New campaign talks to New Yorkers like New Yorkers

NEW YORK —Anyone who has spent any time in New York City knows that there seems to be a Duane Reade on every street corner, but what the Manhattan-based retailer has lacked is a New York voice. That is changing as the company launched in July its first new ad campaign in years that speaks to New Yorkers as only a born and bred New Yorker can.

Aside from strengthening the retailer’s hometown connection, the campaign also brings Duane Reade’s “Prescription for Change” turnaround plan full circle—a three-pronged plan aimed at fixing the customer experience; developing a relative, urban drug store box; and improving pharmacy.

“It all comes down to Duane Reade equals New York living made easy. There isn’t a thing that we should be doing in this company that New Yorkers will not view as making their life more easy and making our stores more approachable. With that, we launched a new ad campaign that was the establishment of this new, transformed brand,” John Lederer, chairman and CEO, told analysts during a July 29 conference call to discuss second-quarter results.

Lederer, who joined the 253-store chain in spring 2008, may not be a native New Yorker, having come from Canada where he had a 30-year career at Loblaw and its subsidiary companies, but one wouldn’t guess it when seeing the changes at the store level. Lederer and his newly established management team—which includes a former Shoppers Drug Mart executive and a former Longs Drug Store executive from California—are becoming as engrained in the city’s fabric as the street side hot dog vendors, and are giving Duane Reade its long-lost “voice.”

Carrying the tagline, “Your city. Your drugstore. Duane Reade,” the campaign is blanketing thousands of subway cars and buses, as well as phone kiosks, billboards and urban panels near rail stations. The campaign, created by New York advertising agency DeVito/Verdi, marks the first new branding campaign in nearly a decade from the ubiquitous chain.

The ads take several New York symbols like Lady Liberty, such events as the NYC Marathon and local references to help communicate the chain’s unique understanding of what New Yorkers need, and when they need it.

This renewed focus also is growing increasingly evident in the stores as the company rolls out a fresh look and feel, complete with new, more upscale-looking in-store signage and graphics, as well as a new brand mantra: “Duane Reade equals New York living made easy.” The mantra’s goal: to articulate its desire to become the destination of choice for beauty, wellness and convenience items.

These core offerings are being supported by a new concept segmentation that is sub-branded in the store: “How I look,” for the health and beauty departments; “How I feel,” for pharmacy; and “What I need now,” for convenience needs.

The new look features a larger pharmacy that has been repositioned from the back corner, wider aisles throughout the front end, improved lighting, a raised ceiling, added hours, grocery-style check-out and, as in the case of the Penn Station store, a fresh food case with daily fresh-delivered sandwiches and salads.

“All of the stores that we have renovated over the last year are performing well above our pro formas. Our research tells us that consumers like what they see,” Lederer said. “The Water Street store is a much different asset and is twice the size and, merely into its third week, it is performing well above what was the annual rate pro forma numbers.”

As far as products, the company has introduced a number of exclusive front-end products that are driving category performance and, over the next few months, it will introduce 1,200 to 1,400 new private-label products, including an apt. 5 reconfiguration in beauty.

Unlike most traditional drug stores, which garner about 70% of sales from pharmacy, Duane Reade’s pharmacy sales account for about 46% of sales, so clearly having the right mix of front-end merchandise that will meet the needs of busy, convenience-hungry New York shoppers is critical. Roughly 50% of the chain’s front-end sales are tied to its Dollar Rewards Club program, which it will be repositioning over the next six months.

In late September, Duane Reade will be opening its Herald Square store, which will truly demonstrate where the brand is headed.

“This is the place that the transformation of Duane Reade really begins,” Lederer said.

Shoppers at this store, which is 9,000 sq. ft. on top of 4,000 sq. ft., will see a major play in beauty and a retail-based health clinic staffed by physicians.

“We are New York, and we resonate with New Yorkers, so we have taken a lot of time to understand what New Yorkers are looking for in their drug store box,” Lederer said.