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Duane Reade Pharmacy

NEW YORK -- Duane Reade is investing in technology to drive long-term growth. In fact, the chain, which is being sold to Oak Hill Partners, is ramping up the rollout of technology-driven programs, namely digital photo and DR Express pharmacy kiosks, that Duane Reade's management says were once received negatively by its risk-adverse shareholders.

The chain's management has said new ownership will give Duane Reade the flexibility to experiment with new avenues, such as in-store kiosks, to improve the business and maintain its leadership position in the metro New York market.

Over the last several years, Duane Reade has made significant investments in digital one-hour photo, which company chairman and chief executive officer Tony Cuti last month said was likely one of the chain's best categories. During a Feb. 19 conference call, Cuti said while the costs and impact on profits raised a red flag with shareholders, Duane Reade stayed with the program because it believed digital photo was in the best interest of the company longer term.

Earlier this month, the chain inked a deal with digital photography software provider Pixology. Under the terms of the deal, which follows an 11-store pilot that began in June, Pixology will supply the 240-plus store drug chain with Duane Reade branded digital photofinishing kiosks in 160 stores, 50 of which are non-mini lab stores.

What's more, Pixology software at 110 stores will allow Duane Reade customers to drop off their film rolls and later preview and select images for print via a Duane Reade branded e-mail This feature also gives them the opportunity to order enlargements or duplicates.

A Pixology spokesman said discussions also are under way to place Duane Reade branded kiosks in high-traffic, non-store locations, such as train station terminals and tourist spots.

The rollout of the digital photofinishing kiosks will kick off this month and is expected to be complete by June.

The regional chain also is continuing to expand its pharmacy kiosk program, which it launched in two stores in 2002. The interactive kiosks allow customers to access a live pharmacist from a remote location 24 hours a day, provided the customer and the kiosk are in one of Duane Reade's 24-hour locations.

Once at the kiosk, customers touch the screen and pick up the phone handset to connect with the pharmacist via a video camera. If they previously have filled a prescription at Duane Reade, they have to state their name, date of birth and phone number. If they have not, they need to fill out a customer profile card, then scan the profile card and their insurance card.

At a Duane Reade store at Lexington Avenue and 56th Street, the DR Express kiosk, located adjacent to the beauty wall, is visible from the entrance. A large sign that reads "DR Express. Get your prescription filled here," hangs overhead. What's more, the Midtown store has placed a path of blue floor decals in the shape of footprints, leading from the pharmacy counter in the back of the store to the pharmacy kiosk.

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