Dive Brief:
- Bids to acquire Rite Aid’s brand and other intellectual property are due Oct. 31, according to Hilco Global, which is managing a sale as part of the drugstore retailer’s bankruptcy process.
- If necessary, an auction for the IP will take place Nov. 6, per Hilco’s press release. Hilco also reserves the right not to conduct an auction.
- Rite Aid filed for bankruptcy in May for the second time in less than two years, largely blaming issues in its front-of-store retail operations.
Dive Insight:
Rite Aid’s IP increasingly exists in a vacuum, given that it has all but disappeared from the landscape.
With no potential acquirers emerging since its latest Chapter 11 filing, the company closed all of its 1,275 or so locations, according to an online notice earlier this month. CVS recently closed on a deal to acquire dozens of Rite Aid and Bartell Drugs stores and hundreds of Rite Aid and Bartell Drugs prescription files.
There’s a reason why CVS and other rivals are snapping up more of Rite Aid’s pharmacy customers than physical locations: Their fleets are already too big, according to a report last month from Morningstar DBRS analysts led by Reid Usher.
“Despite the appeal of adding former Rite Aid stores via the bankruptcy bidding process, CVS and Walgreens have also experienced their own challenges with brick-and-mortar locations ... likely contributing to their decision to focus on acquiring prescription files rather than stores,” Usher said. “Both chains have recently announced plans to close stores and reduce locations.”
Founded in 1962, Rite Aid eventually became the nation’s third-largest drugstore chain, running 2,100 stores in 17 states at its peak, according to Hilco’s release.
In recent years, though, drugstores expanded their footprints, grocers added more pharmacies and online competition increased, and the space was oversaturated. That is now leading many players, and not just Rite Aid, to shrink. In February, CVS said it would close more than 270 stores and Walgreens announced plans to close about 1,200 over the next three years. A third of all pharmacies in the U.S. closed between 2010 and 2021, according to Morningstar, citing University of California research.
In this environment, it’s unclear what kind of appeal a legacy pharmacy brand holds. In a statement, David Peress, Hilco Global's executive director of IP services, called the sale “a rare opportunity to acquire one of the most well-known retail healthcare brands in the U.S."
"The Rite Aid brand can be immediately leveraged across multiple sectors — from ePharmacy and digital health, to health and beauty and consumer-packaged goods — to meaningfully engage with consumers across sales channels,” he said.
In addition to the Rite Aid brand and RiteAid.com domain name, the company’s Ryshi, PawTown, Refreshery and Tugaboos brands are available for sale, as is some front-end loyalty data, Hilco said. Prescription files are not part of the sale, however.
