Joe Fresh 2012 Strategic Marketing Plan

March 2012

Olivier Benny

Table of Contents

1.0 Executive Summary 1

1.1. About

1.2. Products

1.3. Purpose

1.4. Goals

2.0 Market Analysis 2

2.1. Environment & Trends

2.2. Customer

2.3. Target Market

2.4. Industry Size & Growth

2.5. Market Needs

3.0 The Company 6

3.1. Mission

3.2. Product Offering

3.3. Position

3.4. Swot Summary

3.5. Competitive Analysis

4.0 Marketing Strategy 16

4.1. Value Proposition

4.2. Marketing Mix Strategy

4.3. Integrated Marketing Communications

4.4. Strategy Objectives

1.0 Executive Summary

1.1. About Joe Fresh Joe Fresh is a fashion brand and retail chain created in 2006 by designer Joe Mimran

in collaboration with Canadian food distributor Loblaw Companies Limited. The line is found in over 300

Canadian supermarkets and superstores, as well as twelve stand-alone locations. In fall of 2011, Joe Fresh set

its sights on the American market, launching five stores in New York, Long Island and New Jersey; an

international flagship store on Manhattan’s Fifth Avenue is to be unveiled in the spring of 2012.1

1.2. Products Consisting originally of affordable fashion apparel for adults, Joe Fresh expanded its product

line in 2007 to include children’s wear, lingerie and sleepwear. The following year swimwear and sunglasses

were added to the Joe Fresh label. Finally, 2009 saw the highly-anticipated arrival of the affordable cosmetics

line, Joe Fresh Beauty.2

1.3. Purpose The central aims of Joe Fresh are to provide North Americans with stylish wardrobe offerings

at an incredible price. With fresh classics and colours in a convenient location, the Joe Fresh line wishes to help

‘take the legwork out of clothes shopping.’3

1.4. Goals Joe Fresh’s core values are universally appealing. This year, the company wishes to pursue its

successful expansion into the United States and beyond, all the while continuing to offer great, affordable

fashion to customers in Canada with one key message: fashion is for everyone.

1 Joefresh.tumblr.com

2 ‘Loblaw and Joe Fresh Beauty Launch Cosmetics Collection’ press release, 2009

3 ‘Loblaw Companies Limited News Release’ press release, 2006

2.0. Market Analysis

2.1. Environment & Trends

In the fast-paced, consumer-centric 21st century, consumers have understood that fashion and affordability can

get along just fine. The social media generation has little trouble keeping up with the current trends. The

challenge of finding the time and resources necessary to satisfy their wants and needs, however, remains.

Increasingly, shoppers are gravitating towards products which highlight these realities. These new values have

been reflected in the successes of such companies as Winners, H&M and eBay. Indeed, getting a great deal,

much like looking and feeling amazing, is cooler than ever.

2.2. Customer

Joe Fresh has become a choice apparel brand to an increasingly large swath of Canadians. With clothing

articles for all ages, and a name that has expanded beyond its grocery store origins, the Joe Fresh brand has

become a part of Canada’s nuclear family. All Joe Fresh customers share an enthusiasm for affordable, stylish

and accessible clothing.

2.3. Target Market

Joe Fresh views the democratization of fashion as one of its ultimate goals.4 This ambition has resonated most

strongly with an audience of moms and newly working men and women, for whom looking good is just one of

many aims on a list that includes being fiscally responsible and time-efficient. Joe Fresh must continue fulfilling

these needs in order to preserve its impressive gains in the Canadian retail industry, as well as to ensure a

successful entry into the American market.

2.4. Industry Size & Growth

Canada

The Canadian Retail industry’s clothing and clothing accessories subsector draws 99.3% of its revenues

directly from sales. Revenues in this industry reached a record 24.8 billion Canadian dollars in 2009, up 0.2%

from the previous year. Over a ten-year period, the clothing and clothing accessories subsector achieved a

healthy 2.8% growth per year. Over the same period, stores of a chain designation, like Joe Fresh, enjoyed

substantial market-share gains of 8.3% over their non-chain counterpart, bringing their 2009 market share to a

dominant 74.1% - good for a 4% increase over ten-years.5 (see graphic6 below)

4 Kelly Gadzala, ‘Joe Keeps it Fresh’, Strategyonline.ca, 2011

2.4. Industry Size & Growth (continued)

United States

In 2011, Joe Fresh opened five stand-alone locations in the United States as part of a planned expansion into

the American retail clothing sector, which trumps its Canadian counterpart in size. With 304.9 billion US

dollars in sales in 20097, the American retail clothing industry is in fact roughly twelve times larger than its

northern neighbor’s, despite only weighing approximately ten times nine demographically. As such, general

spending on clothing goods was roughly 25% higher per capita in the United States.

Joe Fresh Growth Potential

Given the largely similar cultures of Canadian and US consumers, as well as comparable retail infrastructures

(shopping malls, power centers, grocery stores), a successful Joe Fresh expansion into the American market is

entirely fathomable. Albeit dependent on more than just industry similarities, the prospect of growth in the U.S.

is very impressive. With a roughly translated market share, Joe Fresh sales would see a ten-fold increase in the

United States. Retail market penetration rates similar to Canada’s would result in Joe Fresh sales increasing

150% in the Northeast US alone. Given the spectacular potential that exists, it should come as little surprise

that the Joe Fresh brand’s founder, Joe Mimran, as envisioned as many as 800 locations across the U.S. in

five years. The cultural and economic rapprochement between Canada and the U.S., coupled with the latter’s

tremendous retail sector, means American expansion is a very real scenario which must be given full attention.

5 Canadian Industry Statistics, Industry Canada

6 Canadian Industry Statistics, Industry Canada

7 ‘United States Clothing Industry Guide’, Research and Markets , 2009

2.5. Market Needs

The rising costs of living in the midst of a still-uncertain economic situation has recently provided a backdrop to

the period of stunning technological innovations that characterized the past decades and begins to shape the

next. With the advent of smartphones, tablets and social media outlets; from tight schedules and even tighter

budgets, a new type of consumerism has emerged. Today’s shopper is savvier, more efficient, more pragmatic

and wiser than once before. The time and fuel expenses inherent to traditional shopping have contributed to the

rising popularity of E-commerce. Being said, not all goods transition as conveniently from the shopping cart to

its virtual counterpart. Among these, the most frequently required is groceries.

While only partially responsible for the company’s success, Joe Fresh’ supermarket location presents the

busy-bodied, utilitarian ‘consumer 2.0’ with an opportunity to multitask – saving time and money - without

having to compromise on quality. Such speaks to the broader image of Joe Fresh; a brand that dismisses

abstract notions of haute couture and prestige, in favour of the tangible benefits of accessible, trendy and

reasonably-priced wardrobe options. Though comparable formulas exist, no single brand embodies these

emerging market needs better than Joe Fresh.

3.0. Joe Fresh

3.1. Mission

Offering Canadians stylish, fresh and affordable apparel and accessories for all seasons, the Joe Fresh brand is

Loblaw Companies Limited's answer to consumers' desire for accessible, of-the-moment style. Today's busy

consumer can shop for fashion right where she shops for food, health and home, and achieve a great look

without breaking the bank. Through its portfolio of store formats, Loblaw is committed to providing Canadians

with a wide, growing and successful range of products and services to meet the everyday household demands

of Canadian consumers.8

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3.2. Product Offering

The Joe Fresh brand, a stylish and affordable clothing and accessories line for men and women, was launched

in March 2006. Today, famed Canadian designer and creative direct Joe Mimran heads the team of over 150

product developers9, trend forecasters, managers and designers who team up to produce Joe Fresh’ 400+

product seasonal collections.

10

Within a year, robust sales and high consumer demand would prompt expansion of the line to include

sleepwear, lingerie and children’s wear. Before long, the Joe Fresh Kids collection became the top children’s

apparel seller in all of Canada.11 In 2009, a highly anticipated line of 8$ or less cosmetic products, Joe Fresh

Beauty, was launched.

8 ‘The Joe Fresh Brand Takes a Bite Out of the Big Apple’, Loblaw.ca News Release, 2011

9 John Intini, ‘Joe’s Fresh Take’, MacLean’s Magazine, 2010

10 JoeFresh.com

11 Hollie Shaw ‘Joe Fresh Follows Tough Path Into Cutthroat NYC Market’ 2011

3.3. Market Position

In the six-year period leading up to its entry into the U.S. market, the Joe Fresh brand has experienced

consecutive cycles of explosive growth. Early marketing approaches were centred on the intuitions of lead

design and creative director Joe Mimran, whose industry-recognized name contributed significantly to branding

both literally and philosophically.12 Initial positioning efforts sought to establish the brand’s core principles –

affordability and convenient style - in earnest. Bright orange, circular price tags were conceived with Joe

Fresh’ grocery store location in mind - much like the ‘Fresh’ moniker itself. A bold ‘what you see is what you

get’ message, reflected in the deliberate use of Mimran’s surname, as well as the dismissal of the odd-even

number pricing strategy13, aimed to extend a message of likeness to the no-nonsense, savvy consumers it

sought to reach in Loblaw’s supermarkets.

With levels of popularity rapidly growing beyond originally targeted markets segments, the Joe Fresh brand

began taking steps towards the possibility of large-scale expansion; several new product lines were launched

and stand-alone Joe Fresh locations were established, reflecting an understanding that the brand’s message

was indeed of universal appeal. The company’s positioning matrix shifted towards a much broader product

line. Notwithstanding, the Joe Fresh brand stuck to a core philosophy that empowered the shopper; the

stand-alone stores – much like supermarket locations – sought to present products in a pure no-frills manner,

leaving price, style and quality to speak for themselves.

12

John Intini ‘Joe’s Fresh Take’, MacLean’s Magazine, 2010

3.4. SWOT Summary

Strengths

(External) The advent of social media, coupled with a generally subdued economic climate, has

prompted consumers to gravitate towards no-frills shopping that values convenience, quality and price.

Joe Fresh brand embodies such attributes, and has achieved instant-brand recognition on a national

stage (Canada) erasing most doubts regarding the feasibility of affordable, accessible fashions

(External) Joe Fresh has successfully achieved a degree of ‘fashion legitimacy’ in the eyes of

consumers without having to sacrifice the cost benefits of a low value-added retail position.

(Internal) The Joe Fresh brand benefits from a vertically integrated approach which fosters a strong

bond within the production process. The brand is developed and produced through one in-house

channel, thus protecting it from the risks of vertical or horizontal channel conflicts.

(Internal) Through a vertical retailing14 approach, founder Joe Mimran personally oversees all aspects

of Joe Fresh product conception, from design & production, to sales & marketing process. This

method produces distinct advantages over the ‘wholesale plus markup’ mechanism of a traditional

retailer, as it creates a well-aligned, autonomous process chain providing Mimran with innovative

manufacturing & design opportunities as well as competitive pricing insight.

13

‘Loblaw’s Apparel Guru No Average Joe’ Globe and Mail, 2010 14

Cintra Wilson, ‘Joe Mimran’s American Invasion’, Elle Magazine, 2011

Strengths (continued)

(Internal) The Joe Fresh brand enjoys substantial financial backing and support. Its parent company,

Loblaw Companies Canada (itself a subsidiary of George Weston Limited), is Canada's largest food

distributor and a leading provider of drugstore, general merchandise and financial products and

services. Loblaw is one of the largest private sector employers in Canada.15 The abundant amounts of

capital available to Joe Fresh bolster the brand’s ability to mount successful expansions campaigns

without requiring the assistance of external investors.

Weaknesses

(External) In 2010, Joe Fresh moved beyond the supermarket aisle with the opening of its first stand-

alone store, located in downtown Vancouver. Months later, Loblaw announced its intent to open

twenty dedicated outlets across Canada. While preliminary data has been mostly positive, the Joe

Fresh brand remains largely unproven in the ‘stand-alone’ store format.

(Internal) While it has come to be known to consumers as name of its own, the Joe Fresh brand

remains inextricably linked to Loblaw Companies Canada. While Loblaw’s has successfully show an

ability to raise successful house-brands like Joe Fresh, President’s Choice and No Name – it remains

to be seen how skillfully the company will navigate the American retail industry.

15

Loblaw Companies Limited, official press release, 2011

(External) While it enjoyed a gradual build-up en route to success in Canada, the Joe Fresh brand

now finds itself in the heart of Manhattan with little to no name recognition. Furthermore, the flagship

stores of their top competitors are nearby.

Opportunities

(External) Given the resounding success of Joe Fresh’s supermarket locations in Canada, the brand is

in excellent position for further Canadian expansion through its stand-alone stores, of which only a few

dozen exist so far. The potential for increased sales and revenues in Canada alone is massive.

(External) In 2011, Loblaw announced its most ambitious plans yet for Joe Fresh – four retail outlets

slated for metropolitan New York City with "an international flagship store" on Fifth Avenue. With this

expansion comes a stellar opportunity to stake a claim in the world’s largest retail clothing industry,

which in 2009 alone managed sales of 304.8 billion US$

Threats

(Internal) The vertical retailing approach adopted by the Joe Fresh brand places an inordinate

proportion of product decision-making processes in the hands of a single individual, Joe Mimran.

Should Mimran and Loblaw Companies Canada part ways, the brand’s integrity could be severely

tested.

(External) In a deliberately aggressive move, Joe Fresh has made New York City the focal point of its

expansion. In spring 2012, the brand will be launching its worldwide flagship store on 5th avenue. Just

a few blocks down are archrival H&M’s flagship – and first U.S. store – as well as a Zara megastore.

5th avenue, NYC (Source: Affairesdacarla.blogspot.com)

3.5. Competitive Analysis

Seven months after the Joe Fresh launch, Loblaw reported that sales had exceeded the company's own

projections. Before long, it became increasingly that the brand would grow on a larger scale than previously

believed. The stand-alone Joe Fresh brand concept was developed as an idea that started in 2010 with the

opening of the downtown Vancouver store has exploded in the last year with a string of similar openings across

Canada, and more to come. Targeting a younger fashionista market, the goal is to put new store concepts in

high-fashion locations where they can compete directly with the most established brands of similar convocation:

___________________________________________________________________________________

H&M

H&M is a Swedish retail-clothing company, known for its fast-fashion clothing offerings for women, men,

teenagers and children. It has over 2,300 stores in 43 countries and as of 2011 employed around 94,000

people.16 It is ranked the second largest global clothing retailer. The recent gains of H&M in the North

American market, coupled with the company’s similar principles on affordability and fashion, makes H&M one

of Joe Fresh’ chief rival brands.

16

‘Facts About H&M’ H&M website

ZARA

Just ahead of H&M, the largest global clothing retailer is Zara, from parent company Inditex. According to this

Spanish brand, only two weeks17 is required to design, develop and get into stores a new product.

Consequently, Zara manages to launch roughly 10,000 new designs per year. Among the more peculiar

strategies of Zara’s are their zero-advertising approach, and their insistence on keeping production in Spain –

contrasting the global trend to manufacture fast fashion products in low-cost countries. Like Joe Fresh, Zara is

a vertically integrated retailer which focuses production efforts on affordability and trendiness.

Winners

Winners is a chain of bargain price Canadian department stores owned by TJX Companies. It offers brand

name clothing, footwear, bedding, furniture, fine jewellery, beauty products, and housewares at a fraction of

their original price. The company operates over 200 stores across Canada; it is one of Joe Fresh’ top

Canadian competitors.

GAP

Gap is an American clothing and accessories retailer based in San Francisco, California. The company has five

primary brands, notably the Gap, banana republic and Old Navy. Today, Gap has 132,000 employees and

operates 3,200 stores worldwide,18 making it the largest U.S. clothing retailer. Like Joe Fresh, it operates

primarily in North America and focuses on affordable, fashion-forward products.

17

Rachel Tiplady, ‘Zara: taking the lead in fast-fashion’, Business Week, 2006 18

‘Key Facts’ Gap inc website

4.0. Marketing Strategy

4.1. Values

The Joe Fresh brand is embodied in the commitment to provide customers with a wide, stylish and affordable

selection of products to meet the everyday household demands of savvy, fashion-forward customers of all

ages.

4.2. Marketing Mix Strategy: the Retailing Mix

Pricing

Benefitting from a vertical retailing production approach, the Joe Fresh brand is able to adopt an ‘everyday

low pricing’ strategy. With full control over manufacturing, production and product marketing, Joe Fresh

manages a highly competitive price point on its products, without having to compromise on the bottom line.

The brand’s affordability is reflected in its dismissal of odd-even number pricing strategies.

Merchandising

Originally consisting only of men’s and women’s garments, robust sales and high consumer demand have

prompted expansion of the Joe Fresh line to include sleepwear, lingerie and children’s wear. Before long, the

Joe Fresh Kids collection became the top children’s apparel seller in all of Canada. In 2009, a highly

anticipated line of 8$ or less cosmetic products, Joe Fresh Beauty, was launched. Joe Fresh products are only

available in the brand’s stores.

Store Location

The Joe Fresh brand has over time come to be found in a number of different locations. Though primarily

located in Loblaw’s supermarkets, Joe Fresh stores have begun to appear in regional shopping centres, power

centres and stand-alone locations across Canada. More recently, Joe Fresh brand has aggressively pursued

locations in the central business districts of some of North America’s most bustling cities, namely Vancouver,

Toronto and New York City.

Retail Communication

Joe Fresh brand is confident about what it offers consumers. As such, the company lets its products do the

talking as much as possible. The company name reflects the Loblaw-based origins, and rounded prices

illustrate the brand’s confidence in its prices. Furthermore, and rather peculiarly, Joe Fresh apparel is only

available in store and not sold online. This strategy reflects the brand’s desire to have consumers visit the store

and experience the first-hand the quality of garments in touch, feel and fit. Finally, Joe Fresh’s founder and lead

designer, Joe Memran, is a ubiquitous presence in the brand’s communication efforts. This expresses to

customers that Joe Fresh is a credible, responsible and proud brand. A decision last year to drop the word

‘style’ from its moniker highlights the recognition and fashion respectability Joe Fresh has earned in just a few

short years.

IMC

As of now, Joe Fresh is a well-established brand in the Canadian market, where it continues to grow. Granted,

it is entering a crucial growth phase as it seeks a stake in the American retail industry. Thus, it must prioritize

acquiring brand preference among its target audience, to which Joe Fresh must convey the advantages the

brand has over H&M, Zara and the Gap. Furthermore, Joe Fresh must concentrate solidifying its distribution in

the United States, where it does not enjoy the benefits of being an arm of a major supermarket. The primary

promotional means that must be employed in this crucial growth stage are effective advertising, which must

stress the brand’s significant popularity among its first generation of customer, as well as emphasize brand

differences with its primary competitors. In this regard, Joe Fresh must emphasize not only the trendiness and

affordability of its offerings but also the quality and durability of the materials it employs.

The Joe Fresh brand must iterate with confidence that a store visit will suffice in convincing customers of the

superior quality of its products. Advertising efforts should leverage the benefits of having broad capital

available to the Joe Fresh brand through Loblaw Companies Limited, in order to compose a bold, far-reaching

campaign in the United States. Furthermore, the brand’s excellent reputation in Canada must be emphasized

and vehicle through concerted PR efforts in the U.S.

_________________________________________________________________

Strategy Objectives

Having consistently surpassed the cautious sales objectives of Loblaw Companies Limited in the past, the time

has come for the Joe Fresh brand to set a high bar for success as it enters the American market. Immediate

goals are the establishment of brand-recognition among the American mainstream, which would clear the

decks for a broad expansion into the U.S. heartland, where the consumer mentality privileges affordable,

stylish and accessible products. The ambitious objective of 800 American stores in the next five years,

previously stated by Joe Mimran19 but downplayed by Loblaw Companies Limited, should be clearly

articulated and reflected in marketing efforts over the next year.

References

(Note: article titles are hyperlinked to source web pages; all links retrieved April 1st 2012)

__________________

Loblaw and Joe Fresh Beauty Launch Cosmetics Collection’ Loblaw Press Release, 2009

Kelly Gadzala, Joe Keeps it Fresh, Strategyonline.ca, October 5th 2011

Canadian Industry Statistics (CIS), Industry Canada, September 13th 2011

Clothing: United States Industry Guide, Research and Markets, August 2010

The Joe Fresh Brand Takes a Bite Out of the Big Apple, Loblaw Press Release, 2011

John Intini, Joe’s Fresh Take, MacLean’s Magazine, January 25th 2010

Hollie Shaw, Joe Fresh Follows Tough Path into Cutthroat NYC, Financial Post, February 23rd 2011

Cintra Wilson, Joe Mimran’s American Invasion, Elle Magazine, October 4th 2011

Facts About H&M, H&M website, April 2012

Rachel Tiplady, Zara: taking the lead in fast-fashion, Business Week, April 4th2006

Key Facts, Gap inc. website, April 2012

Marina Strauss, Loblaw’s Joe Fresh Enter Cutthroat U.S. Market, Globe and Mail, October 11th 2011

19

Marina Strauss ‘Joe Fresh’s Expansion Plan’ Globe and Mail, October 2011