The Fixers: Convenience key for Duane Reade

When Rick Dreiling took the helm at Duane Reade just over two years ago, he hit the ground running, improving the look of the stores, tweaking the mix, boosting customer service and focusing on what busy New Yorkers want most—convenience. He may have headed off in late January to steer the ship at discount store chain Dollar General, but he has left in place a solid turnaround plan that, if executed properly, will likely spell success for his successor.

Until a permanent chief executive officer is hired, Duane Reade chief marketing officer David D’Arezzo and Alan Lacy, senior adviser to Oak Hill Capital Partners and, perhaps what he is best known for, former chairman and chief executive of Sears Holdings, are taking the reins of the 241-store pharmacy retailer and moving ahead with the six-point turnaround plan implemented by Dreiling in March 2006.

To date, the no-frills turnaround plan, dubbed Duane Reade Full Potential, has helped the chain improve operations, increase market share and enhance the customer shopping experience. The success is reflected in the numbers, especially at the front end.

For its most recent quarter ended Sept. 29, the chain experienced its fourth quarterly record front-end same-store sales increase in the last six quarters.

The success seen to date has not been by luck but can be attributed to Dreiling’s back-to-basics approach to running a business and such forward-thinking initiatives as the Diabetes Resource Centers and in-store health clinics. The latest move is the testing of a condensed store format, aptly named Duane Reade Express. This new concept is designed to meet the front-end convenience needs of shoppers. Instead of a pharmacy, the Express format has a pharmacy kiosk, so shoppers can request prescriptions to be picked up at a nearby Duane Reade or have them delivered to their home or office. The word that once again comes to mind—convenience.

The retailer also has implemented initiatives to reduce shrink, including the retraining of store managers, intensifying security in high-loss locations and protecting high-shrink merchandise through enhanced displays that limit exposure. And to improve customer service, the company is implementing RedPrairie Corp.’s Workforce Management application to better align customer traffic with employee scheduling.

Then there’s the deal, inked in late 2005, with pharmacy benefit administrator HealthTrans to co-market pharmacy benefit services to employer groups and unions in the New York metro market. To date, the PBM’s coverage has grown to nearly 100,000 people.

And through it all, Dreiling always stressed the same message: “There remains much work to be done.” That may very well be the case, but there’s no denying that Dreiling’s initiatives have given his successor a solid foundation on which to build future store expansion and sales growth.