Fresh food at retail continues to define new frontiers for newly emerging channels like mass discounters, drug and dollar stores. Compared to pharmacy competitors, Walgreens continues to establish the cutting edge for fresh foods, both within its own banners and in the Duane Reade chain it acquired in New York City. Walgreens made a splash a couple years ago when it revamped the Wall Street location of Duane Reade, offering a wide range of products and services, including fresh foods and beverages that extend well beyond the norm not only for drugstores but also for competitors in other channels. The upscale overhaul on Wall Street aimed to capitalize on consumers' yen for fresh, healthy food on the go.

We thought it would be interesting to hear the perspective of a native Manhattan consumer – and a male shopper at that, because men shop in drugstores more frequently than women. Below is a shopping trip with Charlie, age 45, who often grabs breakfast or lunch at a nearby bagel shop, deli or pizzeria, and goes out for dinner with friends. He shops at Duane Reade for household supplies and gets prescriptions at a small, local pharmacy.

Charlie essentially found that, although Duane Reade looks impressive, its food effort appears to be outdone in both convenience and perceived freshness by nearby delis and fruit stands – and by home delivery services. Here's Charlie:

“Through the main entrance of the 22,000-square-foot store at 40 Wall Street, I immediately encountered the fresh food area. Two sushi chefs cut and prepare sushi in a large oval surrounded by sandwiches, wraps, salads and other fresh foods. The sushi seems freshest, possibly because the chefs are standing right there, while the sandwiches are wrapped in plastic reminiscent of an airport, and the salads are in plastic containers.

“To the right of the oval are fresh fruits and deli meats, cheese and other dairy items – most of the latter not packaged to grab and go. To the left of the oval is the Juice Market, which sells fresh juices with catchy names like Wellness (beets, carrots, ginger, red apples) and Immunity Booster (spinach, kale, carrots, red apples, ginger) and smoothies such as Acai Berry (apple cider, acai berry, blueberries, bananas) and Coconut Quencher (coconut juice, peaches, pineapple, bananas). Shoppers can create their own blends as well.

“In one corner is a highly disappointing coffee and pastry section with two self-service coffee machines and a glass container filled with pastries billed as 'delivered fresh daily,' but whose appearance suggested otherwise. The corner also features a 'Coca-Cola Freestyle machine dispensing 130 varieties of Coca-Cola fountain drinks' pressed against a wall without any prices, instructions on how to use it or person to assist you.

“While the look of the 40 Wall Street store is certainly impressive with its 28-foot-high ceilings, graceful archways and marble columns, I found the store's layout to be confusing. It feels like three separate stores. The beauty section is located behind the food on a slightly raised level that extends far to the left and right – but only a small part can be seen from the main floor. The traditional drugstore is to the right of the food, separated by a wall and with few entrances. Further contributing to this separation, the drugstore has its own outside entrance and cashier (food purchases can be made here, as well).

“I found the fresh-food offerings less impressive and upscale than advertised and less attractive than nearby delis and produce stands.

“There are delis within a block of Duane Reade on both sides that cater specifically to lunchtime workers and include salad bars where you can choose from a variety of fresh vegetables and toppings, which are then mixed into a salad right in front of you. The delis feature sandwich counters where fresh cold cuts, a variety of breads and toppings also are assembled in front of you, unlike Duane Reade's pre-made, plastic-wrapped sandwiches. Produce stands also offer tough competition. On almost every other block in Manhattan there is a fruit and vegetable stand with greater variety and fresher produce than I saw at Duane Reade.

“Prices at the delis and produce stands are competitive with or cheaper than Duane Reade, and the shopping experience is faster and more convenient – something that is crucial on Wall Street. Produce stands are right on the street, so you select your fruit and vegetables, pay and keep walking. Deli cash registers are located at the front of the store to get you out quickly. Duane Reade has no cash register where the fresh food is sold, so shoppers either walk all the way to the end of the food/grocery area to pay or wait in line at a slightly hidden second cash register that also serves drugstore customers.

“I visited at lunchtime and noticed both delis near Duane Reade were crowded, while only a few people shopped for fresh food at the upscale convenience store. One or two shoppers carried baskets to hold multiple items. My sense is that nearby residents may use Duane Reade as a grocery store, as there are few in the neighborhood. For fresh food, however, I would guess that rather than buying a sandwich or sushi at Duane Reade, they will choose Seamless Web, Fresh Direct or another online service that delivers restaurant and grocery fare.

“Duane Reade's Juice Market did appear to be hopping. It's a unique offering in the neighborhood, and juices and smoothies are hot right now. They have a real sense of freshness, as they were prepared while you wait. Customers can design drinks themselves, and the Juice Market has its own cash register, so customers can easily pay and leave.

“The other success at Duane Reade appears to be its Good & Delish and Nice! branded items. These come in a wide variety of products – nothing precisely like the Powerful Yogurt brand aimed at male shoppers such as myself, but plenty of appealing items, including potato chips, pretzels, candy, cookies and yogurt-covered pretzels. They are given very favorable locations on store shelves, and there are some sections made up exclusively of Good & Delish products. The packaging is fresh and contemporary, giving no indication of being a store brand. Perhaps most important, they are significantly cheaper than similarly branded products while being of comparable quality.”

Our Takeaway

Charlie's impression of this Duane Reade location underscores the difficulties retailers new to food retailing face in the days ahead: In dense urban locations like Manhattan, there is already stiff competition for diverse snack and meal occasions in the form of street food and existing specialty retailers.

At the same time, as Walgreens is proving through its expanded offering of fresh and portable snacks and related foods in its stores throughout the United States, fresh snacks and related products can become another reason to shop at such stores, especially with the growing consumer desire for immediate consumption products.

Consumers are in and out of drugstores for a broad range of reasons, not the least of which includes prescription drugs and beauty products. As shoppers learn that drugstores are yet another destination for snacks and meals, as long as quality criteria are met for freshness and taste, it seems that such locations will increasingly present themselves as yet another stop within what we call "the roadside pantry."