Cheap? Check. Convenience? Check. Choice? Check.
Sainsbury’s launched a rival to Savile Row in outlets this week, giving shoppers a chance to buy suits with their weekly shop.
The move is a classic example of how wafer-thin margins and the dog fight for market share is forcing supermarkets to turn towards different revenue streams – be it launching a new range or acquiring a business.
The so-called affordable fashion sector is one such growth market. Figures from Kantar Worldpanel show that supermarkets account for £3.1bn of annual clothing sales.
In fact, for every £10 spent on clothing in the UK, £1 now goes to supermarkets. Sainsbury’s clothing brand Tu outperformed the rest of the business during the first quarter of the financial year while like-for-like sales at Tesco’s clothing arm F&F were up 3.5 per cent in the first half of 2017.
Last month, Lidl sold a whopping 106 items a minute on the day it launched supermodel Heidi Klum’s new Esmara range.
What draws customers to put supermarket clothing in their trolleys is its price and quality. If the editor of Vogue raves about an £8 Tesco top then you’re likely to pick it up.
The other factor is convenience: time-poor customers are more likely to take notice of clothes on their grocery run in their local supermarkets, that are open until at least 11pm, than their nearest high street retailer. It’s also worth noting that supermarkets have a goldmine of data on their customers to adjudge consumer preferences and tastes.
While cut-price clothing might have proved a lucrative avenue for supermarkets so far, not all diversifications work. Take Tesco, for example. From bakeries to restaurants to coffee chains, the supermarket giant ventured into different sectors following its boom years, snapping up existing players in the sector.
However, when food sales started falling, it had to sell these loss-making ventures to shore up its balance sheet.
Here’s some food for thought for supermarket bosses: Explore new growth opportunities to give customers more reasons to shop from you but not at the cost of grocery – your core competency. A new revenue stream needs to be an addition not a distraction.