If Walgreens And Rite Aid Merge, Thousands Of Stores Might Close

Last week, Walgreens Boots Alliance, the parent company of this country’s top drugstore chain, announced that pending antitrust approval, it would buy the #3 chain, Rite Aid, for $9.4 billion. That would create two massive national drugstore chains, and also leave a lot of empty stores. One estimate is that 3,000 stores would close… not necessarily for antitrust reasons, but because the stores are simply too close together.

The company could be required to sell some of those stores off to competitors, which would keep them open. Who would be left to take them over? Regional chains and CVS, or perhaps a new competitor could enter the market, then get gobbled by by Walgreens in a decade or so.

Cushman & Wakefield, a real estate services company, analyzed the situation and which stores the combined chain would be likely to close. Even if they chose to divest all stores where the two chians are literally across the street from each other now, that would still leave them with areas that are too dense with their own stores to make any sense.

The firm estimates that Walgreens might have to sell 1,000 stores, but ultimately close 2,000 more. That would still leave Walgreens as the drugstore with the most locations nationwide, of course.

In my hometown, for example, there’s a Rite Aid and a Walgreens half a mile apart. The current Rite Aid was built as an Eckerd, and when traveling between the two you pass the previous Rite Aid, which has been sitting empty since those two chains completed their merger in 2007.

Walgreens-Rite Aid merger will lead to store closings: Report [Shopping Centers Today] (via Fortune)

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