Orchestrating a turnaround from front end to pharmacy: Rite Aid Mary Sammons, president and ceo

DSN Retailing Today, Sept 6, 2004 by Laura Heller

In just four years since joining Rite Aid, Mary Sammons, now president and ceo, has spearheaded a turnaround that pulled the drug chain back from the brink of bankruptcy, returned it to profitability and is now looking to grow based on a strong foundation of improved corporate culture and front-end operations nearly unparalleled in the industry. Not bad for a woman who graduated with a degree in French and holds a secondary-level teaching certificate.

Sammons is a merchant in the truest sense of the word. Working her way up through the ranks--first at Fred Meyer and then taking the reins at Rite Aid as president and coo in 1999. In 26 years at Fred Meyer, Sammons held positions of increasing responsibility in all areas of operations and merchandising before becoming ceo of that company. She is also chairman of the National Association of Chain Drug Stores, the chain drugstore industry's trade association.

When Sammons joined Rite Aid in December 1999, the company appeared to have no future. Still reeling from years of mismanagement and an accounting scandal, the company was dramatically in need of resuscitation. Sammons, along with chairman and then ceo Bob Miller, improved operational performance by decreasing costs, repaired frayed vendor relationships with innovative collaborative programs such as a supplier advisory board that remains in place today.

But perhaps the most often-cited key to success has been Sammons and Miller's installation of a corporate culture that celebrates both the customer and employees and focuses on trust. These are common themes in the halls of just about every corporation in existence today, but by all reports, Sammons is credited with doing far more than just walking the walk.

"We really have turned our business around," Sammons said, "and now we can focus on our future."

During her first three years at Rite Aid, the focus was largely on front-end operations. Through the implementation of strong private label programs, marketing campaigns, product guarantees and high-quality customer service, the chain has established itself as one of the leaders in front-end sales in the drug channel, outperforming Walgreen's, CVS and Eckerd in the beginning of this calendar year.

Front-end sales momentum combined with improved operational performance propelled Rite Aid to its first annual profit in FY04 for the first time since Sammons joined the company. For the year ended Feb. 28, the chain earned $83.3 billion, compared to a net loss of $112 billion the year before, while revenues have increased steadily since 2000.

A range of programs in the HBA categories have served to establish Rite Aid as a consumer destination of choice for these products and a leader in its industry in front-end sales. The inclusion of GNC stores within about one third of Rite Aid's 3,000 stores creates the look and feel of a dedicated health supplement department. Vendor-sponsored health and beauty expos serve as both strong promotional events while continuing to draw in customers. Glam Camp focuses on teens, driving traffic from its Web site into stores and a publication titled "Be Healthy and Beautiful" (published by DSNRT parent company Lebhar-Friedman) is distributed exclusively through Rite Aid stores on a quarterly basis.

And now Rite Aid is embarking on a new store program for the first time in years. The chain expects to open 35 to 45 new or relocated stores and remodel 175 during the current fiscal year; 100 new or relocated stores are planned for 2006. It is also about to unveil a new prototype, one that will build on the company's success in health and beauty and more aggressively serve pharmacy customers.

Two units in the new prototype format are expected to open this fall. The company has been pretty tight-lipped about the details, but Sammons did share some general goals. "Pharmacy will be the star and will be more prominent than in the current design," she said. "We will upgrade customer amenities, such as the waiting and consultation areas, with the layout of the entire store reflecting our commitment to the health and wellness aspect of a drug store."

"The new design also enables shoppers to find destination items more easily, highlighting the important draw of the beauty department and improving the flow and service ability of the photo area," said Sammons. "We also will continue to carry the convenience categories customers expect to find in a drug store, such as greeting cards, consumables and seasonal."