How to build a private label wardrobe

Let’s face it: Consumers love affordable clothing. Trends may come and go but getting a good deal on a great outfit never goes out of style. In fact, some folks even like to brag about it. Who could blame them? Looking like a million bucks without spending a fortune is just so gratifying.

Now, more retailers are catching on that private label clothing draws in customers, builds loyalty and captures higher profit margins. Seems like a no-brainer, right? But, as with most things, the reality is often very different. The fact is food retail and clothing retail do not have a lot in common.

“The core competencies associated at being a good food retailer and clothing retailer only partially overlap — even less if you are talking about fashion retail,” says Tory Gundelach, vice president of retail insights for Kantar Consulting.

But many retailers have taken the leap anyway with some managing to find and maintain success for years.

“Fifteen years ago, you would not have identified Costco as a major apparel retailer,” says Matt Sargent, senior vice president of Magid, “but now [its] Kirkland Signature [store brand] is a wardrobe staple.”

Fred Meyer stores have also been selling clothing for quite some time. Its parent company, The Kroger Co., is also offering own brand clothing. Last year, the retailer announced the rollout of its Dip clothing line to 300 of its Fred Meyer and Marketplace stores.

“During the product development process, we were intentional about creating a brand that’s unique and resonates with our shoppers — and we believe we’ve done just that,” said Christina Groth, Kroger’s vice president of general merchandise, in a statement.

PLANNING IT OUT
The higher margins associated with private label clothing can also give retailers that competitive edge to keep up with the inevitable changes to the retail landscape.

“Particularly, as online grocery rolls out, grocers are looking for ways to compensate for those additional costs, [and] selling a more profitable merchandising mix is one of those ways,” Gundelach says.

With so much potential upside, private label clothing seems worth the risk. What could go wrong? Without a plan, plenty.

“The most critical element will be store planning, and not just dropping this new category into the store,” Sargent says. “Retailers will need to ensure that they have enough space in the store to create a separate clothing area rather than it feeling as if it is right on top of the milk and oranges.”

Kantar Consulting Senior Analyst Tiffany Hogan agrees. “Successful fashion brands run on merchandise planning systems, which operate very differently than category management employed in traditional grocery,” she says. “Grocers will need to think about the type of apparel they want to offer (whether it’s more fashion- and trend-driven or focused on basics), and employ the right type of planning system to avoid issues with in-stocks or inventory management.”

The type of apparel should line up with what customers already expect from that retailer. But the likelihood of success is found in the basics.

“There is a spectrum here,” Gundelach explains. “Selling basic socks and underwear or even T-shirts and flip flops is a lot more achievable than a grocer succeeding in selling jeans and women’s shoes.”

Robert Anderson, president and CEO of Store Brand Consulting, also suggests that retailers stick to the basics but could also offer seasonal items like swimsuits, gloves and winter hats. Price points should remain under $20 and the quality needs to be above average without being too trendy.

“They need an entry and exit plan and should have a markdown schedule to keep inventory fresh and current,” advises Anderson, a former Walmart executive who began the retailer’s Great Value food private brand line.

Seasonality and scarcity play an important role in driving consumer browsing behavior and engagement in apparel and other non-grocery categories.

“Knowing that an item may not still be available
on their next trip can increase impulse buying,” Sargent explains. 

AVOID THOSE SNAGS
In any store brand product category, consumer confidence is integral to success. Gaining and retaining that trust takes time.

“I think the key for grocers to be successful in apparel, and particularly private label apparel, is to build up credibility with shoppers over time,” Gundelach says.

For those retailers in more of a rush, consider a name-brand apparel partnership, she suggests. But do so thoughtfully.

“Partnering with a well-known apparel brand could also be a way to build credibility more quickly,” she explains. “But this doesn’t always work if the store experience or the brand equity pairing doesn’t make sense to shoppers.”

Kroger, for instance, recruited fashion designer Joe Mimran, best known for Club Monaco, Pink Tartan and Joe Fresh, to lead the creative and design vision of its Dip clothing line. 

For some retailers, however, the addition of private label clothing might not fit at all with their focus and would potentially dilute their brand. “For example, Whole Foods Market has built its brand with a specialty focus of natural foods and wellness, and would likely struggle to introduce an apparel offering,” Sargent says.