Writing stories about the loss of iconic Seattle businesses is almost a full-time beat nowadays.
Each resonates in different ways, but the $95 million sale of Bartell Drugs to Rite Aid, announced on Oct. 7, stands out for several reasons.
That’s mostly because a humble retailer became a landmark through a combination of endurance, character and resisting consolidation for 130 years. Rite Aid plans to preserve the Bartell’s name, and we’ll have to see how much local character remains.
Another reason this transition stands out is because it comes as the fate of Seattle’s downtown retail core is uncertain. Even before the pandemic, downtown was struggling with chronic crime and an addiction crisis.
Bartell’s was a focal point for the crime debate, especially after employees were hurt in attacks, and it decided to close a Third Avenue store. Although it has 67 stores across the region, the company depended on its busiest stores downtown.
Those Seattle challenges were one of several factors leading to the sale, Chairman George D. Bartell and CEO Kathi Lentzsch explained in a wide-ranging interview last week.
That’s another reason this story is different. For a private company, it’s being remarkably open about the sale, the family and Seattle concerns.
So instead of writing another retail obituary or recounting my affection for the neighborhood Bartell’s, I thought readers would prefer to hear straight from Bartell himself.
Here are edited excerpts from our conversation.
Q: Was this sale inevitable, given consolidation and trends in the pharmacy business?
Bartell: Part of it is the industry. The pharmacy industry is very difficult, a lot of pressure to continue to be more efficient because reimbursement rates in pharmacy keep going down. The front of the store, which has been one of our strong suits, has been hit. The internet probably plays a role in that. There were some failures on our part internally to manage things as well as we could, investments in systems that didn’t work all that well. A third element is some of the crime that we see in our stores. Covid kind of put the frosting on the cake — it made it very, very difficult to see a way out.
Lentzsch: With folks not going downtown, the business loss there has been so dramatic that we haven’t been able to overcome that in other areas. Other areas are doing relatively well, performing better than last year, but the volume of stores downtown is proportionally higher than our other stores. So when they perform poorly, it takes a whole lot more to overcome that.
Q: We’ve talked about high security costs downtown …
Lentzsch: It’s a cost of doing business from our point of view, we just needed to do it. The crime has continued downtown, but all retailers are faced with that.
Q: How can we revive downtown and foster more independent, local companies?
Bartell: I remember when Frederick & Nelson went out. A lot of concern, a lot of concern. Yet the community came together and downtown was revitalized, but it’s kind of fragile. I’m not sure that people quite understand how dangerous things are to the long-term health of downtown Seattle. I don’t know how long it might take to come back, but it concerns me quite a bit.
Lentzsch: I’d like to think that this is cyclic, that there would be a shot of it coming back. I’m actually going to move downtown because I want to be part of bringing it back.
Q: What about Seattle’s current business climate?
Lentzsch: The last number I heard of the number of restaurants and retailers that closed downtown was 133, and that’s simply shocking, these are retailers that are not planning to open. As citizens of the community, we’ve got to get behind these businesses and really help them.
Bartell: I don’t think the sale of Bartell Drug is an indictment of city politics, but I do think the city could be more responsive to the needs of the businesses that try to operate here.
Q: Seattle’s flagship companies have a certain ethos, emphasizing customer service and employees. Bartell’s seems to have that, too.
Bartell: Seattle doesn’t get enough credit for how unique it is in that regard — you’ve got Nordstrom, Costco, Starbucks, Amazon — it’s a huge list. Almost all of them have a big customer-service focus. It’s so different than most other places in that regard. The CEO of Rite-Aid, Heyward Donigan, spent some time working for Premera here, so she understands the area, she understands Bartell’s. Without that, I don’t think this deal would have come about; I think she recognizes how unique this region is when it comes to the retailing thing.
Q: How do we keep these local startups going another century?
Bartell: I don’t know. I think there’s an ebb and flow. Part of it is you get people who grow up in those environments and then they go out and start something that carries some of the values along with them. I don’t see a reason why it can’t continue, though the whole nature of retailing is definitely changing with the virus situation.
Q: I hope downtown gets more creative, local companies to fill those empty storefronts.
Bartell: Yeah, me too.
Q: You’re the third generation owner. How many are in the fourth and what was their decision like?
Bartell: There are five. The family is pretty small, and so we talked about this a lot. All of the kids worked for the drug company at some point in time when they were teenagers so they have some understanding of the business. They’ve been supportive of that and participating in the decision.
Q: Is there a future for stand-alone drugstores?
Bartell: There might be fewer stand-alone drugstores, but I still think there will be quite a few because it does provide a neighborhood-based option for people. When the virus is out of the way, face-to-face contact can be so important.
Q: You’ve experimented with clinics. Is that the direction they’ll go?
Bartell: It could very well be. Pharmacists are pretty highly educated, and in some cases they can provide value for people’s health in a less expensive way. One example is inoculations.
Q: What kind of response have you had to the sale announcement?
Lentzsch: The company and the community’s all about compassion at this point, and everybody’s reaching out to support each other.
Bartell: That’s happened to me. I have had employees where the first thing they say is “How is your family doing?” I say “How is your family doing, that’s what I really care about!” So it’s just amazing to see that. The outpouring of love — it’s kind of mind boggling. I can’t really say how we got to the position where as many people would say that they love our business somehow, it’s really humbling.
Q: Anything else you’d like to add?
Bartell: I don’t know what I could possibly say except thank you for all the support over the years, it’s just so incredible.