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Walgreens Introduces Line of Fashion

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This sure sounds like an interesting move. Walgreen Co. has rolled out its own line of clothing, Casual Gear, that will show up at its drug stores starting April 1. With times tough in the retail world I wonder if we'll see more of this--companies diversifying their base of products in attempts to keep sales up. Still, even if diversification is a smart strategy, this seems to stretch the limits of that concept.

Does it make sense for a drug store to make a push into apparel? On the other hand, there was probably a lot of skepticism when drug stores starting turning over aisle space to food and other sorts of general merchandise. And that's worked out pretty well for them. Also, it's not like Walgreen is talking about entering the world of high fashion. It's talking about t-shirts and things like that. In fact, a lot of drugstores already do have small selections of clothes--especially in tourist markets.

So who knows. Maybe this will be the start of a brand new trend.

Walgreens, which stumbled last year when it posted its first quarterly profit decline in a decade, is seeking to boost profits by expanding its in-house brands, which range from nuts to trash bags and now clothing. The collection of cotton capris, sweat pants, quilted vests and T-shirts for men and women, will be priced at $7 to $15.

While two-thirds of Walgreens sales come from prescription drugs, sold at counters in the back of the stores, the big margins are in selling "front-of-the-store" general merchandise that the company develops itself, products known as private label. The strategy is similar to what grocery stores and department stores have been doing for years: make more in-house brands and profits will follow.

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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