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Tesco plots attack on branded market

Tesco, the UK’s largest retailer, is plotting an assault on the branded fashion market as part of a relaunch of its clothing website next year.

Tesco’s buying team, including head of buying for menswear Jon Bennett, were out in full force at young fashion trade show Bread & Butter in Barcelona last week, tapping up brands about potentially selling their collections on a new Tesco-owned website in 2010.

Tesco began selling its own clothing brands, including F&F and Cherokee, online in 2007, but abruptly axed the service only six months after its launch. Terry Green, chief executive for clothing and hardlines at Tesco, confirmed the supermarket would relaunch its transactional clothing website in 2010, but he declined to comment on what the website would sell.

The venture is likely to go head to head with the likes of etailer Asos, mail-order firm Littlewoods and House of Fraser’s website, among others. Asos in particular has recorded massive growth since it launched in 2000 and Tesco is believed to be keen to cash in on a slice of the growth of online branded fashion sales. A branded venture is likely to be popular with shoppers in the regions who do not have easy access to brands on their doorstep.

According to Hitwise, which measures website popularity, Tesco’s existing grocery and Tesco Direct homewares and electricals site www.tesco.com was the eighth most popular retail site in the UK in December, and Tesco as a whole now accounts for about £1 in every £8 spent in the UK.

Young fashion brands contacted by Drapers said they were unlikely to supply the venture for fear of what effect it might have on sales for their other stockists. However, the timing of Tesco’s assault on the branded fashion market, when brands are facing massively depleted order books, could play into the grocer’s hands. Some brands could be tempted to take what is likely to be huge orders from the UK’s largest retailer to boost their sales in the midst of the recession. Tesco’s own-brand clothing generates in excess of £1 billion in sales annually.

One brand boss said: “I wouldn’t want to supply Tesco because of the implications it would have on the sector as a whole, but the first brand that agrees to do it could have a big impact on what the rest of the market does.”

Another young fashion brand said: “It could spell the end of the young fashion market as we know it. What will it mean for independents in this sector if brands sign up to it?”

It is unclear whether Tesco would launch a separate site without Tesco branding to help win supplier support for the venture. Last year, mid-market chain Next launched a similar concept at www.branddirectory.co.uk, but its success has been limited. Websites normally require heavy marketing to drive traffic and most of the Brand Directory sales are understood to have been generated through links to the core high-traffic Next
Directory site.

One industry insider warned: “Everything that Tesco does is always very price oriented. If it put fashion brands online, Tesco would make it all about price and there would be a danger of it destroying UK fashion.”

Readers' comments (1)

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