Aldi fashion launch may threaten value rivals

German no-frills retailer Aldi intends to launch its own UK fashion brand in an initiative that could hit rival value clothing retailers.

Aldi is understood to be on the hunt for a buying director to spearhead the venture.

Details are unclear, but retail consultant Clive Vaughan of The Chambers said an Aldi clothing brand could threaten Matalan and Peacocks.

He said Aldi's scale - there are 6,886 discount stores worldwide - would bring buying power and could lead to 'ferocious' pricing. 'Clothing would be an extremely good addition to its range,' he said.

Vaughan pointed to the success of George at Asda, which generates sales of more than£1 billion, as an example of demand for value fashion.

However, M+M Planet Retail analyst Oliver Heins said Aldi has struggled to appeal to UK shoppers. With only 0.8 per cent of the grocery market, Aldi is a comparatively small player.

There are 284 Aldi shops in the UK, selling mainly own-brand products.

Food generates 85 per cent of sales. Heins said non-food promotions draw shoppers into stores, but questioned the viability of a permanent fashion offer.

Pragma director Mike Godliman said: 'They will have difficulty in establishing a brand, but there could be an opportunity if they're able to create a brand a la George, which has its own associations.'

No comment was available from Aldi.