Duane Reade and parent company Walgreens are mostly known for their quick, pharmaceutical pickups. However, that's slowly changing as the drug store industry takes a more inclusive approach to on-the-go convenience. Recently, more drug stores are engaging in channel blurring and moving in the direction of the “grocerant niche” by incorporating more hot and fresh food into their offerings.
On a recent visit to a Duane Reade store, I immediately noticed a large area of the store was devoted to fresh food and wrapped sandwiches. According to this article by Grocerant Guru, the retailer chose stores in San Francisco, New York, and Chicago to pilot its fresh food program. The idea appears to have gained traction. The retailer is planning to expand and offer its ready-to-eat plates and heat-and-eat plates, in an effort to become a destination for time-starved customers planning dinner.
Dangers of Overcharging
Offering fresh, pre-packaged foods is a trend that comes with some controversy. In July, two plaintiffs in New York filed a class-action lawsuit against Duane Reade. The suit alleges that they were overcharged for prepackaged food with a price based upon a false, inflated weight.
This lawsuit is yet another example of the importance of auditing and self-auditing in any type of retail setting with pre-packaged food. We saw it happen in Whole Foods, and it proved to be a major setback for the retailer. We also saw pricing troubles negatively impact Haggen, which declared bankruptcy in the aftermath of a failed expansion.
Duane Reade is in an interesting position, and this lawsuit present an important opportunity. Since the retailer is not yet well know for food sales, it’s possible they can contain this lawsuit, regroup, and make sure mistakes don’t happen in a larger rollout.
No Room for Error
Duane Reade has to get it right from the start. When you look at their full offering, you realize there’s a lot of room for error. Items include fresh fruits and vegetables, salads, sushi and sandwiches. Some stores even carry meats, wraps, and soups. All of these items rely on freshness and storage temperature.
It all comes down to training employees how to manage a cold case, regularly checking temperatures of foods, and restocking items. Making this transition is easier said than done when for years, Duane Reade had operated under a “set-and-forget” model of dry goods on store shelves.
If Duane Reade hopes to compete against delis and higher-end convenience stores, they will have to adopt several self-auditing procedures to check the storage of food ingredients, the presentation of the cold case, and even the cleanliness of the store. During those initial weeks, real-time communication with senior management will be key – as it is should be during any large promotional rollout.
The proof will be in the process. Based on location alone, Duane Reade can be a huge competitor in the fresh food space, but they must take quality control seriously from the start.
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