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Duane Reade Looks to Europe for Inspiration

SVP Joe Magnacca talks about the drugstore chain's upscale moves.

New York is the epicenter of the beauty industry, and it’s also the place to jump-start change, said Joe Magnacca, senior vice president and chief merchandising officer of Duane Reade, a metro New York drugstore chain.

“The only place to change the face of beauty is in New York. A place made famous by many and celebrated by all, there is only one New York,” Magnacca told attendees of the summit.

Two years ago, Magnacca left his post at the Canadian pharmacy Shoppers Drug Mart — which has looked to Europe for inspiration to create upscale beauty boutiques within its stores and build a stand-alone luxury concept called Murale — to put his stamp on the U.S. drugstore business and attempt to elevate the mass market beauty experience.

First, Magnacca and the management team at Duane Reade had to polish the image of an urban drugstore that he described as “an old, dingy, poor-serviced, overmerchandised store.

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“We truly had negative brand equity in the marketplace, yet we were on every second [street] corner,” said Magnacca. “We had to make a lot of changes. We had to widen aisles, refresh the mix, rebrand the store, redefine the private brand program, rebuild the loyalty program, expand into new categories and enter into the beauty world in a way that no other drugstore has in America.”

As part of the revamp, a handful of stores include Look Boutique, an expansive, high-end beauty boutique — complete with brow services — manned by trained beauty advisers who sell across the assortment. The changes attracted the attention of Walgreen Co., which, in February, announced plans to acquire the chain. As for how the retailer implemented swift change, he said, “It’s about vision.…It’s deciding where you want to take a brand and then tactically going after the steps.”

Just as Shoppers Drug Mart did, Duane Reade looked to Europe when devising an upscale beauty concept designed to incorporate prestige brands into its drugstore setting. “In the U.S., we have fallen behind so many global trends. It’s time we begin to transform beauty in the United States, because it’s all about [the customer], it’s all about what she wants, not what we want.

“We look to Europe to see the future,” said Magnacca, noting the plethora of retail European concepts — naming Marks & Spencer, Harvey Nichols and Selfridges, in particular — that “appeal to various lifestyles, retail stores that cut across ages and emotionally engage all.”

Each concept, in Magnacca’s view, shows beauty can be revolutionized on U.S. soil, and in the U.S. drugstore, where consumers are already shopping for everyday needs. “In every visit we, as retailers and as brands, have a chance to sell her that new lipstick shade or new fragrance that she didn’t even know she needed.”

He also had a message for niche brands struggling to find a home. “We know you are out there and we’re willing to work with you and raise your profile.”

Duane Reade’s move upscale is proving successful, he reported. “A Look Boutique customer spends five times more than what a traditional drugstore customer spends,” he said, adding the company expects to have 10 Look Boutiques by year’s end. “It’s changed the way a customer uses and thinks of a drugstore in New York.” To the prestige beauty executives, Magnacca said, “Change is inevitable.…We need to share the customer and work together to grow the overall category.”