The nature of retail has changed. In the past, consumers needed local stores to meet their basic needs.
However, digital retailers have made some of those store visits unnecessary. This isn’t massive disruption, but rather death by a thousand paper cuts. amazon and other digital retailers have had success, but most shopping still happens in brick-and-mortar chains.
Related: Popular supermarket chain closes more than 30 stores
“The first quarter 2024 e-commerce estimate increased 8.6 percent (±1.1%) from the first quarter of 2023, while total retail sales increased 1.5 percent (±0.5%) over the same period. E-commerce sales in the first quarter of 2024 accounted for 15.9 percent of total sales,” Census.gov reported.
So it's not that digital retailers have devastated traditional in-person shopping. On the contrary, they have eliminated enough business to make many brick-and-mortar stores go from profitable to unprofitable.
Retailers operate on relatively thin margins. In many cases, consumers have shifted some of their higher-margin purchases to online retailers, while bulkier, lower-margin purchases are made in person.
It's harder for a retailer to sell you toilet paper than Tylenol simply because of the size of the item. It's not a retail apocalypse, but it is retail murder when digital retailers take away just the right amount of business so that many outlets are no longer viable.
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Rite Aid's bankruptcy continues to worsen
Filing for Chapter 11 bankruptcy allows a company to negotiate with its creditors to find a way to at least get back on track. In the case of retail chains, landlords are often an important piece of that puzzle.
Companies are trying to get landlords to reduce rent or forgive past-due balances. In many cases, especially in a market where several retailers and restaurants have closed, it makes sense for the landlord to accept less money to keep the tenant in place.
This is even more true when it comes to a valuable anchor tenant that helps draw foot traffic to a mall. In theory, that gives Rite Aid, a Chapter 11 bankruptcy chain, leverage with its landlords, but that doesn't seem to be helping.
When the drugstore chain filed for bankruptcy in October 2023, it said it would close 143 locations. That number has been steadily growing, and more closures were announced this week, bringing the total to more than 520.
That represents about a quarter of the chain's branches.
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Rite Aid has another problem
In addition to its Chapter 11 bankruptcy, Rite Aid (RAD) The chain shared on July 15 that it suffered “an incident involving personal information of certain consumers,” the chain shared on its website.
Rite Aid notified affected customers by sending them letters.
“On June 6, 2024, an unknown third party impersonated a company employee to compromise business credentials and gain access to certain enterprise systems. We detected the incident within 12 hours and immediately initiated an investigation to terminate the unauthorized access, remediate the affected systems, and determine whether any customer data was impacted. We also reported the incident to law enforcement authorities as well as federal and state regulators,” the company shared.
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The stolen data included the purchaser's name, address, date of birth, and driver's license number or other government-issued form of identification presented at the time of purchase between June 6, 2017, and July 30, 2018. Rite Aid said no Social Security numbers, financial information, or patient information were affected by the incident.
Rite Aid has opened a dedicated phone line for customers concerned about the breach.
“Anyone with additional questions can call our toll-free helpline at (866) 810-8094 from 8:00 a.m. to 5:30 p.m. Central Time, Monday through Friday, excluding holidays. This line will remain open through October 15, 2024,” he added.
