Magazine article Marketing

Amanda Aldridge on Retail: Asda's Lack of Food May Starve Clothing Sector

Magazine article Marketing

Amanda Aldridge on Retail: Asda's Lack of Food May Starve Clothing Sector

Article excerpt

One doesn't have to be an expert to appreciate the growing importance of non-food merchandise to the nation's supermarkets. You would have to cast your mind back quite some time to remember when they sold nothing but groceries. Nowadays a trip to the supermarket could see you spending as much on clothes, electrical goods, CDs or pet insurance as on your weekly food shopping.

The importance of these non-food categories was reinforced recently with Asda's announcement that it intends to open a supermarket in Walsall, dedicated solely to non-food merchandise. Yes - a supermarket without food. Coming on the heels of the launch of the retailer's George brand in stand-alone high-street stores, it will be interesting to see how the public takes to this latest innovation.

While the public may be keen to see such a convenient and value-conscious proposition turned into commercial reality, the chances are that there will be a few prayers offered up in several retail boardrooms - particularly those of clothing businesses - that this venture falls flat on its face.

The key battleground here is the clothing market. It is the second-biggest retail sector after food, but is fragmented like no other. Significant growth is occurring at opposite ends of the market. The major supermarket players, which focus on price and value, are growing their own clothing businesses at rates in excess of the clothing market as a whole, some by as much as 20% a year.

At the opposite end of the spectrum, the smaller high-street players (which include the French Connections, Jigsaws, Jane Normans and Zaras of this world) are, on average, also reporting growth rates in excess of the market average.

In contrast to the supermarkets, they differentiate their offering on product, backed by a strong and recognisable brand. So the squeeze is on for those businesses that are stuck in the middle of this struggle for increased market share such as M&S, Bhs and some of the Arcadia brands.

What can they do in response? They are hardly likely to downsize their business to compete more effectively with the smaller, niche players.

At the same time, who can realistically expect to compete with the buying power of the supermarkets?

Unnerved by the prospect of the corporate giants moving into their sector still further, one saving grace for smaller clothing businesses may be that it is hard to envisage a real 'category killer' engulfing the sector, with shoppers always demanding specialist outlets. …

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