Walgreens Rolls Out Clothing Line
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?
The key challenge for Walgreens, like other drug retailers, is to improve profits by selling more “front-end” items. A large number of shoppers leave the store having bought only a drug, or one or two items. Therefore, the stores are stocking more food, beverage and other impulse items. In some respects, drug retailers are looking more like convenience stores these days.
Clothing seems an odd choice for this purpose. It tends to be a destination rather than an impulse or add-on item. Also, clothing requires significant inventory of sizes, colors and varieties. Much of it ends up being sold on discount.
Even if they can sell the clothing, a key question is the opportunity cost. Since clothing will require significant space in the store, they will have to remove other items. It is difficult to see how this will solve their profit issues.
If Walgreens can merchandise private-label “basics” in the same space (or slightly more space) that they use today for mass-branded socks and underwear, there is probably a margin opportunity. As far as a significant sales opportunity, that’s another story. Is Walgreens committed to more space for the category? And how, exactly, does Walgreens establish itself as a destination for the type of product that’s available in plenty of other outlets?
Walgreens is already veering toward the “bunch of stuff” syndrome, where they are becoming dangerously overassorted like a 21st century version of a variety store. It may be time to reexamine their mission and to make some tough editing decisions accordingly.
Unless the clothes are super casual and fill a need for work type clothes or kids clothes that are more impulse buys than fashion buys, it seems unlikely that this will be a successful strategy. At the same time, as retail becomes more of an experience, there may be room for the right clothing line to fill a consumer need. Doubtful. But worth keeping an eye on.
The Walgreens I patronize in the Chicago area have for years stocked inexpensive logo t-shirts, tube socks, sweatshirts, and caps of the professional sports teams, rotating stock by the season–as well as local interest college teams (and even the local high school team if they’re having a good year). These displays stacked high take only a small space, require only a few size options, and are located near the service and checkout counters as impulse buys. Some also get dragged out at Christmas time for that “hard to buy for person on your list.”
I think we must assume this foray into clothing has proven successful enough to get Walgreens’ attention. They should also have a good idea what sizes and types of garments sell well for them. As long as Walgreens doesn’t go overboard and start stocking “designer labels” why not expand this line?
While I wish Walgreens all the success, my own little anecdote probably won’t cheer them much: I was recently standing on a street corner when a shirt-sleeved and (apparently) impoverished person asked me for a handout; their reason? They were trying to raise $10 (or some amount like that) to buy a coat…at Walgreens. So it seems W’s already sell clothes: I’m just not sure the target market is what they’re hoping for.
Walgreens isn’t the only “drug store” that’s become a variety store. Rite Aid, CVS, Duane Reade and every other “drug store” became variety stores several decades ago. They all sell auto accessories, tee shirts, candy, cameras, socks, office supplies, Christmas ornaments, greeting cards, toys, pet supplies, insecticide, hand tools, toasters, and sewing kits.
Walgreens has excellent systems than can easily report the profitability of every item and category. They wouldn’t sell clothing if they knew of anything else more profitable that could use the same space.
Criticizing Walgreens move into apparel is pretty old school when every retailer from Virgin Megastores to Home Depot is finding ways to wedge it into their stores. Apparel is a high margin category, Walgreens is a small format alternative to supercenters, the average wait for a prescription is twenty minutes. Smart move.
Walgreens does not define itself as a pharmacy or a drug store. Walgreens defines itself by convenience and has been selling clothes for a long time. Walgreens carries t-shirts, sweatshirts, skirts, some shoes, and underwear. Nothing is high fashion or high prices by any means. If the sales of these items are profitable, it is no surprise that Walgreens would expand the offerings. Store formats are continuing to blur as they each try to find a way to be distinctive and attractive to changing consumer needs, on the one hand, and profitability, on the other hand.
Well all of you naysayers might want to come up north to Canada, where Loblaws has launched what I believe is a very successful clothing line (“Joe Fresh”), complete with its own catalogue and website. It’s cheap chic (similar to H&M, but often even cheaper) and yes, I’ve bought clothing even though I went to the store for some milk.
Does a grocery store have more square footage? Absolutely. Is it a bit of a stretch for Walgreens? Perhaps. But, as others have noted, it’s not at all unprecedented to carry unrelated items in the same retail space and given Loblaw’s new tag line when promoting its famous “President’s Choice” private label products (worth switching stores for) it may just be the differentiation necessary to make someone cross the street. It’s not a “can’t wait to scoop up stock” idea, but neither is it absurd…if pharmacies have to stick to a core value proposition, then we’re back to apothecaries selling medication only, and toss out the food, greeting cards, photo finishing, pet items, seasonal decor….
Sheesh….
Time will tell if this is a worthwhile endeavor or not. However, this is not a foray into fashion forward categories. These are very basic apparel items.
For those who wonder how trustworthy customers will find a pharmacy located in a store that sells these and other non-health & wellness goods, it’d be worthwhile to go take the time to wander through a Walgreens and see how much shelf space is devoted to these (non-health & wellness related) goods already. It’s also useful to spend an extended period watching what folks actually are bringing up to the registers on the front end to actually buy.
Finally, Walgreen’s has built a very sustainable business model over many decades by listening to customers rather than retail pundits. Something to ponder!
Walgreens is building off its success with t-shirt sales. The clothing line may not be successful in all stores in all markets, however, those stores in high travel/vacation destination markets have a likelihood of success. The challenge I would think is based on their limited amount of space, to have the right sizes/clothing available in each location, meeting the needs of the individual markets.
Doesn’t sound like a major initiative, nor should it be. But, there’s no harm in seeing what aging boomers might buy on impulse while they hang around waiting for prescriptions to be filled. Until, of course, all those scrips go to mail-order.
Years ago, nobody found any food in drug stores–how is that working out? Having said that, this one seems to be a stretch!
The lack of awareness and the time, cost and resources needed to build an apparel business could be a drain on the business. Unless you are talking limited seasonal items, I think this one will be short-lived.
Walgreens is beginning to look like a Wal-Mart condensed into a space a fifth of Wal-Mart’s size. Given the number of urban locations they have, surely Walgreens can think of a better way to serve their shopper. Why not sell auto parts too?…I’m kidding….
Walgreens has dabbled in clothing for a while, so I’m guessing that this rollout is a result of the success they have already had.
The clothing they carry isn’t by any stretch high fashion, just real basics, some with cute logos at great prices. Certainly a fitting room isn’t necessary to figure out which size sweat pant or boxy t-shirt you need. With S-XL sizing, the assortments don’t seem deep enough that they will get them into trouble, just a quick in and out business that is likely giving them margins they don’t see in many other categories.
Mark this down: “Grabbing at Straws!” This would seem to be a classic attempt to divert attention away from the possibility that Walgreens isn’t doing a very good job of managing its core business.
Walgreens is a…Pharmacy! Their primary business is filling prescriptions. Walgreens has a horrible reputation as an employer in the Pharmacy community. They have suffered numerous law suites for pharmacy mistakes. One pharmacist left Walgreens because of his concerns about the emphasis on speed and the number of prescriptions expected to be dispensed, as well as a substantial reduction in the opportunities to speak with patients. These are the issues that Walgreens needs to address.
Walgreen’s management seems to want to focus on the store at the expense of the pharmacy. The pharmacy is the only real reason anyone would ever enter a Walgreens. Branded Clothing–give me a break! If there has ever been a signal to sell, you just got it!
I believe there has to be futuristic, ‘out there’ thinking if retail stores are to compete. Partnering is one way; I think Walgreens may have stumbled onto something big assuming the quality of the label is decent. In our region, there are drugstores every 1 mile.
Also, in our region, Stop & Shop has partnered with Staples and Boston Chicken. Many grocers have partnered with coffee chains and banks. This is not an unusual concept in many parts of the country–especially in locales where distance is a factor.
I love Walgreens and wish them the best!
In an ongoing effort to try to be all things to all people, and therefore improve its lot as a shopping destination, Walgreens has added clothing. How does this tactic fit in its core story? By adding clothing, does Walgreens gain a valuable asset that is attractive to consumers, or does it muddle its message?
Recently, I had the opportunity to attend an event to hear some remarks by Walgreens executives including David Van Howe, Catherine N. Lindner, George Riedl, Patrick Faye, Mark Cordes, and Mike Olson. I came away with the sense that new items and services are the lifeblood at Walgreens, and that Walgreens is doing all that is possible to attract and solidify the every day female consumer, and to surprise all consumers with new products and services, while retaining the efficacy of the Walgreens brand name. I am extremely impressed with all the plans laid out for the new direction at Walgreens, and I predict they will do very well because of the people they have in place to execute the plans.
In addition to clothes, Walgreens plans to add in certain stores, ink-refill stations, in-store coffee service, more extensive photo departments, health service clinics, and any number of new additions. They have even gone as far as to give special attention to well lit parking lots. The addition of the clothes is just one more piece to accomplish some greater objectives and I’m excited about what Walgreens is doing to invigorate a more extensive purpose for chain drug stores.
Even in good times this is a stretch, like a fast casual food store adding a menu item because they might be missing “something.”
It is doubtful that people will be “trading down” to buy their clothes at Walgreens. Someone will be paying for the merchandise sitting in the stores and you can bet it won’t be at a decent margin once it has sat there for a month.
This is another indication that Walgreens has lost its way a bit, and is trying to figure out exactly what it wants to be as the competition gets more difficult. Walgreens used to be the pharmacy that America trusts. But then it decided that it wanted to be more. It announced last year that it was going to direct source exclusive European skin care products for women, and try and upgrade its cosmetic counters. They wanted to be a beauty supplier to upscale female clientele.
Now they want to sell low-end tube socks and sweatshirts; in the same store in which they are trying to sell upscale bath and body products. Add to this mix the Dollar store items that they have peppered throughout the store, and you see a chain searching for its own identity.
A former CEO once described Walgreens as a 7-Eleven on steroids. As in real life, steroids can sometimes cause really strange growth side-effects. Time will tell if the same side-effects occur at Walgreens.
I suspect this will not be very successful. If they had discovered a need amongst a core shopper segment, one would think they’d be marketing to that segment in a visible way, positioning the products as a solution.
And what will they do for a fitting room??? I will go check it out as I think just watching shopper reactions will be very revealing.
Clothing is a stretch for Walgreens but if the pricing and marketing is solid, it may work. Walgreens will have to rely on converting customers to shop their clothing line.
My only suggestion is to make sure that staff are sales trained for clothing assortments! It is a different game than what they are used to. It is not about suggesting the right cough medicine but more about subjective and suggestive selling which are the traits a competent clothing salesperson needs.
Hope it works because that is an interesting departure and a way to separate itself from the competition.
Count me as supportive of Walgreens’ move. I have long suggested that retailers stop defining themselves by the merchandise they offer, and instead be as helpful to their customers as possible. Considering the hierarchy of need, clothing comes right after air, water and food. So where’s the big problem? It’s only a matter of proper execution.
I wouldn’t snicker at Walgreens’ move into clothing.
They got stores just about everywhere, and clothing, as a product extension line, makes sense, if it’s reasonably priced.
There was a Mid-Atlantic chain more than a decade ago, Dart Drug, which sold some really great clothes and seemed to do quite well, for a time.
If it worked once, it can work again.
Loblaws is having great success with its Joe Fresh line of casual wear.
So I do think this has potential.
Hivemaster hits it on the nail. I just got back from Montreal, where weather delays forced an enormous number of us to head from the airport to our hotels with no hope of knowing when our luggage would arrive. And in downtown Montreal at 11:45 pm on a Friday before Easter weekend, guess what was the only store open? A pharmacy a la Walgreens. Travelers from Australia, Italy, and the US were thrilled to find clothes alongside the travel razors and deodorant. And not just your grandmother’s underwear style either….
I’m not suggesting that late travel customers will comprise a huge niche market, but if there’s no room for a Target in a downtown urban environment, thank goodness there’s something else. I’m not sure it’s worth having their own brand, but urban areas still need the sort of ‘catch all’ stores that cater to those who shop at odd hours, don’t have transportation, and like nice things. Having it be your local pharmacy isn’t that bad either.
Walgreens has been selling clothing quietly for many years. The only real story here is that this company is pooling their experience and dropping store-level vendors in favor of a corporate approach allowing in-season reordering and guided markdowns.
No more of store “A” carrying Bubbaware and store “B” down the block carrying Bobware. One source, one quality, one profit margin, one UPC to track.
Walgreens adds and drops departments yearly with little fanfare.