Both Rite Aid and Albertsons are facing tough competition from larger competitors in their respective industries
Although Rite Aid and Albertsons have good positions in their respective industries, the cancellation of the deal has come as a bit of a disappointment because both companies are struggling with tough competition. Apart from Amazon (AMZN), which has set foot in both the grocery and pharmacy sectors, Rite Aid is facing competition from Walgreen Boots Alliance (WBA) and CVS Health while Albertsons is tackling other major retailers.
Rite Aid’s plans to sell a large number of its stores to Walgreens was cut down and the drugstore chain ended up selling just under 2,000 of its stores to the retail pharmacy company instead of the originally planned 4,500. Now Rite Aid has to go up against its larger competitors all alone and there are those who doubt its ability to survive in this tough environment.
Coming together would have helped both Rite Aid and Albertsons by allowing expansion into each other’s markets. It would have also created a large entity capable of managing in a retail environment alongside giants like Amazon. Rite Aid stock was trading down more than 9% as of 1:30 pm ET.