Rite-Aid – How Can Such a Big, Well Funded Company Fail?

The Business Trendsetter Podcast

Over and again we see big companies, often leaders in their industries, fail. Despite having vast resources, ability to hire top talent, and legions of customers they “blow it bigtime.” Sears, Hostess Baking, Kodak, Xerox, Fannie Mae, GE – how could they end up a failure? And if they blew it, how can you avoid a bad outcome?

The podcast explains how regardless of size, if your business falls out of line with trends it will end up in trouble. The first sign is often trouble keeping up your revenue growth. That leads to focusing on earnings instead of sales. Which leads to protecting “sacred cows” and historical operations while cutting costs. And as trends unfold, the company becomes farther and farther off trend, until the margins have eroded and failure is the result. But failure is usually several years after trends indicated change is needed – leadership simply failed to manage for trends.

Rite-Aid, Walgreens, CVS 40 years ago were retail leaders with some of the highest margins. Now they are marginalized retailers. Failing to use trends when planning, demographics left them with fewer customers and far lower margins. Electronic commerce and discount chains ate up what margin might have been left. Because these companies never fully understood their customer Value Proposition they Locked-in on their historical products and assets, leading to overcapacity of drug stores with very little reason for customers to keep returning.

Thinking Points:

• Do you have a handle on how demographics is leading to big changes in your business? How about AI or Environmenetal awareness?
• Do you know the “sacred cows” in your business that keep you from doing something new?
• Are you actively using White Space team(s) to develop new growth opportunities, rather than leaving it all up to senior leaders?
• Are you updating future scenarios – 3, 5 and 10 years into the future – every month so that you keep trends at the forefront of your planning?