Inside the Duane Reade on the corner of Delancey and Ludlow on the Lower East Side, a thick white guy in dusty construction boots ruminates on a display of Ben-Gay and its generic counterparts. “Didn’t know how much they cost,” he mutters as he puts one down and picks up another. “You gotta be kidding me!” he says finally, and stalks out past the dozen other shoppers reading product labels with the quiet deliberation of people considering books from an unknown author. The store looks disheveled and lived-in, as if it had grown organically through years of trial and error, not through anything as prosaic as a retail “planogram.” In the front window display, food is haphazardly stacked next to diapers and window cleaner, and, in a fit of absurdity, only one item has its price tagged: Johnson & Johnson baby powder, $2.99.
Duane Reade ought not to be successful. The prices aren’t particularly low and the staff isn’t particularly helpful. And the often cramped and disorganized stores offend the boutique sensibilities of New Yorkers. “I just happened to be in a Duane Reade, and the entire time I contemplated how poorly planned the shops are,” says Karim Rashid, the industrial designer whose clients range from Acme supermarkets to Armani. “How bromide and miserable and vacuous the place is, how completely unaesthetic. What a poor experience.”
Yet over the past decade, Duane Reade has completed a voracious expansion campaign and achieved a ubiquity once limited to cabs and pigeons. How did a chain that’s neither the cheapest (a gallon of milk goes for $3.39 at Duane Reade and $3.19 at CVS) nor the nicest become New York shorthand for drugstore?
The company understands two important things: New Yorkers are uniquely harried shoppers, and the whole ball game comes down to real estate. Duane Reade has used its skill at that quintessential New York blood sport to cut rents by shoehorning its stores into bizarre locations other chains wouldn’t touch. And it’s kept New Yorkers coming back by knowing us better than we’d like to think: For all our bluster about good design, organic foods, and attentive service, we’ll take our Band-Aids and trash bags where we can get them.
Founded in 1960 by the brothers Abraham, Eli, and Jack Cohen, Duane Reade started as a three-store health-and-beauty chain that took the name of the two streets that bounded its lower-Broadway warehouse. The company grew in fits and starts over the next three decades. But it didn’t really begin to take off until 1996, when then-owner Bain Capital brought in the president of Pathmark, Anthony Cuti, as CEO.
A Rome-born, Manhattan–raised 59-year-old with a swoosh of gray hair and the air of someone used to getting his way, Cuti gave the chain an ambitious new energy. In 1998, the company raised $102 million by going public and used the cash to buy stores from Rock Bottom, Love’s, and Value Drug and open plenty of its own. Since Cuti took over, Duane Reade has grown from 59 to 249 stores, the most of any drugstore chain in the city.
The massive expansion hasn’t always been friendly. An estranged union of Duane Reade employees runs DwayneGreed.com, and a string of steamrolled residents has called the company a bad neighbor. In one dispute, Cuti refused to compromise on a huge store-top billboard that irritated neighbors in Rockaway, and even sued an artist who took out a negative ad in the local paper. “It seems like he had a bit too much testosterone for his own good,” says Congressman (and mayoral candidate) Anthony Weiner of the hard-charging CEO, who eventually had to modify the sign and lost the suit. “It ended up the way it would have if he hadn’t been a dick.”
Cuti’s aggressive style has served him better in the real-estate game. The central conundrum of New York retail is that you pay gobs of money for space but you can mark up a bottle of soda only so much. To compete against 5,000-store giants in an unsentimental real-estate market where the highest bidder, not the local kid, gets the lease, Cuti has to be smart enough to pick the right locations but flexible enough to use whatever spaces he can get.
Satisfying the first part of that formula is easy in theory. According to Cory Zelnik of Winick Realty Group, Duane Reade’s real-estate broker, it means staying on the avenues and major crosstown streets (like 14th and 23rd) and opening stores near mass-transit stops. Generally, a store needs 25,000 people who will use it as their primary source of pharmacy and beauty products, Cuti says. Entities like Equifax and the city comptroller’s office provide population-density maps, which help to some degree, but because so much of New York is vertical—meaning that placing a store on the right or wrong side of an apartment tower can make or break it—and so much is office space, picking spots means spending a lot of time counting pedestrians. When the company considers a location, the marketing department sets up electronic beams or hand counters to tally the number of people who pass by at various times and in different weather conditions.