New Duane Reade chief sees opportunities despite competition

Drug Store News, Oct 9, 1995 by Liz Parks

NEW YORK - Continued growth in operating income will be one of Barry Weston's main priorities as the new chief executive officer of Duane Reade. Weston assumed the role of acting chief executive officer in mid-September after Bruce Weitz, who had been Duane Reade's chairman and chief executive office for three years. resigned to pursue other interests.

For years, Duane Reade was the only real drug chain in Manhattan, but now Rite Aid has entered the Manhattan market, Genovese has one store, and Woolworth is in the wings trying to decide whether it wants to expand its 20-unit Rx Place/Drug Mart chain.

The 48-year-old Weston, who has a rich and varied background in retail, says that despite the growing presence of other competitors in the city, Duane Reade's market share has grown over the past three years.

According to some industry estimates, Duane Reade currently has an approximate 15 percent share of drug store dollar sales in the New York City market, and one of its biggest challenges will be to hold on to that share and enhance it.

Weston, who was hired by Bain Capital, the investment company that owns the major part of Duane Reade, is very aware of the struggle for market dominance. "Market share is very important to almost all successful businesses," he said, "so we shall continue to focus on building our substantial market share.

"But I don't know yet what the appropriate pace for 1996 store openings would be for us. It's too soon to say since I'm still on a steep learning curve. We opened 11 stores in 1994 compared to three in 1993, and we've opened eight this year."

Weston said that Duane Reade will finalize its expansion plans for 1996 "later this year."

Another way to build market share is through advertising, and Duane Reade is trying new things in that area as well.

For years, Drug Store News has observed that Duane Reade has run a very limited print advertising campaign, and believes that Duane Reade has chosen to plow the bulk of its advertising allowances into lower prices with the best "buys" featured in the chain's store window displays and in offshelf displays throughout the store. That tactic allowed Duane Reade to put some of the money saved from not advertising back into its gross margins as a hedge against margin erosion.

This month, Duane Reade is testing its first significant circular, focused on the special buys available in a cluster of Duane Reade stores. In the past, it only used circulars to announce the grand opening sales of individual stores.

At presstime, the eight-page advertisement was being handed out on the streets and was also available inside the stores.

Weston said Duane Reade will "look at all the issues involving advertising, and we may experiment with different types of things. I don't know if we'll do this type of circular again, but we're trying it now for the first time."

Because of the competitive nature of the New York market right now, many drug chains are experiencing some combination of declining same store sales and/or margin erosion.

As a key player, Duane Reade is potentially vulnerable to the same problems, but Weston said that while he has "some thoughts on the issues, I'm not prepared to discuss them at this early stage in my tenure. I don't want to shoot from the hip on such important issues.

In his approximately 25 years as a senior executive in companies as diverse as Waldenbooks, The Gap, The Good Guys, and Pay `N Save, Weston described his prior roles as "functioning in partnership with the chief executive officer, focused on all types of strategic issues, but specializing in the administrative areas, particularly in finance, MIS, distribution and real estate."

Weston's most recent position was at Stamford, Conn.-based Waldenbooks where he was executive vice president for two years. Prior to that he was the chief financial officer for two years with The Gap.

He has also served as a top executive with The Good Guys, a chain of consumer electronics stores.

For the past year, he's managed his own retail consulting company.

Weston is not a stranger to the drug store industry. He was vice president of finance for Pay `N Save for five years in the early '80s.

One of the main differences between the drug store industry of today and the industry in the '80s, he noted, has been the consolidation that has taken place. "The consolidation has resulted in a lot of growth for the major chains, and as a consequence, the chains now have greater market share than when I was in the industry.

"You see competing chains running into each other more now, but there is still a substantial amount of the market held by independents, so there are still good opportunities for chains to grow."

Weston has had a relationship with Bain Capital that goes back several years. It was Bain Capital who recruited him in September when Bruce Weitz, Duane Reade's chairman and ceo, resigned.

Among the individuals who now report directly to Weston are Gary Charboneau, senior vice president of merchandising and sales; Bill Lang, senior vice president and chief financial officer; Frank DeMarco, vice president distribution; and Irving Shneps, senior vice president of store operations.