Duane Reade, the New York City-based drug store chain, consistently ranks among the top retailers in the drug store channel in sales per square foot. But, according to Supermarket Guru Phil Lempert, the retailer might be over-reaching with its new private label snack and beverage line, called DR Delish.
Lempert, writing on his food blog recently said, “No matter how ‘politically correct’ the packaging (suggestive of green and natural) or ‘health formulated’ the product (gluten-free, multigrain, etc.), it’s hard to imagine why the smart merchants at this chain think this line could succeed. Why would they expect fast-paced New Yorkers to spend time pondering a private label line of cookies, chips, trail mix and more—25 items at its launch—when their favorite snack brands that always satisfy are readily available?”
Millions of Manhattan residents and workers turn to Duane Reade because of its ubiquitous locations, not for innovation, according to Lempert. “Not even health, for that matter. And certainly not food leadership. At Duane Reade, convenience counts most,” wrote the NBC TV food editor and frequent contributor to both Convenience Store News and Progressive Grocer.
Lempert predicts DR Delish will fall short of expectations.
By contrast, Lempert points out that Walgreens, which enjoys a more robust image for healthcare excellence and complete one-stop shopping, including food for every daypart, is rolling out its new Customer Centric Retailing format stores to 400 more stores this year, after initial success with the first 35 test stores of this format.
As we've reported on CSNews Online, www.csnews.com, the new format includes the drug chain’s reintroduction of beer and wine to its shelves, a feature that will expand nationally (to about 70 percent of its 7,000 stores) over the next 12 to 18 months.
Lempert clearly prefers Walgreens’ approach to food and beverage because it more naturally suits its customers’ tendencies than the private label push by Duane Reade.
I can’t argue with Lempert’s analysis. However, I think Duane Reade will have better luck with the new line of Zabar’s sandwiches it has recently introduced in its stores. Zabar’s is a Manhattan institution known for its quality food in much the same way that Duane Reade is noted for its many locations. Either way, all this activity on the drug store front is a direct attack on some of the most important categories in a convenience store.
Duane Reade’s moves are obviously a very regional phenomenon. What are drug stores doing in your part of the country? Let us know? Reply here or email me at dlongo@csnews.com. I think competing successfully against the drug channel is going to become more critical than ever for the future of convenience store chains.
-- Don Longo, Editor-in-Chief, CSNews
good article...though would like to track the sales from private label for Duane Reade. about blurring lines between a C-store and a drug store, its approaching from other direction here in Japan i.e. C-stores getting into product lines of a drug store. however, I feel that c-stores here are experimenting too many things at the same time..read alternate for QSR, drug store etc.
Posted by: cvs | November 10, 2009 at 05:24 AM