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Left: From the bad old days at Duane Reade in Manhattan. No style, no space, no love. Right: The new flagship on 40 Wall St. Clutter has given way to airy opulence Brian Finke
For decades, the Duane Reade drugstore chain offered one of New York’s rawest shopping experiences, with the ambiance of a DMV, with really narrow aisles, maybe located in Times Square circa 1973. The layouts were labyrinthine and the merchandise disorganized. The staff was so famously sullen that the blog “I Hate Duane Reade: Service from Hell” used to come up first when Googling the company. In 2007, New York magazine asked the actress Martha Plimpton, a lifelong resident of the city, what she hated most about living there. “The dead-eyed pharmacy people at Duane Reade,” she said. “It’s always a journey into the heart of darkness.”
Now there’s the Duane Reade on 40 Wall St. The chain’s 254th store, just down the block from the New York Stock Exchange and across from a Tiffany’s, is like an extravagant apology to the city. It occupies a 22,000-square-foot space with 28-foot-high ceilings, graceful archways, marble columns, and a gilded air. The Rockefellers ran a bank there. Now Duane Reade offers $10 manicures where David Rockefeller’s office used to be.
The store, which opened in July, also has a hair salon, a juice bar, two sushi chefs, and a holographic greeter. There’s still aspirin and toothpaste, and now there’s a doctor, too. Beauty consultants are available, along with two different machines that provide virtual makeovers. A 20-foot-long stock market ticker flashes above the front windows. “So many men have been asking for haircuts that we decided to do those, too,” says Paul Tiberio, the executive in charge of merchandising and marketing at Duane Reade. “No shaves, though. We don’t want blood.”
Tiberio, dressed in a pinstripe suit, a crisp white shirt, and a tie in the new corporate lavender, is an enthusiastic tour guide. He walks over to the brightly lit refrigerated section and says, “We’ve got everything you would find in a grocery store, except the hanging meat.” At the sushi station, the chefs—two Korean brothers—are preparing for the lunch rush. The improbability of that image is striking. “We had been a little reserved about rolling out sushi in a drugstore,” Tiberio says. “But after we did salads and sandwiches, we thought we could do sushi, too. Now sushi and fresh juice are two of our top five sellers here.” Rounding out the list are bananas, coffee, and Marlboro cigarettes. “This is great,” he says. “You have a dream and it works.”
Duane Reade’s transformation is as noteworthy as any in modern American retail. It occurred mostly during the Great Recession. It involves private equity backers from Oak Hill Capital Partners in Stamford, Conn., and a group of Canadian executives who brought a fresh view of what an American drugstore could be.
In early 2010, Oak Hill sold Duane Reade to Walgreens, the nation’s largest drugstore chain, for $1.18 billion, about $300 million more than it paid in 2004. The alternative—that Duane Reade would go the way of Circuit City and Borders—had been just as likely. “Duane Reade couldn’t forever ignore the consumer or it would have gone out of business,” says Bruce Cohen, a retail strategist at Kurt Salmon consultancy. “Now, for the first time, consumers have expectations about Duane Reade. Can Duane Reade live up to that?”
Duane Reade had come by its decrepitude honestly. The company was founded by three brothers, Abraham, Jack, and Eli Cohen, in 1960 and named for the two streets that bordered their first store on Broadway in Lower Manhattan. They pioneered what has come to be known as the Starbucks strategy, opening their second store opposite their first. The Cohens expanded slowly over the years and in 1992 sold the chain of 37 stores to Bain Capital, then run by Mitt Romney, for a reported $239 million. When Duane Reade went public in 1998, there were 67 stores. Six years later, when Oak Hill bought the chain, it had 239 stores. Now there are 256 Duane Reades in New York City, more than there are McDonald’s.
