So far this recession, discounters, mass merchandisers, a few fashion specialists and the internet have been the winners in apparel retailing. But no-one's cracked doing all these things right at the same time.
Is that what Tesco's trying to do?
Mass merchandisers like Wal-Mart or Carrefour really haven't made much progress at the fashion end of the clothing business. At the value for money end – they've performed terrifically: but fashion has always been trickier for them. In many locations, out of town superstores often aren't a logical place to buy fashion from, customers don't go into them in a fashion buying frame of mind and the environment just isn't right. But the internet has suddenly become a far more credible place to buy fashion from, with web specialists like ASOS having an outstanding 2008, and fashion retailers like New Look getting far more from their websites than seemed likely only a few years ago. The mass merchandisers haven't shared in this, though: Tesco – outstandingly successful with its online food business – stopped transactions on its clothing website, www.clothingattesco.com, last year and now just offers a limited clothing range on its main site. Clothes are available at a minority of its stores.
Now it's announced the relaunch of a clothing website by this autumn. Though apparently limited to its private labels, there were lots of rumors at the Barcelona Bread & Butter trade show this week Tesco were approaching smaller brands exhibiting at the show and asking them to supply the new Tesco site. If true, they've picked a great time to do it: many independent labels will be struggling – and the offer of supplying ideas to Tesco can give developing designers a cash flow that's almost impossible to find from conventional indie branding right now. With the right designs and designers, Tesco may well be able to make branding as irrelevant in clothing as it's made it in wine or fuel. And the web might not only be the place to do it – but to sell to customers in territories where it doesn't have a physical presence.
To add to conventional clothing retailers' worries, both Tesco and Wal-Mart have announced hefty (though slightly trimmed) store expansion plans for 2009: Wal-Mart will, for the first time, add more store square footage internationally than at home in the US - with 19 - 20mn- new square feet from small convenience stores in Mexico to a new Sam's Club in Shanghai and its first wholesale joint venture store in India. Tesco plans to add about 11.5mn sq ft internationally this year. Metro has just organised its buying systems to let operational divisions have greater autonomy.
Who knows whether Tesco have finally found the right formula for the fashion end of the market – and it might not matter much anyway. The mass merchandisers have signalled getting fashion right is a priority. As long as they're around, and there's a fashion sector, they're going to keep on refining their offer until it's right. It's by no means certain they'll sort fashion out eventually – but I'd say that's the way to bet.