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An Exciting Drug Store?

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Years ago, Duane Reade became New York’s leading drug chain by featuring steeply discounted prices on prescriptions and the leading brands of everyday health and beauty products.

But Duane Reade is an entirely different experience these days. Walgreen Co. acquired the chain in 2010 and has been steadily incorporating the best of both chains’ merchandising concepts into new and retrofitted Walgreens and Duane Reade locations. The Duane Reade flagship that opened at 40 Wall Street this summer is like no other drug store in the country; Joseph Magnacca, president of Duane Reade and Everyday Living Solutions at Walgreen Co., calls it “the most exciting drugstore in the world.”

At 22,000 sq. ft., it is Duane Reade’s largest store ever. The cavernous former bank space has vaulted ceilings that rise two stories above the marble floor and retains the bank’s marble columns, pyramidal roof and French gothic spire. As the Bank of Manhattan Trust Building, it was the tallest structure in the world until the Chrysler Building opened in 1930. Donald Trump purchased it in 1995, but for 11 years the site was only used to host special events, Magnacca says. The New York City Landmarks Preservation Committee awarded it landmark status in 1998.

The ‘wow factor’
One of its distinguishing features is its virtual greeter, a “next generation” holographic image that projects the illusion of a real person at the entrance. Think of the movie “Avatar,” and now imagine a real actress, photographed delivering the brand and promotional messages that Walgreen wants to stress at any given time. Her image is projected from a customized kiosk, delivering those messages 24 hours a day, seven days a week.

Paul Tiberio, senior vice president of merchandising and chief marketing officer for Duane Reade, describes the Virtual Assistant, the first of its kind in any U.S. retail store, as “an essential part of the ‘wow factor’ that we’ve built into our new store.

“The virtual aspect captures shoppers’ attention from the moment they enter the store,” he says. “Because she is so compelling, shoppers are receptive to the wealth of information she provides, enabling them to get the big picture of everything the store has to offer.”

The Tensator Virtual Assistant was created to Walgreen specifications by Bay Shore, N.Y.-based Lawrence, a U.S. outpost of London’s Tensator Group. Tensator specializes in digital media platforms, queue management and in-queue merchandising systems, as well as display and signage products used by blue chip retailers, international airport operators and a variety of other industries. Bill Vetter, general manager of Lawrence, says the Virtual Assistant can be customized by gender or language and can deliver whatever messages a retailer wants.

Merchandising innovation
Magnacca describes the store as “a laboratory where we will test new marketing and merchandising concepts.

“We are taking the best of Walgreens and the best of Duane Reade and bringing them together,” he says. “This store will become an incubator for new ideas and new concepts. Whatever works here, we have a chance to apply to other locations both in Duane Reade and Walgreens.”

Among the many firsts at 40 Wall Street: Its pharmacy is tied into and powered by Walgreens’ propriety pharmacy management system (PMS). Among other things, this allows Walgreens customers to have prescriptions refilled at this Duane Reade location. The company plans to have all Duane Reade pharmacies on the Walgreens PMS by October.

The store also features a large number of merchandising innovations: a fresh-made sushi bar with two on-site chefs; a smoothie bar; a hair salon; nail and fragrance bars; and a pharmacy with an on-site doctor.

Cosmetics, skin and hair care are merchandised in the Duane Reade LOOK Boutique. A virtual makeover station in the cosmetics department allows customers to take photographs of themselves and then scan in makeup items; the computer retouches the photo to show customers how they would look wearing the product. Beauty advisors are also on hand to provide personal assistance in both cosmetics and skin care.

In addition to fresh, organic produce, the upscale food section includes convenience foods and refrigerated cases featuring signature New York products like Carnegie Deli pastrami, Zabar sandwiches and glass-bottled Ronnybrook milk.

Tiberio called the store’s fresh and healthy food offerings “un-paralleled within the drugstore industry.

“As our customers shop across fewer retailers, we have positioned 40 Wall Street to best service the ‘need-it-now’ trips of the area’s growing residential and professional populations, offering an ‘up market’ fresh food proposition and their one-stop shop solution.”

Rebirth and regeneration

Magnacca says the store was designed to appeal to three different customer groups: people who work in the businesses that comprise New York’s bustling financial district; the residents who live there; and the thousands of tourists who crowd the streets taking in the area’s rich history and inspiring architecture. Many of the new concepts being tested at 40 Wall Street could be added to other upscale stores in the right high-traffic locations, he says.

The flagship store cost approximately 20 percent more than usual to design and build, but “because of the enormous foot traffic in the area, it should break even in less than the three years that it typically takes a Walgreens store to break even,” Magnacca says.

The store also represents rebirth and revitalization: A Walgreens store on Wall Street was destroyed when the World Trade Center towers were felled 10 years ago.

“We wanted to come back to Wall Street,” Magnacca says, “and now we have done so in a building and a location that couldn’t be more perfect.”