The list of major drug retailers feeding from the It Bag has just grown by one.

Rite Aid has joined Walgreens, CVS and a host of other non-grocery players in the food fray but they're doing it with a twist.  Rather than going it alone and inserting food into its current formats, Rite Aid is partnering with Save-A-Lot to morph 10 existing Rite Aid stores in the Greenville, SC market into co-branded Save-A-Lot/Rite Aid Pharmacy stores.  Yep, that's what they'll be called.  Not exactly catchy but leveraging existing (dual) brand equity and pairing up with a retail entity parented by a wholesale/retail powerhouse (Supervalu) is one heckuva way to play catch-up.  So much for speculation that Supervalu would be going on a retail diet in order to feed wholesale.  Manga!

What began as a conversation between contrarians has evolved into a collaboration that I can’t wait to share with you.

You know that I’m always challenging retail assumptions, often ones that are widely accepted as fundamental truths, and I found a kindred spirit in toy industry expert and thought leader, Richard Gottlieb.  At this year’s Licensing Expo, Richard and I were trading thoughts on how the toy and retail industries have transformed and where we see it all going.  However, as anxious as we were to explore big ideas, both of us kept coming back to the nagging fundamentals, how many of the guiding principles that form the basis of business decisions are rarely questioned.  Richard calls these “first principles” and he and I are excited about exploring them together and sharing the results with our readers.

Since Richard and I naturally build upon one another’s ideas we didn't see any reason to mess with the formula.  We're continuing our conversation via a series of letters to one another which will be posted as they happen and we’ll keep going until we run out of things to say.  You're invited to eavesdrop or join in the dialogue along the way!

Richard kicked off the conversation in his first letter to me yesterday by questioning department-driven system in retail.  He brought some great historical context as to why the system even exists in the first place and he threw out some provocative challenges regarding the consequences.

In my just-posted response, I explore how "departmentalism" in retail has actually gotten in the way of innovation and ways that the system impacts everything from store environment to supplier volume.  In reality, most stores still operate as "department stores" and that may be holding everyone back!

Is the department system due for redefinition . . . or is it already too late?

Stay tuned!

We've been talking about how Walgreen's acquisition of Duane Reade was much more than a grab for greatness in Gotham.  Walgreens is also gaining a younger-vibed urban template that they can replicate across the U.S.  Duane Reade's Look Boutique concept in particular portends of major advancements in the beauty area for both entities (more on beauty in an upcoming posting).  We also speculated that Walgreens would tap into Duane Reade's private labels, particularly in food.  Well, that's beginning to take shape. 

I checked out a newly CCR'd Walgreens a couple of days ago and, while Walgreens' optimization initiative isn't necessarily original, the results are definitely easy on the eyes: clear sight lines, great navigation, improved adjacencies, cleaned up photo department . . . and as predicted, a fresh infusion of Duane Reade-branded food items in addition to Walgreen's own private brand.  Private brand expansion is core to Walgreens' and others' forays into food and gaining access to new private brands is a less-discussed retailer acquisition benny. 

We tell our clients that these days, they aren't a brand selling to a retailer, they are a brand positioning to another brand (that goes for services too, by the way).  It stands to reason that retail acquisitions have become about brands buying other brands.

P.S.  I'll be covering the Private Brand Movement conference in Chicago next month on behalf of Retail Wire.  Presenters from Kraft, Sam's Club, Ahold, Target, Family Dollar, Walgreens, Sears Holdings, Safeway, Office Depot, Philips and many more will be sharing the latest and greatest developments in private branding and I'll be there to pull it all together in a series of blog postings and tweets.  I'll also be meeting with clients and speaking to private corporate audiences in the Chicagoland area so shoot an email to me carol@newmarketbuilders.com if you would like to meet or book some time!