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Duane Reade fills ‘Prescription for Change’ with recent transformation

BY Antoinette Alexander

NEW YORK —It has been just over a year since John Lederer joined Duane Reade as chairman and CEO, and the chain’s transformation is gaining momentum—a nod to what could be characterized as his first major stamp on the chain since coming aboard in early April 2008.

“Since that time, we have made some tremendous progress in identifying opportunities for improving Duane Reade, and we’ve also developed and begun implementing our transformation strategy, which we are very excited about as we believe it will enable us to better serve New Yorkers,” Lederer told analysts during the company’s May 5 conference call to discuss first-quarter results.

With the findings of consumer research conducted last spring/early summer among more than 1,000 New Yorkers serving as the underpinnings, Duane Reade’s management continues to forge ahead with its “Prescription for Change” turnaround plan aimed at improving pharmacy, fixing the customer experience and developing a relative, urban drug store box.

One location that Lederer, in an earlier call, brought to the attention of analysts is its recently renovated Penn Station store, which, according to Lederer, “serves as a proxy for the opportunities within the company.” This store 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 and a fresh food case with daily fresh-delivered sandwiches and salads.

In this most recent call, Lederer also discussed plans to open a new 14,000-sq.-ft. store in Manhattan’s Herald Square during the summer.

“It is in a very hustle-and-bustle area, and we are going to show some new innovation in that store in terms of categories. And we are going to show the consumer where this brand is headed,” Lederer said.

In 2008, the company opened 15 new stores, seven of which are new concept stores. By the end of the year, there will be about 30 stores that will either be new or renovated stores.

The company also has revamped its Web site to reflect the new look and feel.

Behind the scenes, Lederer and his team have been working to enhance pharmacy, supply chain and store operations.

Since former Longs Drug Store executive Frank Scorpiniti joined Duane Reade in December as SVP pharmacy operation, he has decided to close the chain’s central fill operation, which had been a part of the business for a number of years. Scorpiniti’s decision not only resulted in a cost reduction for the company, but also better in-stocks for stores and less wait time for pharmacy customers.

Meanwhile, the supply chain team has been able to drive service levels up to industry-leading stats, and warehouse inventory is down significantly, Lederer said. The store operations team has been working to improve the customer experience through reduced wait times and cleaner stores.

Looking ahead, the company is planning to revamp its private-label program. By year-end, it expects about 1,000 new brand entries within private label.

To enhance customer loyalty and provide even greater benefits to suppliers, Duane Reade will further leverage its loyalty program and will relaunch the program in late summer/early fall to transition it into more of a database-marketing business.

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CVS opens Beauty360 No.3 in one of its original Project Life stores

BY DSN STAFF

NEW YORK — If anyone thinks that CVS has recast itself solely as a healthcare company, given its string of acquisitions in recent years — particularly, Caremark and MinuteClinic — they probably haven’t seen a Beauty360 store yet. In fact, standing in the middle of one of these 3,000 sq.-ft., high-end beauty boutiques, you might have a hard time recognizing you were in a CVS store at all.

Beauty360 is the culmination of the long-time vision and an awful lot of hard work on the part of several key individuals, most notably, CVS’ top merchant Mike Bloom, VP beauty merchandising Cheryl Mahoney, senior beauty category manager Mary Lou Gardner and Mike LePage, director, retail innovations and store design. Importantly, it is also a very bold statement that, for as much energy as CVS Caremark devotes to driving solutions that save lots of money for big payers of health care, it is very much still focused on its stores, and using other areas beyond health and wellness to spark innovation and create reasons for customers to shop their stores.

You want to talk about growing the market basket? How about adding a whole other basket? With prices on many items topping $100, Beauty360’s contribution to overall store profitability is palpable. According to CVS executives, sales in the two other locations the company operates in Mission Viejo, Calif., and Washington, D.C., are well ahead of expectations.

And why wouldn’t they be? No woman in her right mind, with at least a minute or two to spare, isn’t going to check out Beauty360 — particularly in the ritzy neighborhoods the chain is putting the stores in. The average household income in Mission Viejo is roughly twice the national average; in terms of shopping, Fodor’s calls Dupont Circle “a younger, less staid version of Georgetown — and almost as pricey”; and the newest Beauty360 in Ridgefield, Conn., is surrounded by seven-figure homes. Bloom says CVS is planning to a whole bunch of them into the former Longs stores it is currently converting, which includes many more posh areas to pick from.

With just 30 of the stores planned by the end of the year, and about 50 by this time next year, it likely will be a while before the impact of Beauty360 begins to be seen in CVS’ earnings. In the meantime, you can expect sales per square foot to balloon in the stores that share a roof with a Beauty360.

Beauty360 is an important message to its competitors that CVS hasn’t forgotten about the importance of creating excitement in its stores.

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SDI launches iPhone, iPod application for allergy sufferers

BY DSN STAFF

NEW YORK The addition of SDI’s Pollen.com allergy applications to the growing number of iPhone/iPod touch-friendly, health-related applications is just the latest example of how an e-health evolution is more and more becoming a part of America’s daily lexicon.

 

Already, there are more than 100 health-related applications available for the Apple products, including FDA for iPhone and WebMD Mobile. According to Apple COO Tim Cook, those apps are available to some 37 million users — that’s how many iPhones and iPod touches are currently on the market.

 

 

Concerned about what exactly those food additives in your favorite snack are? There’s an app for that. Worried about your blood pressure or heart rate? There’s an app for that. Want to know what your blood-sugar level means? There’s an app for that, too.

 

Indeed, while SDI was preparing for its official Pollen.com iPhone app launch, two Northwestern University teams took home the top two prizes awarded in the Diabetes Mine Design Challenge last week. The challenge? Develop an iPhone app that diabetics could use to help manage their condition.

 

Next month, Apple plans to release an updated iPhone 3.0 with support for Bluetooth-enabled medical peripheral devices, like Johnson & Johnson’s LifeScan glucometer. And while Apple is updating its iPhone capabilities, Palm will be introducing its Palm Pre, slated to debut June 6 on the Sprint network. The Palm Pre is expected to give Apple’s iPhone a run for its money, but at the very least, it’ll open the door of health-related mobile apps to that many more users.

 

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