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Tailoring F&F for the world

Jason Tarry is the third person to lead Tesco’s clothing business in a year, but he foresees no let-up in its international ambitions.

Tesco’s chief executive of clothing, Jason Tarry, is just a few weeks into his newly expanded role when Drapers meets him at the supermarket’s headquarters in Welwyn Garden City. Aptly dressed in a sharp suit from Tesco’s own label F&F, Tarry’s laid-back, relaxed manner belies the fact that he is taking on the role following a series of senior management changes, against a backdrop of a somewhat challenging UK market, which led to a profit warning after Christmas. 

Now the third person to head up Tesco’s clothing offer within the space of a year, Tarry’s appointment follows Richard Jones’ defection to Irish supermarket chain Dunnes in September last year after a two-year tenure, and immediate predecessor Jill Easterbrook’s promotion last month to head up a number of Tesco’s other businesses. The same month also saw UK chief executive Richard Brasher leave his role following a slowdown in the retailer’s domestic business, with Tesco group chief executive Philip Clarke stepping in to assume responsibility for the UK.

Propelled by the strength of the F&F brand in central Europe, Tesco’s clothing sales increased by 12% in the region for the year to February 25. However, despite remaining the third-largest player in the UK value fashion sector in terms of market share (see chart overleaf), domestic sales across general merchandise, clothing and electrics dipped 3.9% in the same period. Tesco is to invest £1bn to turn around its wider UK business this year in an effort to win back market share.

In July, Tarry’s remit grew to include the UK in addition to his responsibilities for central Europe, bringing the two business streams closer together in what he describes as a “natural progression”. Citing the similarity of the business models and a 95% shared common supply base between both regions, Tarry dismisses the notion that the added responsibility will involve a juggling act.

“There is a lot of synergy between the teams and we’re already focusing on the same things. It’s just bringing those together to look at opportunities for us to further leverage the skill and the scale of the group,” he says.

Addressing the need to bolster the UK business, he adds: “We’ve been able to position F&F as an international brand that’s exclusively available in Tesco stores in central Europe.  We’ve already got a great business under the F&F brand here and I think there are some opportunities to further strengthen the brand by bringing together the experience and skill of the two teams to improve the offer. So, I see nothing but opportunities.”

Mirroring a trend across the high street, international expansion is set to play a key role in the business’s growth plans. “Fashion retail is becoming more of an international business. If you look at arguably the most successful mass-market clothing or fashion retailers at the moment, the likes of Inditex and H&M, they very much have a global focus,” says Tarry.

Already present in 11 countries across central Europe, Turkey and Asia, this year Tesco partnered with retailer Fawaz Abdulaziz Al Hokair & Co, which operates 1,300 stores under 80 brands, to open six franchise stores in Saudi Arabia, with plans to use the same model in further Middle Eastern countries. Tesco is targeting a leading clothing market share in Saudi Arabia, a position it already holds in the Czech Republic, Hungary and Slovakia.

“We got to the point where the F&F brand was really resonating with customers internationally, and we saw that as an opportunity to bring the brand to more markets,” says Tarry.

He explains that the decision to expand via the franchise model follows the success of the retailer’s three European standalone F&F stores, proudly gesturing to photos decorating his office depicting the two Czech stores and one Polish. “In terms of the impact it’s been quite successful and that has given us the confidence to be able to take the brand internationally through our franchise partners,” he says.

Kate Ormrod, retail analyst at market research company Verdict, agrees that expansion via franchise partners is a sound strategy. “Franchising allows the retailer to expand internationally at a more rapid pace and to where its grocery offer is not yet present, and reduces the risk involved. This will help to transform F&F into a global brand, and standalone stores also help to justify the premium positioning that F&F has outside the UK,” she says.

While Tarry confirms that Tesco is looking to open more standalone F&F stores overseas, he says there are no plans to do so in the UK. However, pop-up stores could be an option, following the success of the F&F pop-up opened for the Queen’s Diamond Jubilee in May. “We don’t have the opportunity to have that many stores in central London that can carry clothing, so the pop-up shop was a great opportunity for us to showcase our offer,” he says.

Tarry is adamant that product and service are greater priorities than closing the gap in terms of market share on rivals such as George at Asda. However, the introduction of more trend-led collections and its own prints for autumn 12 is likely to do just that, and forms part of Clarke’s ambition for F&F to become more on-trend.

“We decided a year ago that we would co-invest with the European business in design resource. So we have a European design team that is largely in place now,” says Tarry.

He adds: “That has really helped us in terms of that ambition of bringing more on-trend, broad-appeal fashion product [to customers]. I am very happy that we’re going to be meeting Philip’s brief going forward, and I think already we’re starting to see some better customer feedback.”

Ormrod says Tesco has better showcased its trend credentials in the past nine months, after boosting the size of its F&F design team, and by reacting to of-the-minute trends such as those worn by the Duchess of Cambridge.

Hilary Monk, senior European retail analyst at research firm Mintel, is equally positive. “Unlike Asda, Tesco operates a multi-brand clothing offer, with a broader positioning that includes a more fashionable selection. Tesco’s segmented clothing offer is a great strength, allowing consumers to trade up or down within the store while making its supermarket clothes feel like ‘proper’ brands,” she says.

However, she cautions: “Tesco must not fall into the trap that Marks & Spencer has already recognised: making its brand architecture and in-store shopping experience too complex. It must resist the temptation to simply add more, and instead work on offering a clear and attractive proposition.”

Like M&S, Tesco’s F&F has a number of sub-brands: 10 at present, including F&F Basics, F&F True, F&F Blue and F&F Black. “Tesco needs to better define who each clothing sub-brand is targeted at to avoid confusion,” says Ormrod.

In March, the retailer axed its premium range F&F Couture, a decision reported to have been based on low sales. Tarry says there are no plans to introduce any further sub-brands, and that Tesco will instead focus on strengthening its existing offer.

Trading is tough, concedes Tarry, but speaking about the outlook for F&F with an air of confidence, he adds: “What wins when you have got that environment is product that people want to buy at prices they can afford.

So actually I think the F&F brand and the positioning of our clothing business is exactly the right place to be at the moment.”

Market share within value sector

Market share within value sector

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