CINCINNATI -- In a test of a
one-stop-shopping strategy, Kroger, the country's largest grocer, is
adding clothing to its lineup of essentials at a Marketplace store in
Mansfield, Ohio.
It's the first time in Kroger's 129-year history that it has offered a dedicated apparel section.
"In
order to stay competitive, we have to listen to our customers and
change to keep up with demand," said Jackie Siekmann, a spokeswoman for
Kroger's Columbus, Ohio-area stores. "We understand that we are experts
in grocery, and we're not going to lose sight of our core values."
The
test will be watched closely by hundreds of independent and national
grocers, said Nate Filler, CEO of the Ohio Grocers Association.
"There
is only about a 1% profit margin in the grocery business, so the best
thing you can do is increase traffic in the store," he said. "Other
grocers will be taking note to see if this is a trend they will
eventually need to pick up on."
Should the test prove successful,
it could help Kroger regain market share lost in recent years to
retailers such as Walmart and Target, which have expanded their
offerings to include food and groceries. Since 2005, more than 120
million square feet of grocery space has been built outside of
traditional grocery stores, according to Booz & Co., a Phoenix-based
retail consulting firm.
"It's a broad and bold experiment, and I
think anything Kroger can do to capture more of the household spend
across multiple categories is really critical," said Thom Blischok,
chief retail strategist at Booz.
But selling apparel is no easy
business, and getting buy-in from Kroger customers used to the mostly
grocery set-up will be a challenge, industry experts say.
"The
downside could be that customers walk in and say, â??Why are they
selling this stuff?' " said Phil Lempert, a Santa Monica, Calif.-based
grocery and retail analyst. "Kroger is not a stupid company. They
understand consumers better than any other supermarket. But do they
understand what it takes for someone to buy apparel and food in the same
trip?"
Kroger executives think so.
"We know this concept can be successful, and we've seen it work in other markets," Siekmann said.
Kroger
is borrowing strategy and products from popular West Coast grocery and
retail chain Fred Meyer, which it acquired in 1999.
"We took some
of their top-selling products, but we know what works best out west in
Portland (Ore.) may not be true here," Siekmann said. "That's why we're
testing the concepts in one store first, so we can tweak the product
lines as needed."
The new apparel section includes nationally
branded shoes, jewelry, outerwear and undergarments from Levi, Carhartt,
Carter, Skechers, Hanes and Maidenform, among others.
Kroger will officially unveil the newly remodeled Mansfield store Friday.
Karen
Short, an analyst with BMO Capital Markets, says the move is
encouraging. But she warns that expanding beyond apparel could be a
reach too far for Kroger.
"I'm happy to see them get rid of
high-ticket inventory like furniture and replace it with apparel because
it is a lower-risk proposition," she said.
"This is a test, and I
think that's one of the things Kroger is well focused on, testing to
see what works and what doesn't to make sure no one gets complacent."
The Cincinnati Enquirer