Retail giant Argos is to throw its muscle behind branded clothing - but has met with a cool reception from the branded fashion sector.
Argos, which sells everything from electricals to furniture through its multichannel operations and is the UK’s biggest general merchandise retailer, is understood to be eyeing major fashion brands. Its hit list is expected to include streetwear brands like Gio-Goi and Ringspun.
The timing of Argos’s move into fashion has yet to be confirmed but it has approached key buyers at etailer Asos, branded young fashion chain USC and department store chain House of Fraser about potential roles. It is not yet known whether the fashion offer will be available across all of Argos’s channels or whether it will operate under the Argos fascia.
It will be Argos’s first foray into fashion since 2003, when it sold its GUS Home Shopping business to Littlewoods (now Shop Direct), including its direct sales retailer Additions, which sold some clothing.
However, many young fashion brands contacted by Drapers said they would not sell through Argos for fear of over-distribution or damaging their brand positioning.
“Do you want your brand to be next to a microwave or kettle?” said Will Rigg, founder and creative director of streetwear brand Fly53. “Fashion products [have] to have synergy with the environment. There are also dangers of over-distributing.”
Johnny Hewlett, Diesel UK managing director, said: “There’s a risk of over-commoditising what is anything but a commodity product.”
Catalogue and general retailers have a chequered history with branded fashion offers. Next axed its Brand Directory website last autumn, 18 months after launch, after it struggled to drive significant traffic. Meanwhile Tesco has been forced to turn to lesser-known brands for its stand-alone branded fashion site, because more established names were sceptical of its scale and positioning.
However, other key fashion businesses predicted Argos could become a major player.
A senior buyer at one major etailer said Argos’s distribution network, customer knowledge and marketing clout made its entry into fashion “unignorable”.
The source said: “Amazon and Play have been born out of a trendier platform [online] but they are essentially after the same audience [as Argos]. Some brands need to recognise they are in a mass-market game.”
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Argos What you need to know
Catalogue store group Argos, part of Home Retail Group which also owns Homebase, is one of the most venerable names on the high street but is under pressure from supermarkets and pure-play etailers.
The 750-store retailer this week reported a 32% fall in operating profit in the first half to £54.4m. The internet accounted for 32% of sales and home delivery for 21%.
Etail in many ways complements Argos’s catalogue business model and super-slick supply chain. The retailer has exploited consumers’ increasing interest in click-and-collect multichannel shopping.
Home Retail chief executive Terry Duddy is convinced of the chain’s long-term strengths, and the expansion of ranges and moves into various new categories - such as health and beauty and children’s books - are central to plans.
Critics, however, fear the pressure on Argos from supermarkets and etailers will only get worse. The retailer’s shoppers have been among the worst hit during the downturn and although volumes of small-ticket items have risen and market share maintained or improved in key categories, demand for big-ticket goods has been slow.
Deputy Editor, Retail Week