New York City Drug Store Institution Expands Convenience Store Lines

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
 

Don’s Top 5 Things to Like About Brazil

Sindicom, Brazil’s confederation of petroleum wholesalers and convenience stores, invited me to Brazil to give the keynote address last month at the Expo Postos & Conveniencia, the country’s equivalent to the NACS Show in the U.S., although on a much smaller scale. The show attracted about 20,000 attendees to Sao Paulo’s Expocenter Norte pavilion which was filled with about 140 exhibitor companies including both product and service suppliers. With a large number of equipment vendors, the show floor resembled the PEI (Petroleum Equipment Industry) wing at the NACS Show.

Sindicom and a local fuel and lubricants distributor and convenience store operator called, Mime Group, sponsored my trip to Brazil, where I was given a tour of c-stores and gas stations throughout the southern state of Santa Catarina and in the huge business capital of Sao Paulo.

One of the things I liked best about Brazil is that sugar is used to both fuel the majority of the country’s automobiles and to make the country’s signature alcoholic drink, the caipirinha, which I absolutely fell in love with.

Ethanol made from sugar is the fastest growing fuel in Brazil, growing from 4 percent of the country’s fuel consumption to 14 percent over the past five years, according to Sindicom. More than 90 percent of new vehicles in Brazil are equipped with flex-fuel technology – meaning they can run on both traditional gasoline and ethanol, which is usually less expensive than regular petroleum fuel because it is not taxed as heavily.

(By the way, caipirinha is an alcoholic beverage made by crushing lime wedges into granulated sugar, and adding crushed ice and cachaca, a Brazilian rum made from sugar cane. As a crack investigative reporter, I made sure to do extensive taste tests at every stop of my whirlwind trip.)

I’ll be writing a complete analysis of the convenience store scene in Brazil, along with many market statistics, for CSNews’ November 9 issue, but here’s a quick look at five things I liked best about the country:

1. The beaches on Florianopolis, the capital of the state of Santa Caterina were just beautiful. Even in Brazil’s spring, the ocean water was temperate and there were plenty of sun-bathers out, along with wind- and kite-surfers.
2. Guarana Antarctica. This popular guarana-flavored soft drink is refreshing and tastes better than most of the high-octane energy drinks sold in the U.S.
3. Caipirinhas. Mentioned earlier, these sugar-cane rum based drinks go down easy, but pack a wallop.
4. The food. Whether we ate seafood (the moqueca was the best fish stew I ever ate), meat (at authentic churrascarias), or baked goods (loved the cheese bread), the food was as good or better than I’ve tasted anywhere in the world.
5. The people. Diversity, thy name is Brazil. British columnist and author A.A. Gill writes, “There’s no shade of the human color chart that isn’t indigenous. Here you’ll find cities of blue-eyed, blond Germans and Pradablack West Africans. Brazil boasts the largest expat population of Japanese outside Japan.” And there are millions of Italians, not to mention a large Jewish area in Sao Paolo.

-- Don Longo, Editor-in-Chief, Convenience Store News

So Much For Breakfast To Go

Last Friday, on my day off, I picked up breakfast for a friend who is recovering from a broken leg. 

After all the press I had read about Starbuck's improved breakfast offer, I decided to give the oatmeal a try. The oatmeal sounded like a healthy, safe choice. It comes with dried fruit, brown sugar and nuts, so my friend could customize it. A nice change from the usual bagel or fat-burdened egg/sausage sandwich right?

The barista opened two cardboard bowls, added hot water, put a top on the container and the oatmeal was ready to go before my drinks were.

As I unpacked the bag in my friend's kitchen, we were both excited to give the oatmeal a try. After struggling a bit to open the fruit bits' plastic packaging, we dug in. We were both impressed by the texture of the oatmeal and the add-ons. It was tasty and wholesome and made us feel superior to those poor, unadventurous, uneducated saps chowing down on sugared pastries while commuting or reading the paper back at Starbucks.

Then it happened. Half way through, I discovered a hair in the oatmeal. Human, I assumed, though it didn't match the hair I remembered on my server's head.

Though it's unlikely I'll ever be a victim of oatmeal hair again, I can't say I'll ever buy Starbuck's breakfast again either. Which, with my on-the-go lifestyle, will mean a few hundred dollars of lost sales per year for my local store.

It took 2 seconds to turn a great "I'm getting this every week!" experience into a gag-worthy, tell-my-friends grossfest. -- Barbara Grondin Francella