The nature of retail has changed. Consumers used to need neighborhood stores in order to fill basic needs.
Digital retailers, however, have made some of those shopping trips unnecessary. It’s not a massive disruption. Instead, it’s death by a thousand paper cuts. Amazon and other digital retailers have been successful, but most shopping still takes place in brick-and-mortar chains.
Related: Popular grocery chain closing over 30 stores
“The first quarter 2024 e-commerce estimate increased 8.6 percent (±1.1%) from the first quarter of 2023 while total retail sales increased 1.5 percent (±0.5%) in the same period. E-commerce sales in the first quarter of 2024 accounted for 15.9 percent of total sales,” Census.gov reported.
So, it’s not that digital retailers have devastated traditional in-person shopping. Instead, they have taken away just enough business to tip many brick-and-mortar locations from profitable to unprofitable.
Retailers operate with relatively thin margins. In many cases, people have shifted some of their highest-margin purchases to online retailers while lower-margin, bulkier purchases are made in person.
It costs a retailer more labor to sell you toilet paper than Tylenol simply due to the size of the item. It’s not a retail apocalypse, but it’s a retail murder when digital retailers take just enough business to make many retail locations no longer viable.
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Rite Aid has closed more stores than expected.
Image source: Shutterstock
Rite Aid’s bankruptcy keeps getting worse
A Chapter 11 bankruptcy filing allows a company to negotiate with its creditors in order to find a path back to at least breakeven. For retail chains, landlords are usually a major piece of that puzzle.
Companies try to get landlords to lower their rent and/or forgive past-due balances. In many cases, especially in a market where a number of retailers and restaurants have gone out of business, it makes sense for the landlord to take less money to keep a tenant in place.
That’s even more true when it’s a valuable anchor tenant that helps draw people to a strip mall. In theory, that gives Rite Aid, a chain under Chapter 11 bankruptcy protection, leverage with its landlords, but that does not appear to be helping.
When the pharmacy chain filed for Chapter 11 bankruptcy in October 2023, it said it would close 143 locations. That number has steadily grown with more closures being shared this week bringing the total to over 520.
That’s roughly a quarter of the chain’s locations.
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Rite Aid has another problem
In addition to its Chapter 11 bankruptcy Rite Aid (RAD) shared on July 15 that it suffered “an incident that involved certain consumers’ personal information,” the chain shared on its website.
Rite Aid notified customers who were impacted by mailing them letters.
“On June 6, 2024, an unknown third party impersonated a company employee to compromise their business credentials and gain access to certain business systems. We detected the incident within 12 hours and immediately launched an investigation to terminate the unauthorized access, remediate affected systems, and ascertain if any customer data was impacted. We also reported the incident to law enforcement, as well as federal and state regulators,” the company shared.
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The stolen data included the purchaser’s name, address, date of birth, and driver’s license number or other forms of government-issued ID presented at the time of purchase between June 6, 2017, and July 30, 2018. Rite Aid did say that no social security numbers, financial information, or patient information were impacted by the incident.
Rite Aid has opened a dedicated phone line for customers who are concerned about the breach.
“Anyone with additional questions may call our dedicated assistance line toll-free at (866) 810-8094 from 8 a.m. to 5:30 p.m. Central Time, Monday – Friday, excluding holidays. This line will remain open until October 15, 2024,” it added.
