More than just market share, DR an ‘accelerant’

When Walgreens snapped up Manhattan-based retailer Duane Reade back in 2010, it was a significant move for the Deerfield, Ill.-based pharmacy giant as it gave Walgreens — essentially overnight — a leading presence in New York City.


Under Walgreens’ organic growth model, it would have taken many years to achieve that type of footprint in New York City. But this was a new Walgreens. A transformative Walgreens. 


Indeed, top Walgreens executives regard the Duane Reade acquisition — and more recently the Walgreens-Alliance Boots transaction in June — as an accelerant of its five core strategic initiatives. Duane Reade was attractive not only because of its strong foothold in New York, but also because the retailer already was on a transformational journey of its own that involved a revamping of the store design, re-examining the product mix to weed out slower-moving items and a rebranding of the 253-store chain. 


While Duane Reade had done a great job securing real estate over the years, its older stores and service levels had earned the chain more than its share of detractors. It has been reported that at the time former chairman and CEO John Lederer joined the company in 2008, the top result on Google Search for the company was a blog called “I hate Duane Reade.” That the blog today has been quiet for almost a year now is a reflection of just how far Duane Reade has come in its own transformation.


Fast-forward to today, and Duane Reade’s evolution — now under the watch of Walgreens’ management — continues to impress and undoubtedly to revamp the landscape of the U.S. drug store industry.


“For some time now, we’ve been fine-tuning our product mix and making it very relevant for the neighborhoods in which we operate, ultimately giving our customers exactly what they are looking for,” said Paul Tiberio, Walgreens divisional VP regional procurement and inventory strategy.


For Duane Reade, content relevance is a moving target as the neighborhoods, and the customers who shop in those trading areas, can change radically from one block to the next. 


For example, the impressive flagship store at 40 Wall St. caters to a mix of financial market traders and nearby residents, and features an in-store sushi chef, a juice/smoothie bar, food from local New York gourmet retailers and eateries like Zabar’s and the Carnegie Deli, and self-serve coffee. It also plays host to a full-scale LOOK Boutique, where it has been testing higher-end beauty services, such as its Essie Nail Salon, a Ramy Brow Bar and a PhytoNation blow-out bar, which has begun recently to offer men’s haircuts. 


Just 100 yards away, at 100 Broadway, Duane Reade’s new store, which opened in July, caters to a slightly different mix of cus-
tomers. Its clientele includes local office workers whose tastes tend to run a bit less posh from the Wall Streeters around the corner at 40 Wall St., and a very steady stream of tourists on lower Broadway, the stretch known as New York’s “Canyon of Heroes.” This Duane Reade location doesn’t have the full LOOK Boutique, but it does feature some important variations that can’t be found in 40 Wall St., such as a chopped-salad bar, self-serve soup, a barista bar and a full-serve bakery.


“We feel we have that ability and need to tailor our offers, especially when it’s a store across or down the street from another. Grab-n-go foods and consumable goods are where you typically see varying offers from one store to the next,” Tiberio said.


Then there’s the pharmacy. Today, all 253 Duane Reade pharmacies are “Powered by Walgreens Pharmacy Network,” linking the Duane Reade stores to Walgreens’ pharmacy system so New Yorkers, out-of-state residents and visitors can have their Walgreens pharmacy information available at a Duane Reade location for a seamless patient experience. The new look of the pharmacy departments and the addition of Walgreens’ back-end technology are helping Duane Reade capture more pharmacy business. Most important, the transformation of Duane Reade didn’t just produce a fleet of pretty stores — the investment and all the hard work are producing real results.


“We solved the commuter’s morning needs with coffee and Danish along with their lunch needs — all areas of which we did not have a lot of play in before,” Tiberio said. “So, we have in fact taken our average order size up and ultimately increased our customer count. We started bringing more people in more often.”