Some Rite Aid shelves remain bare even post-bankruptcy. Experts explain why that may be

PHILADELPHIA — Constance “Conni” Billé can walk to the Germantown Rite Aid store.

But she’s stopped going there regularly, opting instead to drive 20 minutes to a CVS store in Chestnut Hill.

Rite Aid’s shelves became so bare in recent years, Billé said, that it’s seldom worth the trip. Often, the store would be out of toiletries, makeup, or household items that she needed. After her insurance changed, requiring her to get prescriptions at CVS, there was no reason to keep Rite Aid in her drugstore rotation.

It’s a shame, Billé said, because she would rather shop there.

Compared with other pharmacies, “Rite Aid is usually a larger store,” said Billé, a 78-year-old retired city worker. “The aisles are wider. It’s a better shopping experience — as long as they have stuff in it.”

Philadelphia-based Rite Aid has been closing stores for years, and in October 2023, it filed for bankruptcy. Around this time, some customers of surviving stores said they started noticing low inventory, an issue that has yet to subside, even months after the company emerged from bankruptcy.

In response to The Philadelphia Inquirer’s December article about the state of Rite Aid’s local retail footprint, consumers from across the region said their still-open stores continued to look eerily empty.

Customers reported low stock in Bristol, Medford, Narberth, Newtown Square, Richboro, and South Philadelphia, as well as across the state in Pittsburgh.

“It’s sad,” said Elisabeth Crago, a 74-year-old retired nurse living in Pittsburgh’s East End. Over the last six months, empty shelves, plus dayslong waits to get prescriptions filled, led her to switch from Rite Aid to a mail-order pharmacy. “My Rite Aid has just deteriorated so severely.”

On the Main Line earlier this month, the Wynnewood Rite Aid’s shelves appeared to be just as empty as they were in December.

A single box of apple-cinnamon Nutri-Grain bars sat alone on a shelf. An anti-theft case held a smattering of men’s deodorants. The options for over-the-counter pain relievers were few. But the seasonal section — which had been largely depleted of Christmas wreaths and other holiday decor back in December — was full of Easter baskets, colorful plastic eggs, and festive candy.

To try to make sense of why inventory problems persist, The Inquirer talked to experts in supply chain, retail, pharmacy, and bankruptcy. They said the situation at Rite Aid stores could be due to an array of possible factors, including cash-flow issues, difficulty reestablishing vendor terms, or plans to close even more stores in the future.

Rite Aid is now privately held, meaning it no longer has to share financial updates publicly. Through a spokesperson, the company declined to answer The Inquirer’s questions for this article.

“Our top priority is nurturing the health and championing the well-being of our customers and the communities we serve,” spokesperson Alicja Wojczyk said in a statement. “Rite Aid continues to fill prescriptions and provide immunizations as normal. We are focused on improving the flow of products to our stores to provide a rewarding experience for everyone who visits their local Rite Aid store.”

In February, the company hired Bryant Harris, a former executive at the grocery cooperative Wakefern, to be its chief merchandising officer, and this month, Bloomberg reported that the pharmacy chain is in talks with creditors to secure more cash flow.

Wojczyk said: “We are laser focused on our retail pharmacy business, including the restocking of our front-end inventory, to ensure we continue meeting the needs of our customers.”

An uncertain time for pharmacies

Rite Aid’s troubles are compounded by an environment in which drugstores face more retail competition, lower prescription reimbursements, and greater difficulty hiring and retaining pharmacists and pharmacy technicians. They cannot afford to lose revenue to theft, so they are locking up products, but that can detract from the customer experience.

Meanwhile, inflation has not let up and consumer confidence is flagging.

“Independent pharmacies are closing, too, as are Walgreens and CVS” stores, said Rob Frankil, executive director of Philadelphia Association of Retail Druggists. “In Philadelphia, it’s just not as prominent as the Rite Aid skeletons that are left.”

The other chain pharmacies have also shown signs of struggle.

Both CVS and Walgreens have seen their stocks and profits decline. Illinois-based Walgreens is in the process of closing 1,200 stores nationwide, while Rhode Island-based CVS shuttered 900 locations from 2021 to 2024. Both companies are investing in more small-format stores and clinics that offer fewer retail items.

The pharmacy section is where drugstores make most of their money, said Maria Nieradka, a research vice president at Gartner who specializes in supply-chain issues. But, she added, the retail section sends a message to customers.

“It’s not a surprise that a pharmacy is located in the back of the store,” she said. “You’re hoping to attract them to the retail items.”

Rite Aid has likely not been doing that as much recently, she said, at least not at the stores with bare shelves.

As a customer, Nieradka said, “I would take that as an indicator that a store is not performing well.”

What could be leading to empty shelves at Rite Aid?

Empty shelves are usually seen before a company files for bankruptcy, in part because of its limited financial resources, said Vincent Buccola, a law professor at the University of Chicago, who spent a decade teaching at the Wharton School of the University of Pennsylvania.

Vendors may also pull back on their willingness to extend credit if “they’re worried about what’s coming,” Buccola said. If vendors deliver items to a company that goes bankrupt, they risk not getting paid for those goods, he noted.

“That’s a very reasonable thing to be concerned about heading into a potential bankruptcy, but it doesn’t really make sense after a bankruptcy,” he said.

When a company emerges from a bankruptcy, it should be able to afford running its locations “in a sensible way,” he said. Having empty shelves “is not a good look” for a retailer and could indicate more store closures are coming for Rite Aid.

Rite Aid seems to have faced a challenge reestablishing terms with vendors and thus filling up shelves with inventory, according to Michael Blackburn, executive vice president at RetailStat, which provides data and analytics on the retail industry.

More vendors have reported slow or missed payments from Rite Aid since January, according to RetailStat.

Some customers might still think the company is in bankruptcy, Blackburn said, noting that Rite Aid missed an opportunity to emerge from bankruptcy with restocked shelves.

The pharmacy chain might still be “cash constrained,” said Robert Lapowsky, counsel at law firm Stevens & Lee.

“Just because they came out of the bankruptcy doesn’t mean they’re tremendously liquid and that they don’t have constraints,” he said.

What will become of Rite Aid?

There are some indications that Rite Aid’s inventory could improve, Nieradka said. Those include hiring a chief merchandising officer, Harris, which is “a signal that they are going to do something strategically about this,” she said.

But “I don’t know how quickly it’s going to translate,” she added. “Most of the products you can get within days or weeks.”

In Germantown, Billé recently walked into Rite Aid for the first time in months. She was pleasantly surprised.

“It looks like they are still in the process of restocking,” she said. While some sections, such as pet supplies and detergent, were depleted, the makeup aisle had some lipsticks and eyeliners — “not 100% full, but far more than before.”

She found what she needed and spent about $40.

The longtime Germantown resident said she hopes that means things are looking up for Rite Aid. She doesn’t want to see yet another store close on Chelten Avenue, the neighborhood’s main drag.

Said Billé: “It’s these small things, piece by piece, that put the city together or take the city apart.”