It's no surprise that Walgreens would be looking to build sales and profits with a greater emphasis on private label. It's clear to see how store brand versions of popular health and beauty care items, for example, can reinforce the chain's brand image and create opportunities for growth. But, just how does a line of clothing fit into Walgreens' strategic objectives for its private label?
The chain announced it was rolling out a line of clothing under the Casual Gear label to its 6,000 stores across the U.S. on April 1 - no joke. The line, which will include cotton capris, sweat pants, socks, t-shirts and vests for men and women will retail between $2.99 and $15.
"When you look at what's going on in national brands, margins are very, very tight and national brand pricing is increasingly tight," David VanHowe, vice president of purchasing, told the Chicago Tribune. "This is a way to differentiate yourself and improve profit margins."??
The Casual Gear collection is made by Wonderbrand LLC, a company formed by Joe Boxer founder Nick Graham. The firm manufacturers Hurley private label brand underwear and sleepwear sold at Macy's and Nordstrom.
Walgreens has done little to promote the brand, the Trib reports, other than an in-store video the company produced. The intent seems to be to allow consumers to stumble upon the Casual Gear line as they shop Walgreens for other items.
Neil Stern, a partner at McMillan Doolittle, is not optimistic about Walgreens chances in its foray into the fickle fashion business. ?"It's a tough sell," he told the Trib. "If you're the pharmacy that America trusts and are known as the credible dispenser of drugs, it's a reach to get into apparel. As marketers, they're not terribly nimble."??
Dan Howard, a marketing professor at Southern Methodist University, said, "Most people, when they go to a drugstore, have very specific agendas. Because you're so targeted, you're less likely to be browsing around. That is what you do at Target."?
Discussion Questions: Is Walgreens move into fashion a crazy brilliant or just plain crazy move? What will it need to do if it is to succeed with the Casual Gear line?