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Beauty Roundup: June 26, 2009

Duane Reade has been — somewhat quietly — opening a new breed of store.

Duane Reade’s Marvelous Rebirth

A friend of this reporter ducked into a Duane Reade store in Manhattan the other day. Typically, that’s not news. Millions of New Yorkers pop in and out of Duane Reade’s ubiquitous sites daily for everything from a snack to pantyhose. What is unique is that the friend’s jaw dropped when she saw this particular Duane Reade.

Duane Reade has been — somewhat quietly — opening a new breed of store. Plans call for a big flourish when a flagship opens in the next month in Herald Square.

Duane Reade stores have never been considered attractive. They are often so busy or crammed into existing odd real estate that they are hard to navigate. Many are spread on multiple floors. But the new look is eye popping — especially because it is Duane Reade. With one of the new stores situated near Penn Station, more and more visitors to Manhattan are getting a peek at the fresh design.

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At a time when the industry is focused on Walgreens and its new format, Duane Reade has proven that even a regional power can make a splash. Duane Reade’s rebirth also proves that drugstore chains can continue to make a mark in beauty.

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The changes even start on the outside with a sleek new logo. Inside, the store is brighter and the aisles wider. There are vivid signs alerting shoppers to departments, including a much-upgraded beauty department. Duane Reade started cooking up a new look in 2006 under then-chief executive officer Rick Dreiling. When John Lederer took over, the project was further ramped up. With executives with experience from Loblaws in charge, the look was bound to be elevated.

There are 245 Duane Reade stores in the city and surrounding areas. Fifteen new units opened in 2008 bearing Duane Reade logos; seven featured the new concept and plans call for 30 by the end of this year.

The company has reported stronger sales at the upgraded locations. At the front end, Duane Reade thrives on traffic, and its goal is to become more of a destination. The average transaction has been constant, but over the past few months, the retailer has undertaken initiatives to drive customer spending, and improved beauty is paramount in that. Private label goods offer “an immense opportunity for Duane Reade,” Lederer said, noting the chain’s store brand penetration is significantly lower than the chain drugstore industry average. He also believes there is much more potential in beauty.

At a time when mass market beauty is a little bleak, Duane Reade is a chain offering positive news.

NEXT: People, Places and Things >>

People, Places and Things

A few words with Jacques Cohen, chairman and ceo of Prestige Cosmetics, on how niche beauty brands can survive.

WWD Beauty News: Some retailers are editing brands in the recession. What does this mean to the beauty business?

Jacques Cohen: Recessions are times when people get scared and they do ‘spring cleaning.’ Some react by getting rid of dead weight. I find a recession is a wake-up call and a time when we can all come out stronger and learn from bad habits.

WWD Beauty News: So what does that mean for prestige?

J.C.: We are coming out with more new products than ever. In tough times, we get more aggressive. We have an entirely new cosmetics line we’ll debut at ECRM. We are doing more with international growth and categories such as mascara. There are chains in America we think are good for us, such as Target. We are just getting more aggressive instead of retrenching.

What’s in Store

CVS and Davidoff: A New York court of appeal has upheld a ban that stops CVS from selling Coty’s Davidoff fragrance with defaced packaging. The decision dates back to a case in 2006 when Davidoff was found with unique UPC bar codes removed.

Meijer Shrinks: Like many superstore operators, Meijer is tinkering with a smaller format. The chain will open a 102,000-square-foot unit next year that is half the size of most supercenters. Beauty will still be a major component of the pared-down store.