Can Kroger make a name for itself in fashion?

Discussion
Source: Kroger
Nov 06, 2017
Matthew Stern

As Kroger tries to reinvent itself to head off Amazon.com’s moves into grocery, part of its new strategy includes strengthening its non-grocery offerings with a new private-label fashion brand.

Kroger is rolling out an apparel label called “Our Brands” in 2018, according to a press release. Robert Clark, Kroger’s senior vice president of merchandising, described the brand as “on-trend.” The offerings in the line range from “elevated basics” to “fashionable highlights.”

“Our Brands” is in fact planned as a re-invigoration of existing clothing brands available at the company’s Fred Meyer and Kroger Marketplace supercenter concepts. The initial rollout of Our Brands will begin at the 300 Fred Meyer and Kroger Marketplace locations, according to the press release. Kroger operates 2,793 stores in total.

While clothing that is available at supercenter and mass merchant stores operated by Meijer, Walmart and others isn’t usually thought of as being trendy, stylishness isn’t without precedent.

Target was one of the first to bring in big-name designers for collaborations on low-price collections. Its 2011 launch of a Missoni line was a major success online and off. The chain quickly ran out of stock and items from the brand appeared on eBay and elsewhere for resale at inflated prices. The retailer has duplicated this success with subsequent limited edition launches tied to luxury designers including Lilly Pulitzer, Marimekko and others.

Walmart has also been working to make its apparel offerings more of a draw. Of its numerous startup acquisitions in the past year, one of the most notable was indie clothing e-tailer ModCloth.

While it’s not clear if ModCloth-curated styles will make it to Walmart’s main-brand racks, People reported that ModCloth recently had an official launch on the retailer’s Jet.com division.

While not long ago, analysts were mulling the possibility of Kroger being the company slated to acquire Whole Foods and celebrating its successful analytics partnership with dunnhumby, enthusiasm for the chain has fallen off.

In fact a recent article in Bloomberg made the case that Kroger is not taking the impending challenge posed by Amazon seriously enough.

DISCUSSION QUESTIONS: What do you think are the factors behind Kroger’s decision to launch its “Our Brands” clothing lineup? What will determine whether Kroger succeeds or fails in this endeavor?

Braintrust
"The challenge for any retailer that has an extensive portfolio of physical store locations is making their square footage relevant in an Amazon world."
"The last thing the US market needs is another apparel brand. There is way too much retail square footage devoted to apparel already."
"Every brand has something called “permission scope,” and this is way out of Kroger’s scope."

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26 Comments on "Can Kroger make a name for itself in fashion?"

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David Livingston
Guest
15 days 4 hours ago

Kroger is just coming up with press releases because their stock is down. If Meijer or H-E-B added a new line, it would not be newsworthy since they are not public. This will probably do best in Kroger’s Fred Meyer format. I don’t expect it to make much impact in their other stores. Kroger should do very well as a company going forward since many of their competitors like Bi-Lo, Food Lion, Fresh Farm and such are imploding on the East Coast. In the West, Albertsons-Safeway certainly is not much of a threat. I’ll just write this news off as another lateral change hyped in a press release.

Bob Phibbs
BrainTrust

Is it just me or is up down in branding when it comes to retail these days? Laundromats in apparel stores, apparel in grocery stores, sounds like desperation or a complete break on what a brand stands for. Kroger = food. Would you say Ralph Lauren = grocery? This is wrongheaded on many levels. Do a better job with offering and delivering food. Period.

Phil Chang
BrainTrust

Well said. In an age when everyone is talking about experiential marketing — it’s weird to see movement AWAY from the experience and TOWARDS big box. Well said Retail Doctor — write them a prescription for clear vision and focus!

Ed Rosenbaum
BrainTrust

I wish I could add to this. But you said everything I was thinking when I read the article. I can see Target having success because they are already in this marketplace. Kroger is not. This reads more like a press release to hype a down chain.

Ben Ball
BrainTrust

Quite frankly, I can’t imagine what they’re thinking. One of the things we keep saying retailers need to do is think of their franchise as a brand — not just the end of a distribution chain. And one of the first rules of branding (albeit one of the hardest to obey) is to know the limits of your brand. To understand what consumers will accept as being a legitimate extension of your brand image. While Meijer has some room here as a mass merchant, or even Walmart whose brand is still mass before food in consumer’s minds, it is almost inconceivable that this could really work for Kroger or any other “food-first” retailer.

Ian Percy
BrainTrust

You and Phibbs said it better than I. But we are all on the same wave length which, IMHO, makes our point brilliant and unarguable. I’m sure you agree!

Max Goldberg
BrainTrust

Kroger wants to become a multi-faceted retailer that is known for more than food. The problem is that most of its stores cannot accommodate clothing lines without cutting into grocery space. And couldn’t they have come up with a more creative name than “Our Brands,” which sounds cheap and unstylish? I don’t see this ending well for Kroger.

Sterling Hawkins
BrainTrust

I understand Kroger’s strategy here, I’m just not sure they executed effectively. Kroger is today synonymous with food and stepping out into grocery stores with apparel comes out of left field for consumers (not to mention that many of their stores are purpose-built to sell food). Kroger’s brand is at risk as they redefine what they stand for in the market.

Neil Saunders
BrainTrust

The reasons behind Kroger’s move to revamp and reinvent the existing fashion offer are clear: profits are under pressure, sales are slowing and apparel is higher margin and a relatively untapped growth opportunity.

As much as this sounds like a sensible move, it should be viewed with a healthy dose of skepticism. There is already oversupply in apparel, discounting in the sector is rife and any player has to stand out both to protect margins and drive sales.

Does Kroger have what it takes to deliver? Maybe, but I ultimately think it will be held back by its mass merchant mentality and approach to retailing. So a small sales uplift, perhaps; becoming a major player in fashion, no.

Ian Percy
BrainTrust

Whatever happened to the “stick to the knitting” principle we learned about in “In Search of Excellence?” I know that was way back in 1982 so is that passé now?

I was horrified when Cadillac decided to make a compact and I refuse to accept the idea of Ferrari making a SUV. Is there nothing sacred any more? Now it’s “look at my new outfit from Kroger and I got this purse at Safeway.” Perhaps Monsanto should launch a meal replacement product or a multi-vitamin. Burger King doing sushi?

Come on people … pick a lane!

Ryan Mathews
BrainTrust

Desperation comes to mind. I’m sure the decision making process went something like, “We need a higher margin category,” or, “One-stop shopping works so well, why don’t we add fashion to our inventory?”

I really can’t imagine what they are thinking. Of all the categories to add, fashion wouldn’t be at the top — or middle — of my list. That said, stranger things have happened. There are two approaches that could work, at least in theory: be so fashion-forward that the beautiful people would have to come to Kroger to show how au courant they are; or be so low priced on basic items like t-shirts or children’s clothing that you attract the Walmart shopper. In other words, I don’t hold out much hope for the idea. I’d love to be wrong, but I have to believe there are more productive uses for the space.

Frank Riso
BrainTrust

Kroger, much like all retailers, is looking to increase basket size and adding these products may help them. As long as they add the right items and the customer sees them as impulse buys they should do well. I do not see them adding full aisles of fashion to their traditional grocery stores. It would be confusing to those shoppers who consider fashion and food two different shopping trips. Again, as an impulse item for a few items would be the appropriate approach. Increased transaction size is the measurement of success.

Cathy Hotka
BrainTrust

Call me stuffy, but some brands don’t work with unrelated concepts. Clorox shouldn’t roll out a beauty line. Saks shouldn’t offer automotive equipment. Out-of-the-box thinking is important these days, but some ideas don’t deserve to be implemented.

Anne Howe
BrainTrust

This seems pretty far-fetched to me, except in Fred Meyer stores. Kroger likely doesn’t have skilled staff to organize all the nuances of the apparel business, and that will quickly become obvious to shoppers. Why can’t Kroger stick to grocery and make a concerted effort to be serious about improving that at all levels? Just asking …

Lee Kent
BrainTrust

I love to see retailers trying something new however, this does not perk my ears up at all. I’m in Bob’s camp on this one. Let’s focus on food and new exciting things they can do there. For my 2 cents.

Adrian Weidmann
BrainTrust

The challenge for any retailer that has an extensive portfolio of physical store locations is making their square footage relevant in an Amazon world. In the quest for relevance, retailers are trying to present and provide products to the shoppers that are already in the store. Perhaps apparel could become products of convenience for existing grocery customers. In short, retailers are presenting any product that they can sell within their square footage. Amazon is selling Echo devices like apples inside of Whole Foods.

Peter Fader
BrainTrust

It’s a great aspiration, but it’s a ridiculous short-term goal for Kroger. They should start with “baby steps,” focusing on more utilitarian products/services, i.e., more aligned with grocery shopping.

it’s not unreasonable for them to eventually get there — look at how Amazon has evolved since its days as a low-price bookstore — but it will take many years to broaden their brand to enable it. And talking about it now seems to diminish their credibility and strategic thought processes.

Yoav Vilner
BrainTrust
15 days 2 hours ago

I feel like many retailers have been doing this a lot lately, trying to become multi-faceted instead of focusing on their original product idea. This is a very bad branding strategy because it makes the consumer confused about what to expect from your brand. Such a shift also puts into question the quality of the products that had been offered by that company originally.

Lee Peterson
BrainTrust

That’s a bad idea. I think some of the above comments are correct (I just needed to say something positive!). Every brand has something called “permission scope,” and this is way out of Kroger’s scope. I wonder how that c-store they just opened is doing? Perhaps some good results from that would be a better press release than this, eh?

Herb Sorensen
BrainTrust
If you look at the list of the top seven global retailers, all over $100 billion in sales, Walmart (#1), Amazon (#3) and Kroger (#6) are in the pack driving for the pole position. For Walmart, never forget Disraeli’s comment upon ascending to the Prime Ministership of Britain, “I have reached the top of the greasy pole.” And I do believe that Kroger is the only one of the seven that is a US-only company. It has been many years since Kroger was a grocery-only business. They acquired Fred Meyer quite a few years ago, a 100-year old regional chain that had evolved into their own “shopping mall” format at least 50 years ago, under the leadership of their founder. The significance of Kroger’s Fred Meyer acquisition was that they moved Fred Meyer’s leadership (shopping center) into the highest levels of Kroger management. So much for misguided “grocery only” thinking about Kroger, which may own more different regional brands than any other business — all in the U.S. Notice that Walmart did not begin as a predominantly grocery company, but began a major focus on groceries in the ’80s and ’90s. This took advantage of the fact that groceries DRIVE… Read more »
Molly Nichols
Guest

I doubt this move will bring much more success to the brand. The brands and clothes they sell will most definitely not be “fashion.”

Kai Clarke
BrainTrust

Kroger will succeed or fail depending on how it prices and positions its clothing as part of the “Our Brands” lineup. This is about price and position for clothing, since the majority of their customers are not going to these Kroger stores to shop for clothing, but instead for more traditional grocery products. Because of this, Kroger needs to more heavily influence their shoppers with pricing and placement of these clothing lines. It will not be easy, and Kroger will need razor sharp focus to become successful.

Martin Mehalchin
BrainTrust

The last thing the US market needs is another apparel brand. There is way too much retail square footage devoted to apparel already. Our Brands is also a terrible naming choice. Fred Meyer can be a good place to pick up mass brand apparel and footwear without the hassle of driving to an outlet mall, but this initiative won’t move the needle at all.

Todd Trombley
Guest
Time will tell if this will fly. Squeezing more $ per square foot out of stores is an obvious reason for this as is the idea of maximizing the spend of the traffic in your store. Look north of the border to see where this has been a roaring success. Loblaw, Canada’s largest grocery retailer, introduced the Joe Fresh line to its stores 10 years ago. Joe Fresh proved to be a huge hit for Loblaw; estimates are way north of a billion $$ in annual sales for Joe Fresh. In addition to their presence in Loblaw stores, Joe Fresh now operates in many stand-alone bricks & mortar locations and are even doing pop-ups in large urban centers in the USA. Key to their success was having this brand headed by Joe Mimram. He knew how to source product that mimicked hot fashions and trends but could be offered at compelling price points. Another key is having “fashionable” offerings at a price point that will entice the shoppers already coming to your store. “Fashionable” doesn’t have to exclusively mean designer brand labels and pricey to mainstream middle America. What will fly in Wichita ain’t the same as what flies in… Read more »
Cynthia Holcomb
BrainTrust

Regionally, Kroger has offered a full range of apparel for the entire family via Fred Meyer superstores for many years. Because Kroger already sells apparel, the context is different than Safeway selling apparel. When a customer walks in the store, most entrances drive traffic to apparel, home furnishings, hardware, garden, etc. en route to the grocery isles. Kroger has a specific apparel customer “taste profile.” The “taste profile” is just beyond being a basic, well made in a classic “American style of manufacturing” and not cheap relative to brands in this space.
Seems to come down to how many regions are needed to ignite enough new growth in Kroger apparel to making Kroger relevant in apparel to the bottom line.

Paul Donovan
BrainTrust

Loblaws in Canada has had some good success by relaunching their Joe Fresh clothing brand in an online expansion. This enabled them to have a more global reach. Perhaps Kroger noticed this and is thinking of expansion overseas as well…?

wpDiscuz
Braintrust
"The challenge for any retailer that has an extensive portfolio of physical store locations is making their square footage relevant in an Amazon world."
"The last thing the US market needs is another apparel brand. There is way too much retail square footage devoted to apparel already."
"Every brand has something called “permission scope,” and this is way out of Kroger’s scope."

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