Though numerous retailers have permanently closed up shop in the course of the coronavirus pandemic, you’d think drug stores would be in no danger of going that route. After all, consumers need access to pharmacies and essentials that can be purchased on a whim without having to navigate a massive supermarket (a whopping bout of hay fever, for example, might inspire a drug store run for some allergy medication).
But actually, drug store chains have faced their share of competition from online retailers like Amazon (NASDAQ: AMZN), and if physical stores want to keep up, they’ll need to take steps to become more customer-friendly. It’s for this reason that Rite Aid (NYSE: RAD) is redesigning some of its stores in hopes of drawing in consumers and maintaining its physical presence in shopping centers throughout the country.
The new and improved Rite Aid
Rite Aid’s new layout involves putting pharmacies at the front of the store, not the back. It recently debuted one of its “store of the future” designs in Moscow, Pennsylvania, and has plans to roll out this model if it proves successful.
Rite Aid’s goal in shifting its pharmacy locations is to give customers easier “in and out” access to medication, and that’s crucial during the coronavirus pandemic, when many people are anxious about the idea of in-person shopping. Rite Aid’s new design will also feature lower shelves to improve product visibility, more natural light, and, notably, a “wellness room” where customers can schedule visits with a licensed practitioner. And, there will be more shelf space for personal care and beauty items, vitamins, and supplements.
A necessary change
Drug stores have seen a 13% decline in foot traffic from October 2019 to October 2020, and the pandemic is the clear culprit. With so many people cutting back on doctor visits, prescriptions are down, and so are store visits. Furthermore, consumers have generally been limiting their trips to essential stores to stay safe at a time when coronavirus cases don’t seem to be letting up. That’s hurt stores like Rite Aid, especially since many consumers may be more apt to pick up over-the-counter medications in conjunction with a grocery run at a supermarket, as opposed to making a separate drug store trip.
Rite Aid’s goal with its new design is to draw in more customers and make their shopping experience more pleasant and easy to navigate, and it’s this innovation on Rite Aid’s part that should give real estate investors a breath of relief. Shopping center real estate investment trusts (REITs) are a precarious investment these days thanks to the ongoing pandemic, and additional store closures could spell trouble for many people’s portfolios. By revamping its design, Rite Aid is helping to ensure its viability, which means it may continue to be a shopping center mainstay for many years to come, even as drug stores continue to follow the pattern of retailers that have been hurt by online competitors.
Of course, if a coronavirus vaccine is approved in the near term, stores like Rite Aid could serve as distribution centers, thereby increasing their foot traffic and boosting sales. But the fact that people may have the option to get vaccinated at the front of the store instead of the back makes the prospect that much safer from a public health perspective.