As fashion retailers branch out into new, unfamiliar sectors, Drapers asks whether this is a good strategy.
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Quiz is trialling menswear, River Island is launching third-party brands online and Asos is now selling homeware. Fashion retailers are diversifying into new markets and looking at different areas to grow their businesses and capture more of their customers’ spend.
Given the challenges in the clothing sector, diversification is a clever way to drive additional growth, says Mamequa Boafo, senior analyst for retail at GlobalData: “Creating an overall offer that spans different product types and creates synergies between its customer base is essential to encourage shoppers to spend, and increase basket size.”
Last week fast fashion retailer Quiz announced it is to trial menswear, which, along with homeware, is forecast for “significant growth” over the next five years, says Boafo. In 2017, a third of menswear shoppers were female, signalling gifting opportunities within traditional female brands such as Quiz.
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However, retail analyst Richard Hyman issues a word of caution to those looking at other avenues as a cash cow: “This is a clothing market like no other we’ve ever seen, in terms of how soft and massively oversupplied it is. Diversifying in itself isn’t a silver bullet. If you’re good at womenswear, it doesn’t mean you’ll be good at menswear.”
Juls Dawson, managing director for agency Just Consultancies, says the strategy to capture as much consumer spending power in their reach makes sense, but, warns that there are still plenty of hurdles: “Existing brand perceptions are embedded in the public’s minds. Undoubtedly, it will be challenging to eradicate these as retailers pursue new, uncharted waters.”
River Island is also set to expand its offer with the launch of an online hub for menswear brands at the end of the month. It follows Missguided’s introduction of sports brands earlier this season.
River Island will start by selling Levi’s, Lee Jeans, Wrangler, Schott, Bellfield, Hype, Jack & Jones and Only & Sons, and introduce more labels added throughout the year. Nick Tahir, head of menswear buying at River Island told Drapers the launch of the brand hub “enforced the retailer’s position as a destination for menswear”.
Anusha Couttigane, senior analyst at Kantar Consulting, said this latest venture is part of a wider strategy for the retailer, which is “trying to grow up with its customer base”.
“In the 1990s [River Island] was a big destination for fashionable teens and young adults. Those shoppers are now parents, homeowners, professionals, so it needs to cater to them, too, to retain them.”
Couttigane says offering new categories is a good way for brands to maximise on relevance to their consumer’s lifestyles, citing Ted Baker as an example. The retailer has slowly introduced new categories such as tech accessories and Ted’s Grooming Room, to bolster its offer, but has nevertheless been careful not to step too far away from its core proposition.
While some retailers fill the gaps with branded goods to provide a wider “lifestyle” offering, launching own-brand ranges, a strategy taken by Asos, can help to bolster margins. The etailer has announced it will start to sell homeware at a date yet to be revealed. This follows the launch of its own-label sportwear collection Asos 4505 in February, and beauty and grooming range, Asos Make-Up, in September.
Daniel Najar, co-founder of womenswear label Chi Chi London, which is sold on Asos, believes the etailer’s foray into own-brand homeware moves brings it a step closer to becoming a true lifestyle destination: “Asos is a well-known disruptor and will shake-up homeware, which hasn’t really moved on a great deal until the more recent emergence of [online furniture retailers] Made and Swoon. There is likely to be market share to gain [in homeware], as some retail giants have shed stores and are clearly struggling. Fluid, ever-changing companies are the ones that survive and prosper.”
The Drapers Verdict
Diversifying your offer is an intelligent way to broaden your customer reach and increase sales, particularly in today’s challenging trading environment. However, new categories must appeal to – and not alienate – the existing customer base, and retailers must also be wary of losing focus on the core business.