Walgreens swallows Rite Aid

How do you feel about the Walgreens / Rite Aid deal?

Two of the biggest “value-added” pharmacy chains around are Rite Aid and Walgreens. Of course Hoboken has both (as well as the other big one CVS Pharmacy).

Recently – Walgreens paid over $17 billion for Rite Aid.

Not sure what’s going to happen now that they’ve further consolidated their power. Do you think that now they have more purchasing leverage that it would be reflected in lower prices for consumers? Don’t hold your breath. With little competition, it will only be more profit for these guys.

We actually prefer Rite Aid (with our 20% discount on almost everything), and don’t like the shopping “experience” at Walgreens. Hopefully that doesn’t change.

It was suggested that upwards of 1,000 Rite Aid locations across the country would close – but we feel the Hoboken locations are far enough apart that they will remain open.

“Generally speaking, the biggest winners are the owners of (most) Rite Aid pharmacies. Obviously, if their store closes due to an overlap with Walgreens they may be out of luck, but absent that they’ve probably just received the single largest boost in their property’s value that they’ll ever get.

On the other hand, owners of Rite Aid properties which have an adjacent or nearby Walgreens may need to be more restrained in their joy. It’s unclear what the algorithm will be for determining store closings though proximity and store sales are likely to figure prominently in the equation. On top of that, the FTC may well be involved with some of the store closure decisions too. Of course lease guarantees still apply so no landlord is at risk of not getting their contractual rent. The problem is more one of what to do if your store goes on the chopping block. Early indications point to a 1,000+ store closures.

Having said all that, it’s probably going to be at least a year before we know exactly how this all shakes out. For those currently selling a Rite Aid (or a Walgreens for that matter) each individual situation is going to be fundamentally different but a much heavier emphasis on the intrinsic value of the underlying real estate is likely to come to the forefront for buyers.”

With all these large chains – it’s amazing Hoboken still has any small “family owned” pharmacies left. How can they compete? Just on prescription drugs and location alone?

walgreens rite aid mega pharmacy hoboken nj

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Another blow to free markets where companies compete against each other. More crony capitalism where a small numbers of players and the government contrive to keep profits high and innovation low. If the Mexican government allowed this kind of merger we would shake our heads and murmur about corruption.