Rite Aid's Standley, Crawford discuss blockbuster deal

Rite Aid chairman and CEO John Standley (left) and president and COO Kermit Crawford

CAMP HILL, Pa. — The Albertsons Cos. merger with Rite Aid Corp. will create a “truly differentiated” player in the food, health and wellness space, John Standley, chairman and chief executive officer of Rite Aid, said in an interview.

The Albertsons-Rite Aid merger deal, announced Tuesday, will transform Rite Aid through the addition of 1,800 Albertsons Cos. pharmacies and access to the supermarketer’s front-end expertise, especially in the private-label arena, said Standley, who will be CEO of the new company. Albertsons’ capabilities in organic/natural foods, with brands like its private label O Organics line, will be especially beneficial for Rite Aid, he said. Such brands will push the drug chain “further into the wellness space,” he said in an interview today.

Rite Aid president and chief operating officer Kermit Crawford noted in the interview that Albertsons’ private-label penetration of 23% compares favorably with Rite Aid’s 18% to 19%, and the merger should accelerate the drug chain’s rollout of store brands, especially of natural foods, as part of its wellness focus. “It fits right into our overall strategy,” he said.

Rite Aid’s store count, Standley added, will be deepened in existing markets and extended to new ones. The ability to add pharmacies to Shaw’s and Acme supermarkets in the East is especially attractive, he said.

Introducing a stand-alone drug store in a new market would be “very challenging” under other circumstances, Crawford noted. “But if you add a pharmacy in an Albertsons store and then follow up with a freestanding Rite Aid, that makes a lot of sense.”

The grocer’s capabilities naturally complement Rite Aid’s strategy of being “a health care company managing the entire patient,” noted Crawford. He especially looks forward to tapping Albertsons’ delivery capabilities through services like Instacart and its Plated meal kit service.

The combined company will offer a holistic approach to health care, Crawford emphasized, with everything from Rite Aid’s drive-through pharmacies to Albertsons’ diverse choice of nutritious foods.

Asked about the benefits of the deal for Albertsons, Standley said the grocer gets Rite Aid’s pharmacy capabilities and trusted brand. And both retailers will gain from merging loyalty programs with a combined 25 million members. The combination will be a tremendous asset for the merged entity’s marketing, he said.

Crawford said the deal gives Albertsons “instant pharmacy credibility and expertise,” citing Rite Aid’s capabilities in immunizations, its RediClinic walk-in clinics, EnvisionRxOptions pharmacy benefit manager and Health Dialog population health management company.

Standley said he and Albertsons chairman and CEO Bob Miller, who will be chairman of the new entity, work well together, and they look forward to the opportunities this proposed merger creates for their companies.

“The combined capabilities are really going to differentiate us in the marketplace,” Standley said.

Crawford said the essence of the deal for Rite Aid is being able to meet customers “where, when and how they would like.”

Pointing out that the drug chain is already offering preventive care through its pharmacies and RediClinics, Crawford said, “Rite Aid’s covering that health care spectrum. What Albertsons’ footprint allows us to do is expand it into another 1,800 pharmacies. This is really about enhancing and expanding Rite Aid strategy and taking advantage of economies of scale. When people begin to really understand the natural complement, they’ll see that this combination makes a tremendous amount of sense.”