Walgreens Adds Apparel to Private-label Mix

Last Updated Mar 19, 2008 1:46 PM EDT

Walgreens Co. will launch a casual clothing line April 1, selling T-shirts and cotton capris near the Marshmallow Peeps and nail polish in most of its 6,000-plus stores. The Chicago Tribune reports the "Casual Gear" line is part of the Deerfield, Ill., drugstore chain's efforts to boost front-end sales of its own brands.

The comfy clothes -- pants and tops for men and women -- will range from $7 to $15. They're made by Wonderbrand LLC, a Larkspur, Calif., company that produces underwear and sleepwear for Target, Kohls and Nike Inc.'s Hurley label.

Two-thirds of Walgreens' sales come from its pharmacies, but front end merchandise such as cosmetics and candy carries higher margins. Private label items from light bulbs to knee-highs make up about 20 percent of Walgreens' general merchandise sales, vice president of purchasing David VanHowe told the Tribune, up from 12 percent in 2000. In national brands, "Margins are very, very tight and national brand pricing is increasingly tight," he said. "This is a way to differentiate yourself and improve profit margins."

Walgreens started overhauling its private label strategy last year, the newspaper said, based on three years of consumer research. It trimmed the number of lines by half and revamped others, piloting an in-store kiosk, Cafe W, that sells coffee and snacks, and expanding Deerfield Farms food items and the Studio 35 personal care line.

While the Walgreens label remains on health care products, said director of private brands Kristen Abreu, the company is gradually rolling out about 800 personal care and household items under the new "W" label. "The name Walgreens didn't mean as much in the sundries category. [Customers] didn't think we were experts in sandwich bags."

Will customers leap at the chance to buy Casual Gear with their TheraFlu and Cheezits? It could happen. Wonderbrand was founded by Nick Graham, founder of Joe Boxer. Its other apparel lines include Knotty Woodpecker, nick(it) and National Underwear, which, under the tagline "Quality You Can Dribble On," sells mildly off-color boxers and Monty Python-themed sleep pants at Sears, J.C. Penney and Wal-Mart.

  • Lisa Everitt

    A Denver-based business writer, Lisa Everitt is a veteran of daily and weekly newspapers and trade magazines, including The Natural Foods Merchandiser, Rocky Mountain News, Inter@ctive Week, San Francisco Business Times, and the Peninsula Times Tribune.