Duane Reade chairman and CEO John Lederer says his company's pending acquisition by Walgreens will accelerate the metro New York retailer's strategy to become an urban drug chain without equal.

"Our mission was to build the best urban drug store proposition in America," Lederer tells Chain Drug Review. "Clearly now, with the power and strength and breadth of Walgreens, we're going to be able to fulfill that vision."

Shedding some light on the rationale for the $1.08 billion acquisition by Walgreens, Lederer notes that the national chain's executives were excited by Duane Reade's "unique approach to serving the New York market and New Yorkers."

NEW YORK — Walgreen Co.’s ownership will accelerate Duane Reade’s drive to be an urban drug chain without equal, according to Duane Reade chairman and chief executive officer John Lederer.

“Our mission was to build the best urban drug store proposition in America,” says Lederer. “Clearly now, with the power and strength and breadth of Walgreens, we’re going to be able to fulfill that vision.”

Discussing the rationale for the largest acquisition in Walgreens’ history, Lederer says that the national chain’s executives were excited by Duane Reade’s “unique approach to serving the New York market and New Yorkers.”

Walgreens executives were impressed with Duane Reade’s Look Boutique prestige beauty department, DR Delish private label foods and beverages, and FlexRewards frequent shopper program, he says.

The $1.08 billion acquisition, expected to close before September, also gives Walgreens the No. 1 market share in Manhattan and the second-place position in a densely populated metropolitan area extending into Pennsylvania.

“This is a quintessential win-win,” Lederer says.

He notes that Walgreens will bring its pharmacy capabilities to Duane Reade, where prescription drug sales account for less than half of total volume. “They have a very strong back end,” he notes, “and we can do some more work on the back end. They’re clearly proficient, and we’ve got a tremendous opportunity to grow that area. So we’ll look for lots of support.”

Walgreens executives will maintain the Duane Reade banner for now, he says, because “they very much like the fact that this is a brand that serves New Yorkers. I think they have every intention of keeping that brand alive in this market for some time to come.”

Duane Reade’s improvements mesh with Walgreens’ implementation of Customer-Centric Retailing (CCR), which centers around SKU rationalization to deliver more value to consumers while simplifying shopping.

Lederer says CCR has reinvented the shopping experience and refreshed the Walgreens brand. The program is “all about furthering their ability to serve unique markets,” he says.

“There’s a surprising alignment” between CCR and Duane Reade’s advances given Walgreens’ size “and this very local New York chain,” he adds.

Lederer, who will be retained by Walgreens, says he and other Duane Reade senior managers are committed to staying the course under the chain’s new owner.

“We’re very much looking forward to working with the Walgreens folks once this transaction closes, integrating these companies and carrying on with this mission of building this joint, tremendously powerful urban drug store proposition,” he comments. “We’re looking forward to the challenge.”

Lederer, a former president of Toronto-based supermarketer Loblaw Cos., says that when he arrived at Duane Reade in April 2008, his first priority was to probe how New Yorkers felt about Duane Reade and what they wanted from their drug stores. Armed with that information, his management team developed a filter for every future company decision, namely its convenience value.

“Anything we did since then was informed by New Yorkers and put in place to make their lives easier,” he says.

The upshot was a remodeling initiative giving stores wider aisles, more open glass and lots of light as well as pharmacy improvements and physician-staffed walk-in clinics.

A culmination of the effort is the chain’s new unit in Chelsea, which features a Look Boutique and extensive fresh and frozen food offering. “In each of the stores that opens, you see a different extension of this notion of making New Yorkers’ lives easier,” Lederer comments. “Each store becomes a little stronger.”