Walgreens hopes the range, which comprises vests, casual trousers and t-shirts priced from US$7 to US$15 (£3.50 to£7.50), will boost profits after the retailer posted its first quarterly profit fall for a decade last year.
Private-label products account for about 20 per cent of Walgreen’s general merchandise sales. The core range, which includes the ‘W’ label, comprises 800 commodity items.
Walgreens vice-president of purchasing David Van Howe said the decision was a way “to differentiate yourself and improve profit margins”.
Two thirds of Walgreens’ sales come from prescription drugs, but the largest margins come from private-label general merchandise products.
Van Howe said: “When you look at what’s going on in national brands, margins are very, very tight and national brand pricing is increasingly tight.”
Edward Whitefield, chairman of consultancy MHE Retail, said the strategy could increase like-for-like sales by 5 per cent.
“It is natural, organic growth of a company extending its reach,” he said. “They serve customers looking for convenience very well. It is likely to be successful.”
Walgreens sells clothing basics such as socks and underwear and the extended range will bring it into competition with retailers such as Wal-Mart, Target and Kohl’s, which all target price-conscious customers.
Whitefield added: “Margins on pharmacy products are about 25 to 30 per cent. Clothing margins are 40 per cent and Walgreens is exceedingly precise in product ranging in stores.”
The Casual Gear range is made by San Francisco company Wonderbrand, which also makes underwear and sleepwear for Nike-owned Hurley.
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