A laser focus on food has helped Morrisons, Sainsbury’s and Tesco combat declining sales but looking to 2017 bolstering their general merchandise divisions will return to the fore.
It’s an unsurprising move given some of the figures that emerged from what the media dubbed ‘Super Thursday’ last week after the spate of sales updates given to the market. First up Sainsbury’s, which noted a 10% growth in Tu clothing sales over the third quarter. Similarly, Tesco’s F&F clothing brand enjoyed like-for-like growth of 4.3% while Morrisons’ Nutmeg clothing range continued to rise strongly with sales up over 30% for the nine week Christmas period.
“The clothing business was really, really exceptional over the Christmas quarter. And even general merchandise, again in a challenging market, we are showing growth,” said Sainsbury’s boss Mike Coupe during an analyst call last week (10 January).
But Sainsbury’s is looking to do more to establish the non-food business amongst consumers. Toward the end of 2016 it spun off the GM advertising from grocery – which went to Weiden + Kennedy – and put the account up for review, hunting for an agency that would deliver strategic planning as well as development of creative communications for Tu and general merchandise.
“We're now the sixth largest clothing retailer by volume and in some categories," said Coupe. "I think we now sell more volume than Marks & Spencer in children's wear. So, that shows the way that we've developed the proposition over the last few years and I think five years ago, you wouldn’t have believed that was possible.”
For Tesco, after 18 months refocusing on getting the basics right, the retailer is now on the hunt for the next phase of growth, consequently bringing its F&F brand back into the mix.
“If you ask people on the street what F&F is, they wouldn’t know,” Chris Other, global marketing director at F&F recently told The Drum. “So, we’ve got to improve the brand consideration and awareness – we need to get the brand out there.”
By Other’s own admission the F&F brand has had a “patchy” history in the UK. It had the autonomy to break free from the recognisable Tesco branding but until three years ago hadn’t been particularly consistent in what it had been producing. Now, it’s looking to tread the tricky path of re-connecting with its parent company without becoming a part of it.
“We’re looking to move the F&F brand on in all markets to have one look and feel that’s distinctive around F&F so people really start to understand the brand, what it’s about and where to buy it. For our customers, F&F is only available at Tesco and customers are happy about that,” continued Other.
“But it’s a different shopping mission, buying for grocery and buying for clothes, so [F&F] needs to look and feel different but still needs to work within that grocery environment. F&F is a brand in its own right and doesn’t just operate in the UK so it needs to be standalone and be able to work in both situations.”
This is tricky brief is being handled by creative agency ODD, which was appointed last November after F&F consolidated its roster of suppliers with the agency. The first piece of repositioning work is expected in April.
But alongside a soon-to-be boosted Tu within Sainsbury’s, Tesco will also find its F&F brand perhaps unexpectedly competing with Morrisons, which has lagged behind its rivals when it comes to general merchandise.
It only launched its first clothing line – Nutmeg – for children in 2013 and has since failed to venture into adult ranges. However, chief executive David Potts promised last year that Nutmeg would be put in a further 100 Morrisons stores this year and across the whole estate by the end of the financial year. Topping off that expansion will be an entry into womenswear, set to roll out in March.
“We’ve got more to go in terms of annualising the benefit of those sales and what customers want,” said Potts.
How Morrisons seeks to market its Nutmeg range remains unclear and it’s questionable how much investment would go into awareness-driving campaign given it still doesn’t sell clothing online.
But all of this comes against a bleak backdrop for clothing retailers, which has been well documented by the struggles at high street stalwarts Next and Marks and Spencer. But for the grocers their differentiating factor comes back to the fundamental reason that they went into clothing in the first place; convenience.
"If you can do your weekly shop, and grab the kids some new PJs, plus get a top for Friday night – amazing. And if anything, attitudes towards ‘everyday’ fashion have softened," said Rob Sellers, managing director at Grey Shopper.
"Brands like ASOS and H&M have helped people feel that clothing can be undbranded and ‘disposable’. So, it makes sense that these business should invest in the category."
And the competition from the high street shouldn't be a concern for Tesco, Sainsbruy's and Morrisons, based squarely in the fact that if they have millions of people coming to their retail spaces (either physical or digital), then cross selling makes perfect sense.
"The challenge is to make your product ‘desirable enough’ to capture enough of those purchases. Hence the investment in building the brand awareness and perception of the likes of Tu, F&F and Nutmeg," he surmised.