Kroger fights back at Amazon-owned Whole Foods and launches an apparel brand

Key Points
  • Kroger will sell clothes, beginning in the fall of next year.
  • This news comes after the Ohio-based company outlined its "Kroger Restock" initiative at an investor day last month.
  • Kroger plans to make $9 billion in capital investments over the next three years.
Kroger fights back at Amazon with an apparel brand

Kroger, in the aftermath of the Amazon-Whole Foods deal, aims to be a destination for more than just groceries.

The supermarket chain announced Friday morning that it's launching an apparel brand in the fall of next year.

Kroger shares were climbing about 2 percent in early trade on the news.

This news comes after the Ohio-based company outlined its "Kroger Restock" initiative at an investor day last month.

The plan will consist of heavy capital investments — $9 billion over the next three years. Meantime, Kroger is exploring strategic alternatives, with the help of Goldman Sachs, for its convenience-store business, including a potential sale.

A move into apparel is part of "Kroger Restock," the company said Friday.

"This new [apparel] brand gives Kroger a chance to inspire and connect with our customers, offering effortless style every day — from elevated basics to fashionable highlights," Robert Clark, Kroger's senior vice president of merchandising, said in a statement.

"This new offering is on-trend, convenient, and right in line with our customers' needs," Clark added.

The brand will first roll out across Fred Meyer and Kroger Marketplace stores, which account for 300 locations nationwide, in late 2018.

Kroger described the line as "modern," "playful" and "simple," and there will initially be sizes for children, young men, juniors, men and women. There will also be a focus on activewear, the company said.

Kroger aims to drive more shoppers to its stores as competition intensifies among supermarkets, and Amazon is growing quickly with Whole Foods.

Lidl, a German-based grocer that's expanding rapidly across the U.S., also sells apparel and recently launched an exclusive line with celebrity designer Heidi Klum.

Another example of this, big-box chains Wal-Mart and Target are known for offering both groceries and clothing to customers within the same stores. The overlap is one way to make up for slimmer margins within the grocery aisles.

Kroger shares have fallen around 38 percent this year.