That new Rite Aid in the neighborhood wants to do more than fill your prescriptions and supply you with shampoo and aspirin.
It wants to become part of your life, a household name from Baltimore to Seattle and eventually overseas, a place to go in a pinch -- or routinely -- for film and a quart of milk, a brand that says "drugstore" the way "Xerox" says copier.
"The consumer has a lot of choices today, but if you're looking for a drugstore, we're your solution," said Martin L. Grass, chairman and chief executive officer, echoing the theme of a new $200 million advertising campaign, the biggest and splashiest ever for the Camp Hill, Pa.-based chain.
The media blitz caps a three-year retooling centered on aggressive expansion and a new store strategy that has transformed the retailer from regional player into the nation's biggest drug chain -- with 4,010 stores in 31 states and sales projected at $12 billion for the fiscal year ending this month.
In Maryland, where Rite Aid entered the market in 1977 with the purchase of the 100-store Read's, the retailer's presence is growing, too. Rite Aid employs 3,000 people at 176 stores and computer technology center in Hunt Valley.
The Baltimore region, which ranks as the company's fifth biggest market with 139 stores, will soon be home to a distribution center in Harford County employing 850. Grass commutes daily to headquarters from his home in Green Spring Valley.
"We've surprised people," said Grass, 43-year-old son of Alex Grass, who started the chain in 1962 in Scranton, Pa., with a single Thrif D Discount Center and took the company public six years later.
"I don't think anybody in this industry three years ago expected Rite Aid to have 4,000 stores. The odds were high against that happening."
The strategy has involved a rapid-fire expansion that allows for savings in advertising and distribution costs, buying power with manufacturers and leverage in negotiating pharmacy contracts with managed care companies. (The company counts on prescription income for more than half its drugstore sales, most of it from managed care patients.)
Equally as important, the company is building a new store model -- at 10,500 square feet nearly twice the size of older ones and with enlarged departments for cosmetics, fragrances, vitamins and convenience foods.
Many are open 24 hours and have drive-through pharmacies, one-hour photo service and a brighter, crisper look.
Rite Aid's emergence as a national retailer with more stores than industry-leader Walgreen Co. has impressed analysts for its speed -- and for how far it has had to come.
"They have so far managed through this period of change quite well," said Sally Wallick, a retail analyst for Legg Mason Wood Walker Inc. in Baltimore. "Their comparable-store sales are strong; total sales growth is strong, and profitability has been quite good. They've become much more creative in how they approach the business."
The company Grass inherited included a hodgepodge of businesses in addition to the drugstores -- Encore Books, auto supply stores, even dry cleaning and plasma businesses.
"There was a healthy dose of skepticism surrounding this company when Martin Grass took over from his father," said Eric Bosshard, an analyst with Midwest Research in Cleveland.
"Rite Aid had a store base that was tired and below average. The sales trends of the stores were weak, the productivity was weak, the locations no longer attractive."
Grass, in one of his first moves, concentrated on the drugstores and sold off ancillary businesses. Then he took a hard look at the stores, visited competitors, talked with vendors.
"I saw everyone with larger stores and also saw larger departments," he said. But he saw little in the way of appealing decor or fixtures. That went for his own chain, too.
"It was working, but it had lost its luster and couldn't prosper and grow without making major changes," he said.
One change -- growth beyond its Northeast and mid-Atlantic base -- has come mainly through acquisitions.
The retailer sought out market leaders in their regions at a furious pace. In its three biggest mergers -- all in little over a year -- Rite Aid acquired more than 1,300 stores and extended its geographical reach to the West Coast.
In 1996, it acquired Thrifty PayLess Holdings Inc. -- the largest drugstore chain in the western U.S., created by a Thrifty Drug and PayLess merger -- for $2.5 billion. Last year it acquired Harco Inc and K&B Inc., gaining 332 stores in the South.
The strategy appears on target, said Jeffrey L. Pittsburg of Goldis-Pittsburg Research Group on Long Island, N.Y., noting that Rite Aid shares have doubled in price over the past year and a half, sending the company's market value to $8.1 billion.
