RITE AID EXPANDING NEW PROTOTYPE

DARLA MERCADO / Additional Reporting by Amy Sung

CAMP HILL, Pa. - Rite Aid Corp. plans to build up to 150 new-format stores by 2007.

The new prototype, called "Customer World," uses interior design to attract customers to the pharmacy and to differentiate from competitors.

Currently, 34 Rite Aid stores use the Customer World concept. The newest opened late last month in Charlestown, Ind.

This prototype provides the customer with a direct path to the pharmacy so shoppers avoid walking through merchandise aisles that don't interest them.

"When you walk in, you'll notice the straight sight lines from the front door to the pharmacy," said Jody Cook, public relations manager for Rite Aid.

The new design may bode well for the chain's merchandising approach, which focuses on a simplified design that highlights the desires of the customer.

"[The format] dictates traffic patterns for customers and lets you highlight areas more effectively from a merchandising standpoint," said Neil Stern, senior vice president of the McMillan/Doolittle retail consultancy in Chicago.

Rite Aid also revamped the pharmacy's physical appearance, changing the department's name from "Pharmacy" to "Pharmacist."

The "Pharmacist" signage conveys the impression of an employee with whom the customer shares a personal relationship, Cook said. Customer feedback via focus groups tipped off Rite Aid to the shoppers' desire for one-on-one interaction with a pharmacist.

Rite Aid's customer-focused makeover may also help the chain stand out in the field.

"Certain elements, such as pricing and location, drive loyalty," said Robert Passikoff, president of New York-based Brand Keys. "The store experience is becoming more important to the customer."

Customers are looking for differentiation, and the personal approach for the shoppers will probably encourage sales, he said.

While the change puts Rite Aid ahead of the pharmacy pack for now, the chain should not rest on its laurels, Passikoff said. The trend will likely spread out to other retailers competing for their customers' interest.

"In the past, the first battle was location, then pricing and merchandising," Passikoff said. "There was a time when you could put anyone in a store of that kind and they wouldn't be able to tell the difference from one store to another."

Rite Aid's success with Customer World and a previous prototype of this design encouraged the retailer to expand the format to 125 to 150 new or replacement stores across the country by fiscal year 2007, Cook said.

The retailer's success depends on its status as a destination for shoppers rather than a commodity, Passikoff said.

"Retailers that become commodities have to leverage price in order to compete," Passikoff said. "Nobody wants to do that."