Kroger wants shoppers to add clothes to grocery list

Retail Dow Jones Newswires

(REUTERS)

Kroger Co. will soon introduce racks of blouses alongside aisles of beans and broccoli.

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The nation's largest supermarket chain said Friday that it will begin selling a new apparel brand next fall at around 300 Fred Meyer and Kroger Marketplace stores. The line will span clothing for children through adults, and feature "elevated basics" with a focus on active wear, Kroger said.

Kroger has sold clothes at Fred Meyer stores in the Pacific Northwest and at Marketplace-branded locations in the past, but the release of its own clothing line comes as part of a major push to add more profitable store brands throughout its hundreds of stores. The company has added many private label products in recent years, but most have been food and a move to sell more Kroger-branded clothing could help Kroger compete with retailers like Wal-Mart Stores Inc., the nation's largest food seller.

Kroger shares rose more than 2% in Friday morning trading.

A Kroger spokesman said the company will evaluate how much of the new brand to carry at its stores nationally, and Kroger believes offering its own line will help it reduce costs and attract new sales from the clothing currently offered at locations.

"Our current customers alone present a huge opportunity for growth in apparel," he said.

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Wal-Mart and other retail chains such as Costco Wholesale Corp. and Target Corp. have carried clothes for years, though groceries drive much of their sales. That diverse product offering helped protect them from the trouble that befell traditional supermarkets during a recent spell of falling food prices and intensifying competition.

That downturn has hit Kroger hard. Same-store sales -- a key retailer metric -- fell for the first time in a decade last year, and were flat last quarter. Kroger's shares are down more than a third this year. Amazon.com Inc.'s acquisition of Whole Foods this summer fanned concerns that traditional grocers aren't prepared to compete with the e-commerce giant's push into grocery. Amazon, too, sells a huge range of goods including clothing in addition to groceries.

Kroger has responded by streamlining its business, including the possible sale of its nearly 800 convenience stores. It has slowed new store growth to pay for expanded e-commerce operations, and is reorganizing its shelves to display profitable in-house brands more prominently.

In September, the Cincinnati-based company said it would launch a casual restaurant chain. The first Kitchen 1883 location in Kentucky is slated to open later this year, touting a "made-from-scratch menu" and "hand-crafted cocktails."

The grocer also took a majority stake in New York City-based Murray's Cheese earlier this year. Kroger opened its 400th location of the high-end cheese purveyor in a Houston store last week.

Lidl, the German discount grocer that entered the U.S. this year, is also selling a line of clothes designed by model Heidi Klum.