FINANCE

Walgreens gets regulatory OK to buy Rite Aid stores

BY Michael Johnsen

Walgreens Boots Alliance secured regulatory approval for a deal to buy stores from Rite Aid Corp. after a reduction in the number of stores and price. The deal will still enable Walgreens to dramatically increase its store footprint, giving it a total of about 10,000 U.S. locations.

The drug store chain announced Tuesday that it has secured regulatory clearance for a revised deal under which it will buy 1,932 stores, three distribution centers and related inventory from Rite Aid for $4.375 billion (and other consideration). The original proposal, announced in June, had included 2,186 stores and related assets for $5.175 billion.

“Combining Walgreens retail pharmacy network with a strong portfolio of Rite Aid locations is expected to help us achieve enhanced, sustainable growth while enabling us to broaden our reach and provide greater access to convenient, affordable care in more local neighborhoods across the United States," stated Stefano Pessina, executive vice chairman and CEO, Walgreens Boots Alliance.

The stores that Walgreens is purchasing from Rite Aid are located primarily in the Northeast and Southern U.S. After the acquisition is completed, they will be converted to the Walgreens banners in phases.

The three distribution centers being acquired are located in Dayville, Conn., Philadelphia, and Spartanburg, S.C. The transition of the centers to Walgreens will not begin for at least 12 months.

Along with the cash transaction, the deal also includes the assumption by Walgreens of the related real estate leases and the grant of the option to Rite Aid, exercisable through May 2019, to become a member of Walgreens Boots Alliance’s group purchasing organization, Walgreens Boots Alliance Development. Walgreens will also assume certain limited store-related liabilities as part of the new transaction.

Rite Aid expects to use a substantial majority of the net proceeds from the transaction to repay existing indebtedness which will improve the company's leverage levels. It also expects that the gain it will record on the sale of the assets will be largely offset by its net operating loss carryforwards, resulting in a minimal cash tax payment on this transaction.

Immediately following the completion of the transaction, Rite Aid will continue to operate approximately 2,600 stores and six distribution centers as well as EnvisionRx, its pharmacy benefit manager, RediClinic and Health Dialog.

"With a compelling and more profitable store footprint in key markets, enhanced purchasing capabilities and a stronger balance sheet and improved financial flexibility, we are well positioned to implement our plans to deliver improved results," stated John Standley, chairman and CEO, Rite Aid. "We are committed to supporting a smooth transition as we remain focused on delivering a great customer experience, improving our business and creating value for all of our stakeholders."

The transaction has been approved by the boards of directors of both companies and is still subject to other customary closing conditions. Store purchases are expected to begin in October, with completion anticipated in spring 2018.

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News

Texas developer partners with United Way on Harvey

BY Al Urbanski

Fort Worth-based Trademark Property Co. has launched fundraisers at its properties in Texas to aid victims of Hurricane Harvey. Proceeds will be distributed via United Way, which is waiving all general and administrative fees in the arrangement with Trademark.

Tenants, financial partners, customers, and the community are being engaged in events, and Trademark has pledged to match up to $150,000 in donations. Miller Capital Advisory has pledged a matching donation total of $50,000 for fund collected at La Palmer in Corpus Christi.

Trademark also owns Rice Village in Houston.

“As a company with deep ties to Houston, Corpus Christi, and the Gulf Region, we are inspired by the stories of resilience and communities coming together,” said Trademark CEO Terry Montesi.

Trademark is inviting the real estate community donate online at app.mobilecause.com/vfu/HARVEYHELP or by texting HARVEYHELP to 30306.


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ECOMMERCE

Study: Shoppers not shying away from voice, chatbots, other new technologies

BY Deena M. Amato-McCoy

When connecting with retailers, consumers are warming up to more complex and emerging technologies.

Retailers are starting to integrate artificial intelligence (AI) and voice technology into communications with shoppers — and consumers are increasingly receptive. In fact, 79% of shoppers have used text, messenger apps or voice devices, and 74% indicated they have used live chat when shopping.

This was according to the report “Bots, Texts and Voice: What Cuts Through the Clutter,” from Navar.

Of those who have used these new technologies, 38% could not identify if they were using AI, and only 10% knew it was not human. Among the 65% of shoppers who knew a non-human bot was responding generally liked it, data revealed.

Chatbots are only the beginning of the consumers’ affinity for AI. For example, shoppers indicated they plan on using voice-powered devices more. So far, 12% of shoppers own a voice device, and 29% of voice device owners use it to shop. Meanwhile, 41% of voice device owners plan to use it in the future.

This increased usage of AI tools makes sense as 77% of American adults own a smartphone; and every month, people exchange 2 billion messages with Facebook Messenger’s 100,000 active bots. In addition, 30 million households will have a voice-first, in-home device, such as Amazon Echo and Google Home, by the end of 2017, the report said.

AI technologies are also playing a role in customer service transactions, especially among those using self-service technology. For example, a majority of shoppers will try to resolve problems on their own first. Those under 30 years old are most likely to use the retailer’s website or chat technology to resolve an issue.

Rather than do away with skilled customer support teams in favor of AI tools, savvy retailers are adopting a hybrid model. Technology offers better self-service options, but escalates higher-level issues to humans. Live agents are on hand to fix complex problems and calm down frustrated customers, while bots can help with simple requests, such as answering questions about order status.

This configuration makes sense as 55% of millennials aged 21-29 prefer to talk to a person to resolve a problem, compared with 72% of shoppers aged 60 or older. Meanwhile, 88% of under-30 millennials and 73% of shoppers aged 60 or older will try to find an answer to the problem themselves when they encounter an issue with a retailer.

“People expect a personalized, effortless online shopping experience from discovery to post-purchase. This is only amplified with the introduction of new communications channels,” said Sucharita Mulpuru, a retail industry analyst who collaborated with Narvar on this study.

“Retail brands should seize the opportunity to learn from and optimize consumer communications through both existing and emerging channels,” Mulpuru added. “The first step is to understand how their customers want to communicate based on elements like urgency, type of message and specific channel.”

Despite the rise of AI-powered tools, consumers are not yet giving up more “traditional” digital communications tools. For example, 38% of shoppers said they want to receive information from retailers via multiple channels, and 36% prefer to receive order updates via text message, while 34% like to receive texts about customer service issues.

Among the most important messages are those that contain order tracking information (73%), and customer service messages (46%). Further, 84% said more communication is critical if the purchase is an expensive one, the study said.

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