired the ruins.
A happy ending to my Rite Aid woes could only have been achieved by leaving the Company.
I have been employed for the last several years by a pharmacy that supplies pharmaceutical services to nursing homes and other institutions. Like Lane’s, my present employer is a locally managed operation that is part of a larger chain. Fortunately, Rite Aid is not interested in this sector and actually sold their nursing home business, which I helped to operate, to my current employer.
I am happy to say that my current employment experience has surpassed Rite Aid in every way.