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Duane Reade’s Magnacca gets top merchant honors
January 5th, 2010
NEW YORK – In just over a year as chief merchandising officer of Duane Reade Inc., Joe Magnacca has put his stamp on the chain in a way equaled by few other retailers.
The newest and most recently remodeled Duane Reade stores are all but unrecognizable for New York City shoppers accustomed to older units in the chain, and a redesigned logo is just the tip of the change.
A new decor created around beauty, health and convenience sections with wider aisles and large uncluttered windows serves to contemporize the outlets. Perhaps most dramatically, the new Look Boutique prestige beauty department has elevated the merchandising of cosmetics, fragrances, and skin and hair care products at the chain to rival the level of department stores. Already more than 30 outlets have the new look and feel, and up to 30 more will get it this year.
According to Magnacca, the change has been “revolutionary, not evolutionary.” No one should discount “how different this model is from what our competitors offer in the U.S., and particularly New York,” he says. “It’s a huge departure.”
For being one of the principal architects of that change, Magnacca has been selected by the editors of Chain Drug Review for the magazine’s 2009 Vern Brunner Merchant of the Year Award.
Magnacca joined Duane Reade in the fall of 2008 as senior vice president and chief marketing officer. He was subsequently promoted to executive vice president while retaining his merchandising responsibilities.
He came to Duane Reade from Shoppers Drug Mart (SDM), where he had led marketing and merchandising initiatives since 2002. At SDM he had most recently served as executive vice president of merchandising and category management.
When Magnacca came to Duane Reade to collaborate with chairman and chief executive officer John Lederer, who had arrived at the company earlier in the year, he saw tough challenges but also major opportunities to recast New York’s dominant drug chain — its market share in the city is nearly 70%. Lederer, Magnacca and retail consultant and acting chief marketing officer Joe Jackman recognized that Duane Reade had the advantage of what Magnacca calls “some of the best locations in New York City, especially in Manhattan.”
That said, Duane Reade had little else going for it in the heated competition for Gotham’s drug store customers. Its stores were showing their age, its mix was unremarkable, and its merchandising approach forgettable. New Yorkers who shopped Duane Reade did so mostly because the stores happened to be nearby, notes Magnacca. The outlets were not stores that customers sought out for the shopping experience or to stock up medicine chests, cosmetics cases and cupboards. Instead, consumers tended to patronize the units for one or two items needed immediately.
To change that perception, the new management embarked on an aggressive renovation and relocation campaign. And the retailer began opening new stores in both business districts and residential communities.
At the core of the transformation of Duane Reade under Magnacca and his fellow top executives are three merchandise groupings with corresponding wall signage and colors: health sections (“How I feel”) set off with a blue background, beauty departments (“How I look”) in mauve, and daily living in New York City (“What I need now”) products against a green decor. Magnacca says a key accompaniment of the change has been a focus at the store level on organization, discipline and service.
That has scored points with consumers, he adds. “We’re pleased that the consumer has accepted our model, but we’re not overly surprised because we developed the model based on consumer focus groups,” he remarks. “It is nice to get that validation, to be honest.”
The chain’s theme of “New York living made easy” is the “filter” for every initiative it undertakes, notes Magnacca. “That really is the top of the pyramid for us.”
For example, the recognition that New Yorkers walk extensively and tend not to cook led to the launch of the DR Delish line of foods and beverages, including sandwiches and salads.
Internally, the overhaul of the stores has “been a very exciting morale booster for all of us,” Magnacca says. “Stepping up merchandising to another level has brought a lot of bonding with our store teams. Everyone’s pretty tired. But when we look back we realized how much we accomplished in just 14 or 15 months.
“Every time we remodeled or built a store we focused on another area of the business, whether it was beauty or food or skin care, and our employees took a great deal of pleasure in that. As we turned the corner on each category, the stores got better and better.”
The chain will continue to enhance its presentations of particular categories as merited in particular neighborhoods, he says. A Look Boutique, for example, is debuting this month in Rockefeller Center, while another will be unveiled in February in Chelsea and more will appear starting in April.
Looking back, and ahead, Magnacca says: “It’s been tremendous to be part of the last 15 months, and the next 15 should be equally exciting.
“We’re inspired by what we’ve done, and that has given us the confidence to go forward just as ambitiously.”
ALSO HONORED BY CHAIN DRUG REVIEW:
• Retailer of the Year: Greg Wasson, Walgreens
• Rx Exec of the Year: Kermit Crawford, Walgreens
• Lifetime Achievement Award: Andy Giancamilli, Katz Group
• Global Retailer of the Year: Alliance Boots