Burgess says with Joe Fresh Style wear displayed in its own high-traffic space—just an aisle or two away from produce, the bakery, and the meat department—Loblaw is able to up the convenience factor for its customers, the bulk of whom are mothers on-the-go.
“We already have her in our stores doing the food shopping and we understand she’s the one in charge of the majority of expenditures for the family. We’re saving her a trip (for clothes purchases). We can give her back time in her day,” he says. “Whether it’s clothing or general merchandise, we’re creating that one-stop shop for the customer.”
Just as on the grocery side, Loblaw updates its clothing line-up on a regular basis, usually with a monthly overhaul, to ensure it’s, well, fresh.
And because it can flex its buying power for so many stores, Loblaw is able to source the clothing line for rock-bottom prices. No single item costs more than CAD$ 39, and others, such as t-shirts and hoodies for kids, can be bought with the change in your couch. “There was a void for a brand with a fresh, accessible style and great quality at unbelievable prices,” Burgess says.
Low clothing prices aren’t unique to Loblaw as they’ve been falling across the country by more than one percent per year for the last five years, according to Statistics Canada. The downward push has come from several sources, including the increasing popularity of big-box discounters, but the most significant factor has been manufacturers moving the vast majority of their production to cheaper offshore labor markets, most notably China.
Even with its low prices, Joe Fresh Style has already become a CAD$ 400-million brand in annual sales, and Burgess says the company is confident it will grow to CAD$ 1 billion in the next couple of years.
The Joe Fresh Style brand was given a unique boost this fall when Loblaw introduced a “pop-up” store concept to help launch its new children’s collection. Set aboard an 18-wheel tractor trailer capable of accommodating 40 customers at a time, it was stocked with the likes of cotton t-shirts printed with animal silhouettes, jeans, and corduroy coats. It traveled across the country for a month, spending a few days in high-profile areas of major cities.
Rob Warren, director of the Asper Centre for Entrepreneurship at the University of Manitoba in Winnipeg, says it’s clear who Loblaw has in its crosshairs with Joe Fresh Style: Wal-Mart. He says it’s trying to make a pre-emptive strike prior to the widely-anticipated arrival of Wal-Mart’s Super Centers across Canada. These giant locations have carved out a significant piece of the US grocery market for the world’s biggest retailer and are in the process of being rolled out north of the 49th parallel.
Wal-Mart presents a multi-faceted challenge to Loblaw, Warren says. First, its buying clout is second to none, ensuring it won’t lose its status as the low-cost provider.
“When Wal-Mart goes to a Chinese manufacturer and says, ‘I want a container load of this for Canada and 10 for the US,’ they can get much better pricing from an overseas supplier than Loblaw can get,” he says.
Wal-Mart’s second major strength is its reputation in the marketplace.
“In terms of their customer base, Wal-Mart and Loblaw are really close but where Wal-Mart has the edge is its customers are habitual buyers and they’re convinced Wal-Mart has the better pricing. Loblaw is going up against the 800-pound gorilla,” he says.
Warren says Wal-Mart may not even end up as the biggest of Loblaw’s worries in the long run. He’s waiting for American Apparel, a company known for its anti-sweatshop stance and risqué, Polaroid-style advertisements, to really shake things up north of the border.
“They’re hitting all the right buttons with younger customers. They’re environmentally and socially responsible, the clothing is on the fashionable side and it’s different. That will attract people,” he says.
It might even cause one of these competitors to lose their shirt, and maybe even their cargo shorts.