Thrifty, PayLess Owner to Renovate Stores

The parent of the Thrifty and PayLess drugstore chains plans to overhaul dozens of stores, installing drive-thru windows in some, to better compete in an increasingly tough marketplace.

The make-over comes as the drugstores begin adopting the Rite Aid name. Rite Aid acquired Thrifty, and its sister company, PayLess, in 1996.

Name changes can be risky. In 1989, American Stores Co., the owner of the Sav-On chain, abandoned a three-year effort to establish its Osco banner in the West by dropping the Sav-On Osco handle and reverting to Sav-On.

But Rite Aid Chairman Martin Grass said his company’s change, announced earlier this week, was needed.

“Thrifty PayLess is a confusing identity,” Grass said.

Over the next 23 months, Rite Aid plans to open 150 new stores and 100 replacement stores for 100 outmoded stores to be closed.

Of the 250 stores, about half will be in the Southland. There are about 450 Thrifty and PayLess stores in Southern California. Thrifty PayLess operates in 10 Western states, including California.

Grass also said the company will create drive-thru service at some stores. Walgreen Co., the national leader in sales, has been opening drive-thru stores in the Los Angeles area. Rite Aid has 400 drive-thru sites in other parts of the country.

In addition, Rite Aid plans to open 24-hour pharmacy service at 180 stores this year.

Same-store sales at Thrifty PayLess--revenue from stores open at least 12 months--were up about 3% in 1997, compared with a 9% increase in sales at Rite Aid stores in other parts of the country.

Rite Aid, the nation’s largest drugstore chain, operates about 4,000 stores in 31 states and the District of Columbia.

Among drugstore chains in Southern California, Thrifty PayLess and Sav-on are deadlocked leaders--each with a market share of about 25%. Sav-on is owned by the Salt Lake City-based American Stores, which also controls the giant Osco chain.

The Thrifty name has some cachet--particularly with fans of its private-label ice cream--but the name change is in the long-term interest of Rite Aid, said Richard Nelson, a Chicago-based industry analyst at Stephens Inc.

“This makes sense because convenience is important in the drugstore industry and all the Rite Aid-owned stores are linked through a pharmacy computer system,” he said. “The name change will make it clear to those in the West that they can refill a prescription at any Rite Aid when they’re traveling outside the region.”

Rite Aid said the name change for all 1,007 of its drugstores located in California and nine other Western states, will be completed in about 90 days. Rite Aid, based in Camp Hill, Pa., has already changed the signs at a few Thrifty and PayLess stores--including one in Los Angeles and two in Santa Monica over the last four months.

Thrifty Drug Stores--formerly based in Los Angeles--assumed a duo identity when it acquired Oregon-based PayLess in 1994. However, the names of the stores weren’t changed.