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Saturday, April 28, 2007

Rebranding failures: Payless Drug Store to Rite Aid

In 1998, Payless Drug Store, a regional chain of chemists operating across western USA, changed its name to Rite Aid Corporation. The name change required several million dollars spent on advertising just to gain a level of local awareness equivalent to the previous brand name. The reason for the change was the acquisition of the Payless Drug Store by the Rite Aid Corporation, which owned its own brand of chemists throughout the United States. They therefore thought the re-brand was a logical step. But what happened?

Soon after the Rite Aid acquisition and brand conversion most of the former Payless stores started to lose 10 per cent of sales every month. Eventually Rite Aid sold 38 of the stores in California, cut down its workforce, and realigned its West Coast distribution centre.

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