Loblaw takes Joe Fresh to main street
Bid to become top 'cheap chic' clothing brand
Hollie Shaw, Financial Post
Published: Wednesday, August 19, 2009
Loblaw Cos. is taking its Joe Fresh Style brand to main street, signing a deal to open an 8,000-square-foot boutique on Toronto's trendy Queen Street West strip.
This marks the first time the grocer has showcased its hit apparel line on a major retail strip and is a further indication it is vying to become the country's biggest "cheap chic" clothing brand. Seizing an opportunity when Home Depot Inc. pulled out of a planned urban development deal with RioCan Real Estate Investment Trust in January, Loblaw is aiming to capture the car-free urban demographic who like fast fashion, but are unlikely to travel to the retailer's largely suburban Superstore locations. Rivals H&M, Le Chateau, Urban Outfitters and American Apparel have stores nearby on the street, which remains a popular destination in the city for youth fashion.
"[This] allows us to stream inventory to have more fashion-forward items in this location," says Liz Margles, vice-president of marketing for Joe Fresh. "[The Queen St. location] automatically elevates the credibility of Joe as a fashion brand because your neighbours are those brands," Ms. Margles said. "And the storefront also acts as a huge billboard for the brand in itself."
The project, which includes a 45,000-square-foot Loblaws supermarket on the second floor and a 29,000-square-foot Winners on the third floor, is scheduled to open in 2011, and Loblaw will look at other opportunities for similar urban expansion. Montreal and Vancouver "are the two cities that jump to the fore," Mr. Margles said. "The afford-ability of the real estate also has to make sense."
Since it debuted at Loblaw Superstores three-and-a-half years ago, Joe Fresh has made a quick ascent to become the second-biggest clothing brand by unit sales in Canada, according to market researcher NPD Group, for the year ending June 2009. And despite the recession, Loblaw is still on track to hit a target of $1-billion in annual Joe Fresh sales by the end of 2010, Ms. Margles said.
Joe Fresh, which is sold in 300 of the retailer's stores, is also sold in two standalone Toronto locations adjacent to Loblaw stores that are not on major urban retail strips. Retail consultant Richard Talbot, owner of Talbot Consultants International, said a drive to occupy urban street space likely came from savvy Club Monaco founder Joseph Mimran, the creative mind behind the Joe Fresh label.
The development shows Loblaw "has really put their money behind [Joe Fresh]," Mr. Talbot said. "I think they are going to try and fight it out and really test the brand against the others." The concept works well with food, he said, because Canadians venture to the grocery store an average of 1.8 times a week, much more often than they do to the mall, which they might visit once a month.
The cross-merchandising of food and fashion is very common in Europe, with U. K. grocery chains such as Sainsbury, Tesco and Wal-Mart-owned Asda selling three-piece suits and pyjamas a few aisles over from the Marmite. Wal-Mart has also deployed the strategy in the United States and Canada at its supercentres.
In the meantime, Canadian urban cores are in a state of revival and need more food stores, Mr. Talbot said. "When [grocery chains] moved out to the big megastores in the suburbs, what they basically did was abandon the downtown cores and there are very few options to buy fresh food in urban centres that is not the higher-end specialty product," he said.
While Canadian Tire, which has put 48 of the 375-store Mark's Work Wearhouse chain inside its retail outlets since acquiring the casual and workwear clothing retailer in 2002, don't expect Joe Fresh to venture far from the grocery fold.
"At one location, you get impulse buys on both sides [food and fashion]," Ms. Margles said, adding the retailer tries to time new Joe Fresh items with customer shopping patterns. "If you are in there once every week or 10 days, you will see something new, and that, we believe, distinguishes us from any other apparel retailer."
