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[13 comments]

Is the Duane Reade name on the way out?

August 26, 2014

Duane Reade does not mean Walgreens to New Yorkers. That's the reason Walgreens chose to leave the Duane Reade banner on top of the 257 drugstores it acquired from Oak Hill Partners in 2010. But that was then and now Walgreens is employing a co-banner on all new and remodeled Reade locations. Whether this means the Duane Reade name will eventually disappear remains to be seen.

According to a New York Post report, a new store on 34th Street in Manhattan has a sign that reads, "Duane Reade by Walgreens." An unidentified spokesperson for the parent company told the paper that new and remodeled Duane Reade locations will include the same signage "in an effort to strengthen recognition among the Walgreens family of companies."

In a 2010 RetailWire discussion, BrainTrust panelists voiced their support for Walgreens' acquisition of Duane Reade, in no small part based on it not tinkering with a winning formula. As Cathy Hotka, principal, Cathy Hotka & Associates wrote, the acquisition "will work well if the new owner changes NOTHING."

FINANCIALS:     [NYSE:WAG] [ ]

Discussion Questions:

Do you approve of Walgreens' decision to co-brand its Duane Reade locations? Should they eventually remove the Duane Reade banner altogether?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Do you approve of Walgreens' decision to co-brand its Duane Reade locations?

Comments:

I will be very surprised if Walgreens doesn't ultimately convert all Duane Reade stores to "Walgreens." There are so many reasons to do so; including national advertising efficiency, store-brands consistency, prescription drug ease and same-store clarification for consumers, and so many corporate and management efficiencies. I think New Yorkers will be smart enough to figure out one day soon that Walgreens has acquired Duane Reade and they will understand that all stores are actually Walgreens.

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David Biernbaum, Senior Marketing and Business Development Consultant, David Biernbaum Associates LLC

I agree with David on this one. As long as the transition is thoughtful and gradual (starting, perhaps, with the use of the Walgreens name in pharmacy packaging), it can be successful. It's the same sort of challenge Macy's faced when it changed several May nameplates (especially Marshall Field's) to its own. In that case, the change happened so quickly that it raised consumers' ire more than necessary, but in the long term it proved to be a wise move. When you have a national brand identity, you might as well leverage it in what is perhaps your biggest market.

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Dick Seesel, Principal, Retailing In Focus LLC

It's a generational problem. You keep the old name to keep the old customers happy—for a minute.

Of course they will eventually phase the other name out for lots of (generally sound) reasons.

Twenty—and quite possibly fewer—years from now Duane Reade will fade from the Big Apple consciousness in the same way that most acquired brand names fade over time.

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Ryan Mathews, Founder, ceo, Black Monk Consulting

The transformation does not surprise me. There is certainly long-standing value in the Duane Reade name, so I actually do not foresee a complete abandonment. The new moniker, Duane Reade by Walgreens, is a good step (it preserves the heritage while introducing the new entity).

My next question stems from the Boots enterprise. Will we begin to see "Boots by Walgreens" in Europe or perhaps Walgreens/Boots in the states? Anyone care to offer a prediction on this one?

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Dave Wendland, Vice President, Hamacher Resource Group

If you are a publicly-traded company like Walgreens won't you want your name on 250-plus well respected locations in New York City, the home of Wall Street? The issue is how to do it without creating a public outcry.

As Dick pointed out, the only way to do that is gradually. Living in Chicago I can tell you the negative publicity that came with the changing of the Marshall Field's name took some time for people to get over.

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Steve Montgomery, President, b2b Solutions, LLC

As long as it doesn't hurt sales, they should convert. CPG brands do this all the time, mostly successfully.

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Dr. Stephen Needel, Managing Partner, Advanced Simulations

Although I do not personally like the idea of changing a known, positive brand perception to an unknown, it seems to have worked for Macy's. I was in Chicago this past weekend with my kids and they went, "oh cool, there's a Macy's." To which I replied, "that used to be the great Marshall Field's store."

They had no clue of what I was talking about, nor did they care. All they know is that Macy's has an awesome tween department.

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Lee Peterson, EVP Creative Services, WD Partners

It's not surprising, and I'm sure Walgreens spent quite a bit of time in front of shoppers capturing feedback on the proposed change. The addition of "by Walgreens" eases the transition and is more palatable than an abrupt switch from Duane Reade to Walgreens that likely would irritate longtime customers. The Macy's/Marshall Field's name change demonstrates just how long shoppers are willing to hold grudges. The difference, though, is that Chicagoans had many other apparel purveyors to replace Macy's with. In New York, Duane Reade outnumbers CVS by a huge margin (more than 150 locations vs. roughly two dozen). I think convenience will trump brand loyalty.

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Kelly Tackett, Research Director, Planet Retail

Let's take a look at how re-branding has worked before.

FedEx bought Kinko's and re-labeled all the stores as FedEx Office stores. Customers were confused, so now every FedEx Office has a sign out front that says "Kinko's Inside."

If it ain't broke ...

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Cathy Hotka, Principal, Cathy Hotka & Associates

Walgreens is doing the right thing and Duane Reade as a banner will cease to exist in the foreseeable future. There is no question (in my mind) that it is the right decision and the marketplace will adjust. This interim approach just eases the way and seeks to reduce the uproar that comes with change—but change is coming.

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David Zahn, Owner, ZAHN Consulting, LLC

A no-brainer, really. It's not as if New Yorkers are unfamiliar with the Walgreens brand. Co-branding is a natural way to make the transition.

Along with the neon outside, I'd start with the private label packages. Some regional advertising might help too. But don't tinker with the Duane Reade merchandising formula much.

As for the Duane Reade brand, I think the shoppers will make it clear when it's time to let it go. I think it will only take a couple of years.

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James Tenser, Principal, VSN Strategies

In my almost 40 years in this wonderful industry, I have seen some wonderful old brands put out to pasture in kind and thoughtful ways. Being from Atlanta, the Rich's name was big for decades and I was heart broken when they first said the name would be changing to Macy's. Now I hardly remember it, but I do miss the fashion show lunches in the old magnolia room.

Yes, it will happen and yes, it should happen. For my two cents!

Lee Kent, Encourages retailers to meet share and learn, YourRetailAuthority

Like most here, I'm conflicted by this: understanding the logic, but feeling twinges of nostalgia (not for DR, specifically, but them as a proxy for other fallen flags).

Many have mentioned Macy's as a successful rebranding (won't go there), but let me point out that there ARE many examples of labels that HAVE been maintained: Best Foods/Hellman's, Dreyer's/Edy's, as well as the multitude of nameplates under Kroger (successfully) and Safeway (some less so). Of course these situations aren't quite parallel, having either two strong semi-national brands, or no dominant brand...I'm not sure having an island of one store within a sea of another would ever work out.

'notcom'

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