Rite Aid Case Study: Using Video to Drive Loyalty and Sales

Drugstore chain Rite Aid has nearly 4,800 stores in 31 states and the District of Columbia. Its e-commerce site sells pharmacy items, household, personal care, nutrition, wellness and beauty products. In fiscal 2009, which ended February 28, 2009, revenues totaled $26.3 billion.

The Challenge: In 2009, like many other drug retail chains, Rite Aid was searching for ways to boost sluggish sales that resulted from the recession. The company needed to find ways to offset an industrywide downturn in prescription sales growth and high operating expenses.

The Solution: One strategy was to expand its e-commerce capabilities with services that would drive in-store sales. As a result, in August 2009 the company announced a 24-hour online prescription-refill service to let customers pick up their order at Rite Aid stores.

At the same time, Rite Aid unveiled its Video Values program, featuring informative, educational and, in some cases, entertaining videos. The Video Values program runs on a platform hosted by video marketing firm Ad Perk. By watching videos, customers earn video credits for savings on products. For example, viewers of a clip for a Brita Water Filtration product earn a $2 coupon off one of the Brita items offered. They must print the coupon and present it at the store. When they rack up 20 video credits, they receive a $5 Rite Aid Bonus Coupon.

Video Values is prominently featured on Rite Aid’s homepage and through its weekly circular, in-store radio, at the shelf of the participating brands and in cross-promotional ads. Shoppers can find videos for various products by brand, category and manufacturer. The only exceptions are for videos of the pharmacy and private-label goods on the site, which are shot in-house. Rite Aid reports that it is averaging between 500,000 and 600,000 video views each month. Redemption rates average nearly 20%, depending on the coupon.

John Learish, senior vice president of marketing at Rite Aid, told eMarketer that one of the pleasant surprises of the video program has been its success in driving traffic to Rite Aid’s Website. People learn about the program from e-mails, coupon sites, shopping sites and blogs. This buzz, and the ensuing viral effects, drives a lot of traffic to RiteAid.com.

Customers must register to participate in Video Values, but this has not been a barrier, according to Mr. Learish. About 35,000 people sign up on Rite Aid’s Website each month. Registration means the program is able to generate a lot of demographic data on customer shopping behavior, for example, if they watch a video and then toggle off the site, and if the video stops or is fully viewed. Additionally, the printable coupons are personalized, so Rite Aid knows the number of times a person requests a coupon and the number of coupons redeemed.

Takeaways: The volume of video views indicates that consumers are willing to watch 30-second TV commercials on Rite Aid’s site in exchange for discount coupons. People who view the videos have an interest in the product, and that translates into a purchase. The viral nature of the program gives Rite Aid an extended marketing force on bargain hunting sites and blogs.

By requiring that coupons be redeemed in-store, Rite Aid avoids shipping fees on many non-prescriptive drug products that have thin profit margins. It also knows that shoppers who come to the store to redeem their coupons frequently make impulse purchases.

The information collected from Video Values participants is highly valuable not only to Rite Aid but also to the product manufacturers. This information can be used for targeted marketing campaigns and adjusting the merchandising mix.

This case study is excerpted from the report, “Video E-Commerce: Innovative Models Drive Sales,” by Jeffrey Grau, which is available to eMarketer Total Access Subscribers only. Every day they have access to new interviews and case studies with digital marketing leaders and trendsetting entrepreneurs.

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