Hy-Vee selling clothes again in Twin Cities, dropping one big brand for another

Lakeville shoppers did a double take when Hy-Vee opened its new store there in 2016. Along with the usual assortment of produce, meats, bread and dairy, stood a 3,300-square-foot F&F department filled with clothing for women, men and kids.

The fast fashion line was moderately priced at $8 to $45, but it has been phased out of all stores in the last couple of months.

When it was introduced, Hy-Vee Chief Executive Randy Edeker said it was an example of the depth of selection that Hy-Vee customers expect. "Whether it's gourmet food or clothes, we have to adapt to the needs of our customers," he said.

F&F is being replaced by the Canadian brand Joe Fresh in select stores, mostly in the Twin Cities. Sixteen of Hy-Vee's 263 stores will feature Joe Fresh, including Robbinsdale, Eagan, Lakeville, Brooklyn Park, Shakopee, Cottage Grove and Savage. Stores in Plymouth, New Hope and Oakdale will not stock it.

"We transitioned our fashion retail partnership to Joe Fresh to offer larger product diversity with Midwestern styles that we believe will be appealing to the Hy-Vee shopper," said Darren Baty, executive vice president of non-foods for Hy-Vee, in a statement. A Hy-Vee spokesperson said F&F's selection didn't meet the needs of a mom with kids looking for good, well-made, affordable basics.

By partnering with Joe Fresh, Hy-Vee is getting an apparel maker that specializes in clothing sold in supermarkets. The line is sold in 1,500 Loblaws stores, Canada's largest grocer.

"Clearly, Loblaws understands the grocery customer to be in so many stores," said Phil Lempert, a supermarket analyst who founded Supermarket Guru. "It's more conservative styling than F&F."

Hy-Vee is not the first supermarket to add clothing. Aldi, Lidl and Kroger have done so in select stores, and general merchandisers Target and Walmart added groceries to their non-food selection decades ago.

Why add clothing? It's a higher profit margin item in a low margin business.

"Food margins are tighter than ever before so grocers look to clothing, beauty aids, coffee and chocolate bars to make a little extra," Lempert said.

Twin Cities' stores will carry a varying amount of Joe Fresh. Robbinsdale, for example, already has the clothing on the shelves and will stock only the children's line, priced from $7 to $29. The remaining Twin Cities stores will receive the Joe Fresh line in late August or mid-September.

Edeker's goal is to have 20 Hy-Vee stores in the Twin Cities, possibly adding four to five stores per year in the future. No new locations have been announced in the Twin Cities for 2020.