Wonder drug

Duane Reade debuts its Wall Street flagship store, which is bullish on grocery and fresh food.

“Great place!”

That is how Donald J. Trump described the Duane Reade flagship store that has just opened shop in the lobby of his landmark 40 Wall Street building. Touring the store at a pre-opening party with his son, Don Jr., Trump was blown away by a host of new offerings including the Up Market grocery department, sushi bar, juice bar, nail salon and Look Boutique, its upscale cosmetics department.

“This is an incubator for new ideas and this is a store where we test and play with new concepts, and where it makes sense we will apply different elements of those back into our organization,” said Joseph Magnacca, president of New York-based Duane Reade. Deerfield, Ill.-based Walgreen Co. acquired the chain with 250-plus stores in February 2010 and is maintaining it as a separate division.

For example, he said the company could offer Butter London cosmetics and O.P.I. and Essie nail polish at other locations without the services such as a nail salon.

“This store is really where Duane Reade and Walgreens come together for the first time in various ways,” Magnacca said. “‘In the Pharmacy’ is our first co-branding effort where the Walgreens logo actually appears,” he said as he pointed to the “Duane Reade powered by the Walgreens Pharmacy Network” banners. “You can [now] take a Walgreens prescription to Duane Reade or a Duane Reade prescription to Walgreens.”

Rich in marble, Duane Reade’s flagship is housed across the street from the New York Stock Exchange on the first floor of 40 Wall Street, an iconic skyscraper built to house the Bank of Manhattan Trust Co., predecessor to Chase Manhattan.  The 22,000 square-foot store is the largest in the company’s stable, although a larger Walgreens banner unit is slated to open later this year.

Duane Reade officials expect the store to service an eclectic mix of customers. “There are now a lot of condos in this area,” said Paul Tiberio, senior vice president merchandising, CMO, at Duane Reade. “We’re estimating that our customers will be 70% residents, with the other 30% split between tourists and Wall Street workers.”

“The Financial District workers are a Monday through Friday business,” said Magnacca. “So on the weekend you will see that some of the mix in the flex spaces will change dramatically because we will start talking to the tourist more than the business person in the marketplace. That is a very European-driven model, where you get the mix right for the day, as opposed to carrying the same product all the time.”

Heading Up Market

That will be seen most in the Up Market, the name bestowed upon Duane Reade’s vastly enlarged grocery department, highlighted by the electronic digital stock ticker scrolling above its entrance. Magnacca notes that for all of its money and power, the Financial District is a virtual food desert with no major supermarkets in the area, despite a number of the area’s older skyscrapers being converted from office to residential use. Duane Reade hopes to service those consumers with its complete grocery selection, including dairy, frozen foods, bakery, produce and floral.

“You are seeing a dramatic change in the mix in this area of the store,” Magnacca said. “We have more healthier product, more organic and natural foods.” A personal favorite of his is “Restaurant Row,” an 8-foot section of groceries from local restaurants.

There is a full assortment of dairy and frozen foods.

Fresh produce is also available, including Dole salads, grapes in a clamshell, raspberries, blueberries, strawberries, mushrooms, celery, Foxy lettuce, bananas, lemons, limes, grapefruit, apples, pears, nectarines, peaches, pineapples, baby watermelons, cantaloupes and honeydews.

“Food is key for us,” Magnacca said. He notes the store’s Delish private label line, which is being extended to Walgreens, as well as breads from Zabar’s, meats from Carnegie Deli and Rice To Riches rice puddings from the trendy NoHo shop that retail for $4.00 per 4-ounce cup. “We carry their four best flavors in a retail pack as an exclusive retail partner with them and it is pretty exciting to try and bring those things in,” Magnacca said.

Two new departments include the Sushi Bar, which is managed by an outside vendor, and The Juice Market juice bar. “We do fresh sushi here daily, everyday. A lot of our stores have sushi, but it is not made in the store,” Magnacca said. “The Juice Market offers fresh-squeezed juice and smoothies, which is just a very, very cool, hip, trendy health option for people.”

Also making its New York debut at the store is the Coca-Cola Freestyle machine that dispenses 120 different kinds of soft drinks.

Virtual makeovers

In the Look Boutique beauty care department that includes teaming with Phyto Universe to offer a scalp analysis and wash and blow-out treatment. “Our customers can come in and assess and analyze their scalp and hair to find out what should be the right shampoo for them to use,” Magnacca said.

The Virtual Makeover Kiosk from EZface also promises to be a big hit. Demonstrating how he’d look all dolled up in fuchsia lipstick and mascara, Magnacca stands in front of the kiosk, which takes a picture of his face. When he scans a tube of lipstick the image on the screen shows how it would look on him. It can then be e-mailed to home or iPhone so the shopper can remember which brand looks best.

Another first is a Nail Salon, housed in a marble room that was once David Rockefeller’s office. “I’m not sure he would appreciate it, but we have partnered with O.P.I. and Essie to create a nail salon,” Magnacca said. “We’re excited about that. We moved into the category in a big way and now we think it is time to move into the service,” he said.

Upscale brands stocked include European import Gosh as well as Butter London and L’Oréal’s Roger & Gallet. “Our merchandising program is just so much different than a traditional drugstore. It is very department-store like,” Magnacca said.

“When we met with Mr. Trump and presented our concepts to him he was just blown away and said ‘how fast can you do it?'” Magnacca said. “It took a long time because this facility was really worn down and had not been occupied in 11 years.”

As a result, can we expect to see Duane Reade making an appearance on the next season of Celebrity Apprentice?

“We have talked about that. Yes,” Magnacca said.

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