The competition has once again heated up among the supermarket chains. Lidl has launched a value clothing range for women which will compete with value retailers such as Asda’s George and Primark.
The competition has once again heated up among the supermarket chains.
This is yet another blow to the big four supermarkets, all of which have their own established clothing ranges and are already experiencing stiff competition from value supermarkets in the grocery department.
Value supermarkets have enjoyed great success in the UK because of their ability to offer consumers rock-bottom prices, even on products that would usually be sought-after in more up-market stores.
Since the financial crisis, consumers have taken greater care to keep their shopping bills down, often opting for cheaper supermarkets such as Aldi and Lidl and sparking a price war.
The effects of this price war are taking their toll on the established grocers and just last week Tesco issued a second profit warning citing “tough trading conditions”.
So, with the grocery divisions already taking a hit at the big four, will Lidl’s clothing range add fuel to the fire?
The market is certainly there. According to Conlumino, sales of clothing and accessories through grocers jumped 30% in the five years between 2008 and 2013.
What’s more, last year Aldi launched a school uniform range costing just £4 and ended up taking 4.2% of all uniform sales. This demonstrates the power of having the right product at a competitive price.
So what prospects does Lidl have in succeeding with clothing in the UK?
The grocer already has a successful clothing range in its home market of Germany and will be transferring this experience to the UK market.
However, the big four established supermarkets probably need not worry too much for now.
Most major UK grocers already have well-established clothing ranges, accounting for one in four of all fashion items sold: Asda recently revealed that its George fashion label had overtaken Marks & Spencer to become the UK’s second largest clothing brand by volume, Tesco’s F&F range is worth £1 billion and Tu by Sainsbury’s is Britain’s seventh biggest fashion label.
Supermarket clothing is a fast-growth market and there is certainly space for Lidl and other new players to enter the sector.
However, newcomers have a lot of catching up to do and it will take years of product development and marketing investment to reach the volumes being sold by the big four.
It’s always useful to keep one eye on the competition, but established grocers should remain focused on their current clothing strategies to ensure they have the right products, at the right pricing for their target customers.
- Dan Coen, director, Zolfo Cooper