October 3, 2009 / 12:01 AM / 8 years ago

Tesco woos trendy shoppers with fashion website

<p>A Tesco supermarket is seen in west London December 1, 2008. REUTERS/Toby Melville</p>

LONDON (Reuters) - Tesco, Britain’s biggest stores group, launched a clothing website on Saturday to tap one of the few fast-growing retail markets and win new customers with a more up market focus.

Tesco said it was set to go along with a vogue for getting top designers and celebrities to create fashion ranges.

The move will step up competition to supermarket rival Asda, which sells its popular George range online, as well as clothing retailers like Marks & Spencer and Next.

It may also pose a challenge to small but fast-growing online fashion group ASOS whose catwalk-inspired fashions had been seen as being safe from Tesco’s plans.

Tesco head of clothing Terry Green said he was aiming for a fashionable appeal while keeping the group’s focus on value, and was working with top brands and talking to top designers. “It’ll be a different experience, so I do expect to get a lot more customers,” he told reporters at a fashion show launch.

Tesco is Britain’s fourth-biggest clothing retailer by volume of goods sold with a 3 percent market share and annual sales of over 1 billion pounds ($1.6 billion), Green said.

Sales growth is currently limited by store space, with around 60 percent of stock unavailable in 80 percent of shops and so putting the full range online will significantly boost availability of Tesco’s clothes.

Green, who started the “Designers at Debenhams” ranges which are still driving growth at the British department stores group, is aiming to leapfrog rivals Asda, Primark, and Marks & Spencer, and to grow online sales to 10 percent of group clothing sales, though he did not say by when.

The website is launching with around 3,500 product lines and more than 20 brands, including Nike and Timberland, as well as hip East London label Liquorish and handbags by actress-turned-designer Mischa Barton.

DESIGNERS AT TESCO

Green said these numbers would increase rapidly and Tesco would put more emphasis on premium ranges of its F+F brand.

Online retail sales rose 16 percent year-on-year in August, according to industry body IMRG and consultants Capgemini, versus 2.1 percent growth in total British retail sales, and with clothing and footwear growing just above the online total.

Green said Tesco was in talks about launching so-called diffusion brands whereby designers do limited ranges for a retailer.“ We may bring in one or two big, famous names as well,” he said.

Fashion retailers have sparked a surge in sales, drummed up publicity and added cachet to their brands by signing up top designers and celebrities for limited periods of time.

Earlier this week, Sweden’s Hennes & Mauritz, which has pioneered such collaborations, said it had signed up French designer Sonia Rykiel for two collections.

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