SAY GOODNIGHT GEORGE, HERE'S JOE

BRIAN DUNN

BRAMPTON, Ontario - The response to Loblaws' new line of Joe Fresh Style fashion items has far surpassed original forecasts, according to the person responsible for the line.

"It's exceeding quite extensively what our original estimates were for performance and the customer response has been much greater than we anticipated," Louise Drouin, Loblaws' senior vice president, hard and soft goods, told SN.

Named Joe Fresh Style after designer Joseph Mimran, the name behind the Club Monaco and Cabin labels in addition to Holt Renfrew fashions, the line was introduced last month at 40 of Loblaws' 80 superstores across Canada.

The new collection will include 300 items for men and women with a top price of $34 for a lady's trench coat, which rivals the low price-points of mass merchandisers like Bentonville, Ark.-based Wal-Mart Stores and its popular George store-brand apparel line, and Brampton, Ontario-based Zellers. The average price for the line, which is predominantly manufactured in China and India, is around $12. (All figures have been converted from Canadian dollars.)

"Our goal with Joe Fresh Style was to create a line of clothing that is accessible and affordable to Canadians," said Mimran, who is now under exclusive contract with Loblaws.

The success of Joe Fresh won't happen overnight, according to analyst Perry Caicco of CIBC World markets in Toronto.

"If you look at the history of the U.K., it will take a long time to build. Their biggest challenge is building awareness and to keep on top of the supply chain."

Caicco doesn't believe other supermarket chains will take after Loblaws. "They're following an entirely different strategy by concentrating on food basics and won't build larger and larger stores like Loblaws," he said.

In terms of helping Loblaws' competitive positioning, Drouin said the addition of Joe Fresh rounds out its offerings of both soft line and hard line products as part of a one-stop-shop environment.

"We know that we have incredibly busy customers," she said. "Our target customers are the 25- to 45-year-old women who are on the go all the time."

What is the potential for a private-label line like this in what is still essentially a supermarket?

"Our superstores have about a third of their space devoted to general merchandise, and since we've been in the superstore business in Western Canada for well over 15 years, I don't think customers think of us as supermarkets only," Drouin said.

Asked what is unique about the line, Drouin said it offers a level of style and price not found in the Canadian marketplace and that it was designed by an expert in the apparel business - factors backed by the initial strong reaction from the public.

While the name Joe Fresh Style isn't exactly stylish, Drouin said it doesn't have to be.

"I think it was more of just trying to have a name that indicated every week you were going to see some new and different things that would not be simply basics, and there hasn't been any reaction other than positive from consumers. I think also it's more the product the customer is reacting to as opposed to the name."

Possible line extensions, notably jackets, and similar decisions will be based on feedback from customers, primarily from its website.

"We repositioned it at the very front of our superstores in dedicated space of about 10,000 square feet," Drouin said. "We really thought about how you shop with a shopping cart and how to get in and out of there really quickly.

"From a marketing prospective, we opted to first have the customer experience the product in the store, letting he reaction to the product to drive sales."

"There's been one introductory glossy flier of eight pages that introduced it to consumers and there will be another one for summer and we'll have something every quarter. But we really think how the customer sees it in-store is the biggest part of the interaction."

The adult apparel will take up 5,500-10,000 square feet, including change rooms at 40 Loblaws superstores, which range from 120,000 to 150,000 square feet. The line will eventually be available in all 80 superstores across the country.

Loblaws has over 1,000 corporate and franchised stores across Canada. Most are not large enough to carry the full line, but many carry some basic items. New pieces will arrive every four weeks to keep the assortment fresh and the line will be completely replaced every eight weeks.

"We think the space dedicated to the line is appropriate," Drouin said. "It's going to be about how we work on the merchandise flow and control the tap into different doors."

Loblaws took the concept into a lab where it was prototyped, and it was determined that the whole aisle configuration would have to be different than a typical apparel section to allow shoppers to get in and out much more simply.

'Unique Shopping Experience'

"We had to make accommodations for a unique shopping experience, such as configuring the fitting rooms for moms with a child in a cart. We also give her a choice to check out in the area, if she didn't want to combine her apparel purchases with her main shop, by adding a cash desk and a lot more help in the department," Drouin said.

While some of the more basic items such as T-shirts casual pants and shorts, and fewer of the fashion-driven pieces are carried in some of the grocer's smaller stores, the growth will come by offering the full product range in the superstores, Drouin said.

"I think the potential for apparel in supermarkets in general is very good based on the European experience where customers have embraced superstores, recognizing that the lines have blurred between all the traditional channels of distribution. And based on our 40 stores, more and more customers don't think of these categories of merchandise in little boxes"

Analysts applauded Loblaws' move into adult clothing - with some provisos.

The concept is a plus for Loblaws, but pricing is a key strategy, according to Randy Harris, president of market research firm Trendex North America, Toledo, Ohio. If they undercut Wal-Mart, they can't beat them on quality, he said.

"The price points are in our view right on the money in terms of where they need to be to compete in the discount store segment," analyst Keith Howlett of Desjardins Securities, Toronto, said in a report.

"They also had distribution problems last summer that were well documented, and merchandising apparel is a lot more difficult," Howlett said.

But Drouin doesn't anticipate any problems getting merchandise into stores. "It was a big area of focus," she said.