Of course, that a store on a busy corner next to a subway exit is likely to get good foot traffic isn’t exactly a secret. That’s why these locations tend to fetch premium lease prices. Finding affordable spaces in these prime areas requires Cuti to be a bit more creative. While most pharmacy chains run in fear from multi-floor, non-box layouts, he embraces them. Forty-nine of his stores have two floors, and they come as small as a studio apartment (under 500 square feet) and as large as a suburban supermarket (a 17,200-square-foot box in Flatlands, Brooklyn). Odder spaces include a store at 62nd Street and Broadway with a basement described as “kind of a triangle with a leg on it,” and an old theater on East 86th Street with 1,300 square feet on the ground floor and 12,000 upstairs.

The payoff for flexibility is significantly lower rent. Take 4 Times Square, where in mid-2000 Duane Reade signed a lease for 3,000 square feet on the street and 9,000 below. With a subterranean location, less-than-hot neighborhood (the jury was still out on Times Square), and a lease shorter than the usual fifteen years, it was the kind of ugly duckling only Cuti could love. At the time, Times Square real estate was going for about $250 a square foot on street level, but a mere third of that—about $85 a square foot—in the basement, says Tom Bow, senior vice-president for the Durst Organization, which leased the space. “Most tenants wouldn’t be able to take that space, but they could,” says Bow. “They understood that Times Square was a 24/7 location. They just knew the local market.”

Defying retailing guru Paco Underhill’s fatwa on “butt-brush,” Duane Reade found that New Yorkers don’t mind being bumped from behind.

One of Duane Reade’s newest finds is a dilapidated two-story building a few blocks west of Rockefeller Center. Walking through the gutted husk, Udo Steudtner, Duane Reade’s director of construction, is pleased. “This is probably one of the premier corners in New York,” he beams. It doesn’t look like much. On the first floor are the cracked red tiles of a former fast-food restaurant, and in the basement—a dank box that lets out into a subway station—bathroom graffiti memorializes a commuter dive bar that gave up the ghost. It’s the classic Duane Reade gambit: Take an odd, unlovable, but well-located hole that would repel other chains and adapt it into successful—and cheap—retail space. If the marketing team has calculated correctly that the store is on the commuting route of some 25,000 office workers, it won’t matter that the surroundings are less than pristine. New Yorkers will shop there anyway.

If you’ve ever run into a Duane Reade to pick up some basic supplies—say, soda and toilet paper—only to find yourself wandering aimlessly in the apparently random aisles, it will come as some surprise to learn that someone actually designs the stores. As senior vice-president of sales and marketing, Gary Charboneau has been choosing locations and designing Duane Reades since 1993.

In a store near his office, as a rainy weekday lunch crowd swirls around us and Hall and Oates’s “Out of Touch” segues into Phil Collins’s “Sussudio” on the Muzak, Charboneau explains how he has split the basic Duane Reade layout into four blocks that can be moved around like the colors on a Rubik’s Cube. The first block is the chain’s bread and butter: beauty and cosmetics, which is most often on the first level near the door. “We try to keep those categories next to each other so that the shopper, usually a female shopper, is in close proximity to that stuff,” he says. Next is the pharmacy, which is always in the least accessible part of the store, because people don’t browse for prescriptions. The last two sections, seasonal (cards and candy) and household and grocery, can be split and moved to fit the space. Most stores carry between 18,000 and 20,000 different items.

With 300,000 people making a purchase at Duane Reade every weekday, a study of exactly what the stores sell gives a pointillist portrait of the New York consumer. Unlike most drugstores, where prescriptions make up the majority of sales, half of Duane Reade’s sales come from food, cosmetics, and the like. That runs from insoles and corn pads—because New Yorkers walk so much, Duane Reade sells twice the industry average—to foods for the society-X-ray palate. “We have four-foot-long sections of rice cakes. Put those in a suburban store and they all go stale,” says Charboneau. “And we have these soy crisps, which are not the best-tasting things. But they fly off the shelf.”

Selling makeup—a huge business for drugstores—proves a challenge to convention: New Yorkers come in darker shades than most Americans. “Cover Girl cosmetics, the No. 1 line in the U.S., is nowhere near No. 1 in Duane Reade. Why?” asks Charboneau. “They think their customer is blonde-haired and blue-eyed. And there ain’t that many true blonde-haired, blue-eyed people in New York.” So in 2002, Charboneau and Duane Reade’s recently retired head of cosmetics, Karen Durham, created a Duane Reade offering, apt. 5 (“The Color for the City”). Even its name evokes city life: Apartment for obvious reasons and 5 because it has what Charboneau calls a “prestigious” association, Fifth Avenue. Not to mention the reference to Chanel No. 5. The line is now the chain’s top beauty seller—industry analysts say annual sales approach $2 million.